A recent study on the House Price Index developed by LankaPropertyWeb which is based on the asking prices of its listings revealed that overall residential land prices (per perch) had soared by 44.19% from Q2 2020 to Q2 2021. 4 bedroom house sales prices had increased by 15.68% from Q2 of 2020 while average 3 bedroom apartment prices had risen by 2.64%.
However, in Colombo when compared to Q1 of 2021, average apartment selling prices had increased by 3.1% in Q2 with the average selling prices of apartments being Rs.49.93Mn for a 3 bedroom apartment. Apartment prices have also seen three consecutive quarters of growth in asking prices, with values heading towards their peak levels during 2018. This could be fuelled by the increase in construction costs and buyers realizing that now is the best time to invest in apartments as new developments cannot be built or sold at these prices in the future with a sharp increase in construction costs.
Further, the LankaPropertyWeb listings prices revealed that the average price of a 4 bedroom house in Colombo during the second quarter was at Rs.170.84 million. While 3 bedroom apartments were priced at an average of Rs. 51.57 million. When compared to the overall changes in property prices for houses and apartments, these fluctuations are evidence of the continuous improvements in property demand in Colombo city. With the Colombo Port City Economic Commission Act, No.11 of 2021 passed 3 months ago and estimates of it said to add USD 4.5 billion during its initial years, it is expected that property prices are to soar further in the metropolitan city as the demand for residential rental property rises with the development in Colombo Port City.
In terms of land, a study on the average prices for Q2 in 2021 revealed that the selling price for a land plot in Sri Lanka was Rs.2.48 million. However, residential land prices in Colombo were recorded at 11.92 million per perch, which is a 79% premium from the overall land prices of the country. Besides Colombo city, land prices in the Western Province had also increased by 19% when compared with Q1 of 2021 while land prices in the Uva province had reduced by 18%.
Unlike most countries in the world, the Sri Lankan real estate market has maintained its stability despite facing three COVID-19 waves. Between the second quarter of last year where the pandemic struck in Sri Lanka at its worst to the current quarter this year, fluctuations in the property prices have remained relatively less volatile.
According to the Sri Lanka customs (Policy and Strategic Planning division Sri Lanka’s export performance January – May 2021) with the merchandise exports increasing by 50.71% when compared with May 2020 and 2021 and rubber-based product exports improving by 78.12%, the opportunities for exporting have relatively increased despite the pandemic. As a result, prices of tea and rubber lands have also seen positive influences, with minor increases in price. Between Q2 of 2020 and 2021, tea land prices have increased by 14% while the prices of rubber lands grew by 2.2%.
Average land price fluctuations in the Western Province
In the Western Province between Q1 of 2020 and 2021, 7 cities experienced average price increases by over 50%. Ingiriya in the Kalutara district recorded an increase of 109% followed by Ragama, where land prices increased by 76%. Lands in Padukka increased by 74% with prices in Angoda rising by 69%, Dompe by 67%, and Peliyagoda by 62%.
Lands in Moratuwa also improved by 56% with demand for property increasing over the years in areas such as Rawathawatha in particular.
During the same period, certain cities also experienced a reduction in average land price values. These included Rajagirya, Athurugiriya, Gampaha, Gothatuwa, Kesbawa and Negombo. Land prices of high-demand cities such as Dehiwala increased by only 4%, Mount Lavinia 8%, Kelaniya 13%, Rathmalana 20%, and Thalawathugoda 17%.