Sri Lanka’s property market comes of age in Colombo’s suburbs and other cities

Rising property prices in the city centre have created a sub-market on the outskirts of the commercial hub, where the highly populated middle income group can more easily afford to purchase or rent homes. While Colombo has been attracting a growing luxury living segment, developments such as Altair, Clearpoint Residencies and Destiny projects have been launched to cater to this market. Yet the segment is showing signs of steady growth.

Outside of the Colombo district, property seekers have been showing interest in two other major regions: Kandy and Gampaha. Comparison of onsite data from leading property portal Lamudi Sri Lanka between Q4 of 2014 and Q1 2015 indicates a 40 percent growth in search for properties in the Gampaha region and 31 percent increase for Kandy. Investors have been focusing mostly on the Colombo district to satisfy residential needs and benefit from the commercial sector growth. However, local developers such as Prime Lands Group have been focusing on investing in such growing areas.

In recent times, Colombo has held the ground for the highest population with 2,316,000 inhabitants, followed by Gampaha with 2.3 million people, according to the Department of Census and Statistics. The population of Colombo contains a growing percentage of people who commute to the city for work, education and other services. One of the significant reasons behind travelling from the outskirts of the city is the difference in housing prices between the two areas. Data from Lamudi Sri Lanka reveals mid-range homes are priced between Rs. 4 and Rs. 8 million in Gampaha, whereas non-luxury homes in central Colombo range between Rs. 14 million and Rs. 25 million.

Many people prefer to purchase homes on the outskirts of the city and travel to Colombo on a regular basis for work or leisure. Lamudi Sri Lanka Managing Director Hugh van der Kolff said: “With the well-maintained highway from Katunayake to Colombo, travelling to work does not consume a lot of time. In addition, first-time homebuyers would be able to invest in a reasonably sized home in Gampaha for a lower outright purchase price or mortgage”.

With a much smaller population of 1,375,000 people, Kandy is an up-and-coming town in the country. The region’s climate and attractions have caught the attention of tourists and locals, consequently creating opportunities for hotel investments and work in the tourism industry. In addition, the local property market has been boosted thanks to city-dwellers who often move back to their hometown for retirement, while others look towards investing in a holiday home in Kandy due to the high quality of life and lower property prices. Similar to Colombo where vertical living is becoming popular, sky-high apartments and condominiums in Kandy now attract a large number of buyers who are drawn to the possibility of living in a luxury home with scenic views.