Real estate seen as preferred investment for Sri Lankans – survey
View(s):A majority of Sri Lankans prefer to invest in real estate as opposed to the stock market or bank savings, according to a joint survey conducted by LankaPropertyWeb.com and the Real-estate Intelligence Unit (RIU). In one of the most detailed ground surveys carried out about the Sri Lankan real estate sector, 44.1 per cent of respondents said that they prefer to invest in real estate as opposed to the 33.9 per cent who preferred to invest in fixed deposits while 22 per cent indicated their allegiance towards investing in stocks and trusts.
According to a media statement issued on the survey by the two organisations, when investigating users’ psychographic behaviour relating to property selection, the travel time and the neighbourhood locality were identified as the two most crucial aspects sought out, prior to purchase. With the build-up of traffic congestion over the years, reaching the metropolis with minimal time is the core objective of the working community. Additionally, for the middle and upper-middle class communities particularly, secure neighbourhoods play a vital role when choosing living abodes due to family expansion plans.
“The survey also revealed that 58.3 per cent anticipated the property prices to consistently increase in the future.
This prediction is affirmed by the National House Price Index maintained by LankaPropertyWeb.com, whereby over the past four years the average apartment and house prices have steadily escalated in Sri Lanka. With a 42 per cent increase in apartments and 41 per cent peak in house pricing, it seems that this is a nationwide trend,” it said. However, taking only Colombo city into account, the increase was hovering at 23 per cent thus indicating a much more moderate increase within the metropolis when compared to the rest of the island. This could be due to the average house price in Colombo being nearly 2.5 times higher than the national average.
Positive market sentiment overall
The survey also revealed that for the urban property seeker, online mediums have proven to be far more effective when identifying potential properties, with newspapers being voted in as the close second. Thirdly, users also stated that word of mouth of family/friend/acquaintance recommendations proved to be quite effective in their search for suitable properties. Property developers surveyed also indicated that they plan to focus on digital as their main selling channel in future. Daham Gunaratna of LankaPropertyWeb.com, noted that their site has seen a significant increase in the number of published ads along with site visitors in the last few years, with their current ads tally surpassing both print and other digital media.
With regards to the debate on oversupply of the apartment market, 64 per cent of the developers’ response to this question was that they do predict an oversupply in future. However, some also foresee the market settling in to equilibrium, propelled by the expected buoyancy that comes through demographic and economic stability. Commenting on these findings, CEO of RIU, Roshan Madawala said that the number of available apartment units is expected to top 10,000 by 2020 at the top end of the luxury apartment market.
Commenting on the sustained upturn in the apartment market, he noted that “while RIU has been monitoring the real estate market in Sri Lanka now for over a decade, we had to in fact revise upwards our initial forecast for supply as well as land prices due to continued strong demand which has been sustained over the past seven years.” The survey also revealed that a majority of the respondents currently occupied their ancestral homes, whereby 58 per cent were looking to buy a piece of property, in the short to medium term. The full report, which includes the results and analysis for 20 survey questions, can be downloaded from www.riunit.lk and www.lankapropertyweb.com/publications