Sri Lanka is poised for rapid commercial real estate growth, suggests Gagan Singh, Chairperson for the Sri Lankan operations for Jones Lang LaSalle. A publicly quoted company (NYSE) which offers financial and professional services focused on real estate, the firm recently opened its 81st office in Sri Lanka at the World Trade Centre.
According to Ms. Singh, who was highlighting key indicators from the firm's recently published "Real Estate in Sri Lanka: Prospects and Potential" research report, the island currently has only five million square feet of office space developed, with a further 765,000 square feet under construction and six million square feet proposed for development.
As such, and in keeping with recent trends, the country's office stock will likely multiply by 2.4 times in the next few years, especially since 90% of office space is currently occupied.
She also added that future demand would be driven by the existing sentiment that, because of current space restrictions, occupiers were settling for what was available instead of, ideally, getting a solution that was tailored to their requirements.
Also, she revealed that office space costs in Sri Lanka were "comparable" to those of the Indian commercial hubs of Chennai and Bangalore. And this is even without taking into account natural advantages intrinsic in an island locale.
Additionally, it also emerged in the report that a major driver for real estate in the future would be the Banking, Financial Services and Insurance(BFSI) sector. Extrapolating the recent growth of branch offices needed for this sector, there would likely be demand for 1,800 more locations required by 2015.
Commenting on shopping malls, Ms. Singh noted that there were currently eight local malls which comprised, in total, 0.65 million square feet.
Additionally added, three more malls were coming up over the next three to four years which would contain, in total, 1.05 million square feet.
Further, regarding residential real estate, Ms. Singh suggested that the luxury segment (valued at Rs. 45 million and up) was mostly sold out.
Meanwhile, mid-level properties (Rs. 10 to Rs. 25 million) had a high availability. As such, she concluded that the greatest opportunity in residential real estate was in the highest and lowest ends of the market.