Real Estate Investment Opportunities in Sri Lanka

After a constant era of remarkable economic growth over the previous decade, Sri Lanka is witnessing an increase in real estate investment. As the nation seeks to gain prominence among South Asian economies, GDP development will coincide with rising wages, resulting in increased demand for higher-quality housing.

Also, increasing demand from local and international companies for quality office and business space is spurring private-sector investment. At Port City alone, the suggested International Financial Center will add 5.65mn square meters of new mixed-use property.

Sri Lanka's economic growth is driven by prominent real estate projects in Colombo from various investors including the US$ 15 billion reclamation project, with an anticipated additional investment of US$ 25 billion in reclamation projects that are all about to reposition Colombo's and indeed Sri Lanka's significance as a leading regional business and financial hub. As the market is at the start of its growth curve, this makes Sri Lankan real estate a fantastic opportunity.

High-quality assets in Sri Lanka give excellent opportunities for long-term returns, particularly in the present situation where asset prices are comparatively smaller than other regional businesses and political centers. Indeed, Sri Lanka is becoming progressively appealing to worldwide real estate investors as a quickly developing emerging market. A recent study by KPMG revealed that the real estate investors in Sri Lanka are being rewarded with ROIs averaging 17% per annum and rental yields of up to 9%.

Sri Lanka has provided a series of increasingly luxurious premium housing developments since the end of the civil conflict in 2009.

• By 2020, more than 6,000 new apartment units will be constructed
• Extensive government investment and private consumption contributed to an impressive 4.5 percent GDP development, according to World Bank estimates
• The luxury market is motivated mainly by local investors from Sri Lanka (61%) as well as expats from Sri Lanka (18%) who are eager to invest in their nation of origin. The rest of the industry includes owners (17%) and institutional investors (4%)
• High-end new-build properties in Sri Lanka achieve an average ROI of 10 percent per annum from drawing board to completion.
• On average, investors entering the secondary market obtained an annual ROI of 15 percent. Historically, prices have increased by 40-45% in the first year to the third year following completion
• Rental returns are a generous 9% per annum, while secondary sector investors average 5-7% per annum.
• Foreign investors are the luxury market's most prominent tenant (67%), followed by local end customers (19%), residents (13%) and foreign visitors (1%)

Regional Sri Lanka, when considering real estate ROI, continues to be appealing as an emerging market. The global economy's favorable perspective is an encouraging indication that the benefits will continue for some time to come.

Recently, developers have brought the real luxury estate into line with top worldwide metropolitan locations, and several new luxuries and branded housing developments – including Cinnamon Life, Altair, Shangri-La at One Galle Face and Ritz-Carlton at The One – have sprung up across the town, with more in the pipeline.
reade more: Real Estate Investment Opportunities part 2
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