Overseas buyer interest in Sri Lankan properties increased by 40% in 2022, compared with the year before, according to the Real Estate Market Outlook Report 2023, published by Sri Lanka’s leading real estate portal, LankaPropertyWeb.
The report said that traffic from overseas countries such as the United Kingdom, Australia, the United States, Canada, and Middle-Eastern countries saw the highest increase mainly for residential properties in the Colombo district.
While the average asking price of houses has increased by 4.4% and apartment prices increased by 60.4% during the last year, the increased overseas interest, mainly by expatriates is attributed by the report to the decline in the rupee’s standing against the dollar, which saw the rupee fall by more than 80% and thus making property investments more appealing to overseas investors and expatriates with their earnings in currencies such as USD and GBP.
The Market Outlook report also shows that despite many of the initial apartments that came to the market in the late 90s and early 2000s reaching over 20 years of age, their value has continued to grow, dispelling the popularly held notion that well-constructed apartment buildings will lose their value as they get old, in the current context of the property market. With construction costs increasing by more than 65% coupled with housing loan rates increasing by triple digits and the majority of new units still being under construction, the high demand for completed buildings and rentals has been highlighted by the report, using the website’s search and demand analysis.
6000+ new residential apartment units are expected to enter the real estate market in the next two years. With this, the report observes that the total number of recognised apartment units will reach approximately 39,000 by the end of 2025, while 1 million square feet of Grade A office space will be added to the market by the same year.
The Market Outlook Report 2023, compiled by the company’s Development Consultancy and Research Team took over 6 months to complete while having to obtain, analyse and validate data worth over a decade from public and own data sources, according to Daham Gunaratna, the company’s Managing Director. “Many might be wondering about the effect 2022 will have on Sri Lanka’s economy and the real estate market. It is in this context that LankaPropertyWeb decided to produce the ‘Real Estate Market Outlook 2023’ report, our maiden research report and one of the most comprehensive reports published on Sri Lanka’s real estate market, to give the public a detailed understanding of the current real estate market and its future path”, said Gunaratna at the launch of the report.
The report further adds that based on sellers’ asking prices, the three-bedroom option has been the most in-demand category among all levels of dwellings over the past years. From all the search traffic for residential houses on the LankaPropertyWeb website in 2022, 42% of the demand has been for three-bedroom dwellings with nearly half (48%) of the apartment unit supply in Colombo being three-bedroom units. Speaking at the launch, the head of Development Consultancy & Research at LankaPropertyWeb, Tharindu Jayarathne said that since the start of 2023, an increase in demand for sales, rentals, and lands was noticed through visitor traffic, with the demand for sales being the highest at a 24% increase, compared to December, 2022.
“Despite the many economic and political unrest the country had to go through, Sri Lankan properties saw a significant price increase, which is evident when comparing the real estate market numbers of 2022 with those of past years. Residential properties have become a good hedge against rising inflation, and the real estate market is expected to boom in years to come”, said Jayarathne.