A recent study on the House Price Index developed by LankaPropertyWeb, which is based on the asking prices of its listings, revealed that the overall residential land prices (per perch) had soared by 44.19 percent from 2Q 2020 to 2Q 2021. 

Four-bedroom house sale prices had increased by 15.68 percent from 2Q of 2020 while average three-bedroom apartment prices had risen by 2.64 percent.

However, in Colombo, when compared to 1Q of 2021, the average apartment selling prices had increased by 3.1 percent in 2Q, with the average selling prices of apartments being Rs.49.93 million for a three-bedroom apartment. The apartment prices have also seen three consecutive quarters of growth in asking prices, with values heading towards their peak levels during 2018. This could be fuelled by the increase in construction costs and buyers realising that now is the best time to invest in apartments as new developments cannot be built or sold at these prices in the future, with a sharp increase in construction costs. 

Further, the LankaPropertyWeb listing prices revealed that the average price of a four-bedroom house in Colombo during the second quarter was at Rs.170.84 million, while three-bedroom apartments were priced at an average of Rs.51.57 million. 

When compared to the overall changes in property prices for houses and apartments, these fluctuations are evidence of the continuous improvements in property demand in the Colombo city. 

With Colombo Port City Economic Commission Act, No.11 of 2021 passed three months ago and estimates of it said to add US $ 4.5 billion during its initial years, it is expected that the property prices are to soar further in the metropolitan city as the demand for residential rental property rises with the development in Colombo Port City.
In terms of land, a study on the average prices for 2Q in 2021 revealed that the selling price for a land plot in Sri Lanka was Rs.2.48 million. However, the residential land prices in Colombo were recorded at 11.92 million per perch, which is a 79 percent premium from the overall land prices of the country.

Besides the Colombo city, the land prices in the Western province had also increased by 19 percent when compared with 1Q of 2021, while the land prices in the Uva province had reduced by 18 percent. 

Unlike most countries in the world, the Sri Lankan real estate market has maintained its stability despite facing three COVID-19 waves. Between the second quarter of last year, where the pandemic struck in Sri Lanka at its worst to the current quarter this year, fluctuations in the property prices have remained relatively less volatile.

According to the Sri Lanka Customs (Policy and Strategic Planning Division Sri Lanka’s export performance January-May  2021), with the merchandise exports increasing by 50.71 percent when compared with May 2020 and 2021 and rubber-based product exports improving by 78.12 percent, the opportunities for exporting have relatively increased despite the pandemic. As a result, the prices of tea and rubber lands have also seen positive influences, with minor increases in price. Between 2Q of 2020 and 2021, the tea land prices have increased by 14 percent while the prices of rubber lands grew by 2.2 percent. 

Average land price fluctuations in Western province
In the Western province between 1Q of 2020 and 2021, seven cities experienced average price increases by over 50 percent. Ingiriya in the Kalutara district recorded an increase of 109 percent followed by Ragama, where the land prices increased by 76 percent. Lands in Padukka increased by 74 percent, with the prices in Angoda rising by 69 percent, Dompe by 67 percent and Peliyagoda by 62 percent. 

Lands in Moratuwa also improved by 56 percent, with the demand for property increasing over the years in areas such as Rawathawatha in particular.

During the same period, certain cities also experienced a reduction in average land price values. These included Rajagirya, Athurugiriya, Gampaha, Gothatuwa, Kesbawa and Negombo. The land prices of high-demand cities such as Dehiwala increased by only 4 percent, Mount Lavinia 8 percent, Kelaniya 13 percent, Rathmalana 20 percent and Thalawathugoda 
17 percent.