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SRI LANKA REAL ESTATE MARKET OUTLOOK REPORT 2025

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Report Summary

Sri Lanka's GDP, GDP per capita, debt and composition of reserves, policy interest rates, and foreign direct investment are key indicators of the country's economic performance. These factors, along with imports/exports, the real estate sector's contribution, exchange rates, and inflation, provide insight into the country's economic prospects. Population statistics, including population growth, density, and the breakdown between urban and rural populations, are also important to consider when analyzing the country's economic performance and aligning real estate investment strategy.

The supply of residential apartments in Sri Lanka is dynamic, with ongoing developments and construction projects. Factors such as location, configuration, and the number of bedrooms significantly influence supply and demand. Analyzing asking prices for residential apartments across various locations provides insights into current market trends. Additionally, management fees, demand for sales and rentals, and foreign search traffic for these properties are examined.

The rental analysis includes the average rental prices of apartments and the year-on-year rental variance in high-demand areas. Rental yields and regional comparisons are also provided. Government-led residential condominium projects and middle-income and affordable housing initiatives by the UDA are considered. For investor convenience, popular search areas by price for 2025 are also analyzed./p>

The supply of residential houses in Sri Lanka is continuously evolving, with new constructions and developments taking place regularly. Factors such as location, size, and design significantly impact the supply and demand for houses. Analyzing asking prices for residential houses across different locations offers insights into current market trends. Additionally, the demand for house sales and rentals, as well as foreign search traffic for these properties, are key metrics analyzed.

The rental analysis includes average rental prices for houses and the year-on-year rental variance in sought-after areas. Rental yields and their regional comparisons are also examined. Popular search areas by price for 2025 are also analyzed to assist investors in making informed decisions.

Commercial office spaces play a crucial role in Sri Lanka's real estate market, providing essential infrastructure for business operations. The supply and demand for these spaces are indicative of economic activity, and the impact of the pandemic on office spaces is also discussed. Grade-A office spaces, known for their high quality, are particularly sought after. Information on commercial office space lease rates is provided, helping businesses understand the costs involved in renting office space. These rates vary based on factors such as location, size, and amenities, which are key considerations for businesses seeking to lease office space.

Retail mall spaces are another important segment of Sri Lanka's real estate market. They offer venues for businesses and attract shoppers, with supply and demand differing by location. Retail mall space lease rates are detailed, providing businesses with insights into the costs of renting mall space. These rates can vary based on location, size, and available amenities. Additionally, a field survey analyzes retail mall market penetration, shedding light on the saturation levels in Sri Lanka's retail mall market and its potential impact on the demand for mall spaces.

The land market in Sri Lanka varies significantly by region, with the Western Province being a key area due to its dense population and robust economic activity. An analysis of land prices across different locations provides insights into current market trends. The report includes data on annual land price changes in Sri Lanka and highlights the cities in the Western Province with the highest price appreciation.

Graphs illustrate the land value appreciation rate versus land price, covering the past five years, and comparing 2024 to 2025. They also show appreciation rates for the most in-demand cities in the Western Province. Additionally, the report examines land prices along Grade A roads, beachfront properties, and cultivated lands.

The demand for land is also analyzed, including metrics such as search traffic, overseas search traffic, and searches by land type, offering a comprehensive view of market dynamics.

Hotels and tourism in Sri Lanka are integral components of the country's economy, driving economic growth and employment. The sector offers a diverse range of accommodation, from luxury resorts to budget-friendly guesthouses, catering to a broad spectrum of travellers.

Sri Lanka's tourism industry highlights the country's rich cultural heritage, scenic landscapes, and biodiversity. The sector is supported by government initiatives to promote sustainable tourism practices and improve infrastructure. Hotels and tourism in Sri Lanka are vital for generating foreign exchange earnings and fostering socio- economic development in local communities. The industry continues to evolve, adapting to global trends and expanding its offerings to meet the diverse needs of travellers worldwide.


Table of Contents

  1. Fitch Upgrades Sri Lanka to CCC+

    1. Key Rating Drivers

    2. Fiscal and External Finances

  2. Population and Demographic Trends

    1. Population Growth and Urbanization

    2. Household Income and Spending Patterns

    3. Migration Trends and Their Impact on Housing Demand

  3. Foreign Direct Investments (FDI)

    1. Approved Projects under BOI

  4. Economic Recovery

    1. Real Gross Domestic Product (GDP)

    2. Inflation Rates

    3. Policy Interest Rates (CBSL)

    4. Exchange Rates

    5. Treasury Bill Rates

    6. Commercial Bank’s Interest Rates

    7. Home Loan Rates

    8. Imports and Exports

  5. Environmental, Social and Governance (ESG) Considerations

    1. ESG Ratings and Impact on Real Estate Investments Sensitivity

    2. Banking Sector Vulnerability and ESG Sensitivity

    3. Public Finance and Sustainability Challenges


  1. Current and Future Residential Apartment Supply

    1. Residential Apartment Supply in 2024

    2. Projected Residential Apartment Distribution by 2027

    3. Residential Apartments Supply by Location

      1. Newly Launched Apartments in 2024

      2. Apartment Projects that Halted Construction Midway

    4. Price Trends: Average Sqft Price vs Distance from Colombo 01

    5. Demand Trends: Demand vs Distance from Colombo 01

    6. Search Trends for Residential Apartments

  2. Asking Price Analysis of Residential Apartments

    1. Price Comparison with Other Asian Countries

    2. Asking Price Analysis by Category

      1. Year on Year Price Comparison

    3. Average Unit Price vs Distance from Colombo 01

    4. Most In-Demanded Areas in Colombo 01-15 and Suburbs

  3. Management Fees and Other Costs

    1. Management Fee Analysis

  4. Secondary Market: Residential Apartment Rentals

    1. Asking Price Analysis for Rentals

    2. High Demand Areas in Colombo 01-15 and Suburbs

    3. Gross Rental Yield Trends

    4. Rental Yield Comparison by Region

  5. Residential Apartment Market Outlook


  1. Construction Cost and Market Trends

    1. Construction Cost Overview

    2. Cost Indices for Various Construction Work

    3. Supply Chain Challenges and Material Price Trends

  2. Housing Market Demand Indicators

    1. Search Traffic of Residential Houses

    2. Buyer Preferences and Changing Trends

    3. Impact of Mortgage Rates on Demand

  3. Residential Sales Market Analysis

    1. Secondary Market Asking Price Trends

    2. Average Sqft Prices vs Distance from Colombo 01

    3. Demand vs Distance from Colombo 01

    4. Most In-Demanded Areas in Colombo 01-15 and Suburbs

  4. Residential Rental Market Analysis

    1. Rental Price Trends and Market Overview

    2. High Demand Areas in Colombo 01-15 and Suburbs

    3. Gross Rental Yield Analysis by Location

  5. Residential Housing Market Outlook


  1. Commercial Office Space

  2. Commercial Retail Malls

    1. Overview

    2. Current Landscape

    1. Global Trends Shaping the Future of Shopping Malls

  3. Opportunities

  4. Lease Rate of Commercial Retail Malls

  5. Market Penetration by Category in Key Retail Malls


  1. Land Price Index and Annual Price Variation

    1. Top 10 Cities with Increased or Decreased Prices

    2. Per Perch Price Change in Western Province (Q1 2020 to Q1 2025)

    3. Asking price for lands in Colombo 01-15

    4. Search Traffic for Land

    5. Searches by Land Type

    6. Asking Price for Lands in Colombo Suburbs

  2. Per Perch Price Increase % (2024 Q1 – 2025 Q1)

  3. Perch Price Increase % (2020 Q1 – 2025 Q1)

    1. Most In-Demanded Cities in Western Province (Excl. Colombo)

  4. Land Price Movement along Class A Roads

    1. Kandy Road (A1)

    2. Galle Road (A2)

    3. High & Low-Level Roads

    4. Panadura – Rathnapura Road (A8)

  5. Price Per Acre for Cultivated Lands

  6. Asking Price Per Perch for Beachfront Lands

  7. Land Market Outlook


  1. Economic Contribution of Tourism

  2. Key Trends

  3. Unveiling Sri Lanka’s Tourist Pulse

  4. Accommodation Rates and Facilities

  5. Distribution of Rooms by District

  6. Opportunities for Mixed Use Developments

  7. Tourism Sector Outlook

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