The land market saw substantial interest, with bare land being the most sought-after type at 46%. Land prices in the Western Province saw a moderate increase of 2% from 2022 to 2023, with variations across specific regions and types such as tea, rubber, coconut, and beachfront lands.

Looking ahead, the Sri Lankan real estate sector anticipates the addition of over 8,000 new residential apartment units by 2026, contributing to a projected total of approximately 42,000+ recognized units says the Real Estate Market Outlook Report 2024 (REMOR24) by LankaPropertyWeb, the leading real estate portal in Sri Lanka.

In the residential housing market, overseas interest was also prominent, particularly from the USA, Canada, the United Kingdom, Australia, New Zealand and the UAE. This interest was reflected in increased search traffic and a rise in average selling prices per square foot in Colombo 1-15 and its suburbs.

Notable locations in demand included Negombo for overseas buyers and Battaramulla for local buyers. Colombo 5 emerged as the top location for both overseas and local renters seeking residential houses. It also said that overseas interest in Sri Lankan properties surged by 33% compared to the previous year.

The demand for residential apartments in Sri Lanka is set to dominate the market landscape by 2025, particularly in the Western Province, with Colombo leading at 90.6%, followed by Gampaha at 8.9%, and Kalutara at 0.5%.

The most sought-after apartment configuration remains the 3-bedroom layout. Notably, search traffic for residential apartments saw significant increases from key markets including the USA and Canada (23%), the United Kingdom (20%), Australia and New Zealand (17%), and the UAE (5%), driven by expatriates attracted to the investment potential.

The report also highlights a substantial rise in average asking prices per square foot in Colombo 1-15 and surrounding suburbs. Luxury apartments in the Colombo CBD (Central Business District) area built before 2015 showed a noteworthy 48% increase in square foot prices from 2018 to 2023. In terms of location preference, Colombo 6 ranked highest among overseas buyers for purchasing residential apartments, while Colombo 2 was preferred among local buyers. For rental preferences, Colombo 6 maintained its top spot among both overseas and local renters.

Managing Director of LankaPropertyWeb Daham Gunaratna and Head of Development Consultancy & Research at LankaPropertyWeb Tharindu Jayarathne, noted, “Despite economic challenges, the resilience of Sri Lankan properties as an inflation hedge is evident in the market’s performance through 2023. We anticipate robust growth across sales, rentals, and land sectors shortly.”