Colombo outskirts better for real estate investment ~ study
View(s):While the ‘apartment’ gold rush happened in Colombo, other cities in the suburbs are now outstripping this competition. While much development has focused on Colombo, improved transport infrastructure is expected to open up opportunities for property investment in areas away from Colombo and more recently, its immediate surroundings.
A study published by Jones Lang LaSalle, confirms this notion.
Their report titled ‘Real Estate in Sri Lanka – Prospects and Potential -Translating Economic Growth into Real Estate Developments in Colombo’ says that owing to an increase in price within Colombo city, a rising percentage of the working population is moving to the suburbs, which are much cheaper in comparison. This is a trend that many builders see and has cottoned onto.
“We definitely see an increase in demand for housing in places like Rajagiriya, which is why we are constructing over there. City Center (which is now being built) is definitely highly priced for professionals,” Rohan Parikh, Managing Director, Iconic Developments told the Business Times.
“Due to increase in price within Colombo city, a rising percentage of the working population is moving to the suburbs, which are much cheaper in comparison. A house in the bordering areas of the city is 26 per cent cheaper than a similar house in the city centre. These clear economic advantages predict a shift toward demand for housing on the outskirts of the city limits,” says the report. It further added “Sri Jayewardene Kotte, witnessed relocation of major administrative offices and residences leading to a further spurt in real estate activity it is fast becoming a retail and residential (high and middle-income) destination.”
Rajagiriya is a classic case in point. Located between the rapidly developing Battaramulla/Kotte and the always-in-demand Colombo, land prices in Rajagiriya have, curiously, not kept pace with its flashier neighbours, it said.
“The rise in real estate values in both Colombo and Kotte has suddenly made land in Rajagiriya, situated on the immediate eastern border of Colombo cheap in comparison. One of the crucial areas identified by the Kotte city development plan 2008 -2020, Rajagiriya is identified as a mixed development zone with both residential and commercial values and is recognized as one of the most transit areas of the capital. The flyover, under construction right now designed by the RDA to blend in with city architecture, attempts to address this critical situation.”
One company that has seen the mismatch of land prices to demand in Rajagiriya and moved swiftly to exploit the opportunity is Millennium Housing Developers PLC (MHD).
Having ascertained that demand for apartments priced around Rs. 25 – 35 million is growing faster than in other price bands, especially for those on the city’s border, MHD secured properties at Edmonton Road, Kirulapana, then Nawala Road, Narahenpita (Colombo 05) and now at 504, Rajagiriya Road, Rajagiriya.
Iconic also feels the same way. “Our project costs about US$130 per square foot. Projects in the City Center can be up to $300-400 per square foot. Thus, there is a huge difference in price. We believe that with improving road connections, the suburbs like Rajagiriya, are the best investments. As roads improve, their value will rapidly increase,” Mr. Parikh said. (DEC)