Tracking Real Developments Across Real Estate..!
International property consultancy JLL India has released its latest
research report ‘Sri Lanka – Scaling New Heights’.
In
this report, JLL analyses developments across the real estate spectrum in Sri
Lanka, identifies the demand & supply triggers and outlines Sri Lankan real
estate’s growth opportunities in the future.
Mr. Gagan Singh, CEO –
Business (India) and Chairperson – Sri Lanka Operations says, “Since 2009, improved confidence in the Sri Lankan investment market
has triggered an escalation in property values. Apart from the effect of
infrastructure projects, increased migration into Colombo from the country’s
rural areas and outside its borders and renewed appetite to own property are
raising real estate values. There has also been a steady increase in land
acquisition within the central and secondary submarkets, thanks to limited
availability in the city.
In fact, Colombo witnessed an average increase of 5%
in land prices in the first half of 2014, while select locations within the
central and secondary submarkets saw rapid growth in land prices at around 7-8%
since the end of 2013.”
The report covers:
The Sri Lankan Economy..!
After a brief slowdown in 2012 due to
external uncertainties, the USD 59 billion Sri Lankan economy bounced back
during 2013. Supported by increased domestic demand and improved exports &
tourism, the GDP growth accelerated to 7.3% in 2013 from 6.3% in 2012.
To
improve productivity in the long term and have stable economic progress, Sri
Lanka is proactively investing in various infrastructure projects, from
improving transport networks to telecommunications and electricity generation.
Sri Lanka’s Residential Sector..!
High project development costs coupled with
high borrowing costs for housing loans have breached affordability limits and
restricted home buying prospects for middle class Sri Lankans in Colombo.
Residents with limited income are forced to opt for properties that are at
least 20 to 25 km away from the city limits. The majority of apartment projects in
the central and secondary sub-markets rely solely on investments from HNI
residents, non-residents and foreigners.
Residential Affordability Assessment..
Affordability is calculated on the basis of
the house price to annual income ratio. If the ratio is less than 5:1 the
property is classified as affordable. The income segmentation for urban
locations classified by theIncome and Expenditure Survey 2012–2013 is
taken as a proxy for Colombo’s income segment.
· Only the top 20% of income-earning households, i.e., 17.1% of the resident
population in Colombo, can afford to buy their dream homes in Colombo or its
suburbs.
· Apartments in the central submarket, upper-mid and luxury projects in the
secondary submarket rely only on NRSLs, foreigners or HNW RSLs in Colombo.
Sri Lanka’s Office Sector..!
Colombo has around 2.6 million sq ft of Grade
A office space, less than 5% of which is vacant. The Banking, Financial
Services and Insurance (BFSI) and IT/ITeS sectors are the top two office
leasing sectors in Colombo. While established domestic BFSI companies absorb
office space that is anywhere between 3,000 sq ft and 15,000 sq ft, the IT/ITeS
sector absorbs office modules between 10,000 sq ft and 30,000 sq ft.
Sri Lanka’s Retail Sector..
As a prime business destination and a gateway
for tourists, the retail market in
Colombo is growing rapidly. The increasing disposable income and the rising
living standards of Sri Lankans are changing their spending patterns and
preferences towards better quality branded goods and services.
Sri Lanka’s Tourism & Hospitality Sector..
On the back of the substantial growth
observed in tourist arrivals and revenues since 2009, Sri Lanka’s tourism industry can
look forward to the future with confidence. Interestingly, the tourism sector
directly contributed around 3.9% of Sri Lanka’s GDP in 2013 and is estimated to
have contributed around 3.5% of the total employment in the country. Driven by
the promising growth in the tourism sector, Sri Lanka’s hotel industry has seen
a flurry of activity.
About JLL Lanka..
JLL Lanka is a leading professional services
firm specializing in real estate in Sri Lanka. Based out of Colombo, the firm
provides investors, developers, local corporates and multinational companies
with a comprehensive range of services including research, analytics, project
and development services, property and asset management, integrated facilities
management, real estate capital markets and transactions encompassing
commercial office spaces, hotels, land, industrial, retail and residential
units. The Firm aims to combine local market knowledge with its access to
global multinational relationships and capital sources, to provide Sri Lankan
corporates, government agencies and clients with superior execution, towards
transforming their real estate portfolios into efficient inventories, as well
as in raising capital for real estate assets.
For further information, please visit www.jll.com.lk
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