Raising several warnings of a possible slowdown in real estate transactions in the country due to increases in interest rates and the consequences of inflation, KPMG Sri Lanka in a report titled ‘Changing Cityscape’ stated that the local policy environment and stable economy were adequate to influence real estate growth.
The recent increases in interest rates and the consequences of inflation is likely to slow down the momentum of real estate transactions, KPMG Sri Lanka and Research Intelligence Unit in a recent report warned.
However, despite the high interest rate which is considered to be higher than international standards, the local policy environment and the stable economy was adequate to encourage real estate growth.
According to the report, the growing number of collaborations between locals and foreigners, including expats, are key drivers of the Sri Lankan property market.
The first quarter of 2012 witnessed a number of real estate developments with leisure projects contributing a major share. The land mark deal of 800 perches facing the Galle Face Green has triggered investor confidence both locally and internationally, KPMG Sri Lanka said.
With the current room capacity of the country being insufficient to meet the growing demand in the tourism sector, many international firms are eyeing Sri Lanka for possible opportunities.
For the first time in the country’s history the leisure sector outpaced housing as the driving force of Sri Lanka’s construction industry.
With the limited availability of land in the capital of the country, the land prices are expected to further increase, currently the price per perch ranged from eight to ten million rupees, the report revealed.
With the Urban Development Authority holding large parcels of land in the central city the supply is essentially low with privately held land parcels according to the report being small scale would not be adequate to meet the requirements.