More demand for lower to mid range apartments – analysts
Anyone in Colombo is reminded daily of the giant scope of development in progress, as cranes line empty spaces throughout the city.
The real estate economy is showing swift development with many luxurious residential and commercial developments on the agenda in Colombo and suburbs. Colombo’s skyline has seen major transformations in commercial and residential construction projects in the past 10 years, but industry analysts warn that this trend may slightly drop in 2017 amidst a cooling apartment market.
In the past, the country was an attractive destination for local and foreign real estate investments. Demand for apartments has exceeded or matched supply for the past several years amid strong signs of economic growth after the war and a broad shift in the housing market in favour of outright purchases against renting, data shows.
The demand for property kept growing at a healthy rate at the time and the return that was made on investments here was extraordinary, according to many in the business. But now many question investing in property in Sri Lanka amidst the current economic conditions.
As it stands, many builders and realtors disagree. Lamudi Managing Director, Jafar Jafarov says that the real estate market in Colombo throughout the years since the end of war, has seen a growth.
“However we can also observe an increase in demand especially for investment in apartments. The reason behind this is that people are much more interested in investing in properties that would guarantee them a fixed annual yield. Thus investing in such luxurious apartments is a better solution and a trend that is currently rising in Sri Lanka due to its strong returns,” he told the Business Times.
According to him the demand for apartments will continue to grow further. “The striking success of Lamudi’s previous Expo which was held last September showed us that people are strongly interested in purchasing and renting out apartments due to its conveniences. However success depends on the amount of research and the capability a developer has to match the demand and the requirements of the market.”
He also added that paying attention to details such as the size of the apartment, number of bedrooms, price and location is exceedingly important when delivering a better product.
When discussing commercial properties, he observed that customers look for flexibility. “Most small scale businesses and start-ups are unable to lock in a huge capital for a longer period of time right away. You need to have options that let customers carry out their businesses with an initial advance payment for a smaller period of time like three or six months. This will encourage small scale businesses to rent out or purchase commercial properties within the city limits.”
Analysts say that high end apartments could well take a hit this year, but the mid to lower end ones may not see the cooling affect that much. “That’s because those buying the last two categories want to be either closer to Colombo or in the suburbs and they can afford these apartments,” an analyst said.