High costs lead to low demand in property market : Analysts
View(s):While Sri Lankan property market is expected to thrive in the medium to long term with aspiring economic and infrastructure development in the country, analysts say that the high interest rates, construction costs, weakened local currency and adverse taximposition on foreign expatriates on real estate in recent times have led the property market to witness a temporary setback in demand.
Currently, the rental yields for luxury and semi luxury apartments are between 6 and 7 per cent, whilst the average outright price of a three bedroom apartment ranges from Rs. 30 million to Rs. 80 million in the city and Rs. 15 million to Rs. 40 million in suburbs, according to a TKS Research report.
It said that the commercial hub Colombo and its suburbs have witnessed a steep increase in its property prices in the last 3-4 years.
“The demand for quality commercial space is rising against a dearth of supply, creating a huge opportunity for both existing and future office space developers,” it said, adding that the current rental yield for A-grade office space varies from 7-9 per cent in the key locations, whereas the same for second tier office space varies from 5-6 per cent.
In the meantime, there are high prospects for the country to emerge as a global IT BPO destination in the next couple of years with the large pool of talented IT personnel and favorable infrastructure such as lowest data tariffs. However, the report highlighted that the lack of sizeable spaces to cater such large scale operations is a constraint for the industry; hence a significant opportunity prevails for other developers to build such mega facilities.
Despite the aspiration to become a future shopping destination, the country lacks shopping space which currently is about 500,000 square feet of retail space. “This area is estimated to expand by nearly 2 million square feet in the next 2-3 year period on the back of the proposed mixed development projects.”
Meanwhile the unmet demand for parking slots in the city and suburbs is rising in the burgeoning economic landscape, the report said, pointing out that proper standalone car parks in the city are yet to be seen and car parks as a pure business venture is still in its infancy, yielding about 4-5 per cent and has great potential to grow in the coming years.
comments powered by Disqus