Most condominiums (considered luxury real estate) in the country’s business capital of Colombo experience an average pre-construction sale ratio of around 50%, according to a report by the local office of global big four audit firm KPMG, in conjunction with Research Intelligence Unit (RIU).

The report titled ‘Sri Lanka Real Estate Market Brief’, said that “more prestigious developments like the Empire, Lumiere and Trillium tend to sell around 80% of their units by completion of construction. Meanwhile, the established buildings like Royal Park and Iceland Residencies have very few apartments available for sale or re-sale.”

The report further revealed that “around one quarter of apartments in two new high-rise projects scheduled for construction by one of Sri Lanka’s main condominium developers have been reserved even before construction has started. Out of the 226 apartments built in the first phase, only 10 remained to be sold.”

At the same time, it also emerged that this was not always the case with regard to the apartment segment in general. The report quoted Priyantha Perera, Group Director of Sierra Construction and Chairman of the Contractors Association of Sri Lanka, as stating: “Currently, we have too many apartments in Colombo where the market is over-supplied. Most people who buy these apartments do so for renting out and very few actually live there. If we take Colombo 06 for example, we find that since the dawn of peace, people who originated from the north have now returned to Jaffna and surrounding areas. This has resulted in a slackening of demand for high-end properties that were previously experiencing strong demand from locals and expats.”

Additionally, the report also cautioned that, as most condominium sales were due to Sri Lankans currently living abroad, this may not be a sustainable source of future sales. However, also added was that “we can note that on the supply-side, developers have been actively expanding the number of condominium projects that silhouette the landscape. For the most part, RIU research indicates high levels of occupancy with pre-sales moving fast enough to encourage further entry of players and projects.”

The reports commented that an “overwhelming factor that impacts the land market is the heavy presence of the state and the dynamics within various state bodies, especially in Colombo 01 and 02. For example, according to RIU sources, the D.R Wijewardene Mawatha and Banking Square areas of Colombo 01 used to be owned by various state institutions like the [Colombo Municipal Council] and the Ports Authority.

It also stated that “the future land market in the inner city area is likely to be drastically transformed towards an exclusively high-end area” and that “those that do hold private property in the inner city areas are likely to witness significant appreciation in prices.”