Colombo’s looming housing crunch: Brace yourself for rising apartment prices

As the Sri Lankan economy continues to grapple with the effects of the recent economic crisis and the slow pace of recovery, the country’s real estate market is also struggling to cope, particularly since the upcoming housing crunch in Colombo is now starting to raise concerns for both developers and prospective homeowners alike.

Colombo’s current inventory of apartments is expected to sell out soon, and contrary to popular belief, only a handful of new projects are currently in development as most developers have been adversely affected by the crisis- thus it is likely that the market will face a shortage of apartments.

Worrying trend
This is a worrying trend to point out, as this indicates that the limited availability of apartments will lead to a surge in apartment prices, making it difficult or near impossible for prospective homeowners to find affordable housing in the city.

The housing crunch in Colombo is not only a concern for developers and prospective homeowners but also for the overall economic growth of the country. The lack of affordable housing can lead to a decrease in workforce, as people may not be able to afford living in the city and may have to relocate to other, more sub-urban areas. This could have a significant impact on the demand for goods and services and ultimately affect the country’s economic stability.

However, Sri Lanka has received a $3 billion loan from the International Monetary Fund (IMF) to help resolve the spiralling economic crisis that began after Sri Lanka defaulted on its debt in April 2022. 

To address the upcoming housing crunch in Colombo, it is imperative that the Sri Lankan Government takes proactive steps to incentivize developers to invest in new projects. This could include offering tax breaks and other financial incentives, as well as streamlining approval processes and providing infrastructure support.

By encouraging the development of new housing stock, the government can not only help to alleviate the shortage of affordable housing in Colombo but also boost economic growth and create job opportunities in the construction sector. This, in turn, could help to stimulate demand for other goods and services, contributing to the overall development of the country’s economy.

However, given the current state of the real estate market and Sri Lanka’s economic situation, it is unlikely that these incentives will have an immediate impact, indicating that it could be a while before developers are able to make sizeable investments in new projects, leaving a gap in the market for new housing options.

Industry’s future
As the Sri Lankan real estate sector confronts the challenges of a post-crisis landscape, it’s clear that the future of the industry depends on the ability of local developers to adapt and innovate. The upcoming housing crunch in Colombo is just one of the many obstacles that developers must overcome to succeed in the market. But with the right mind-set, strategies, and partnerships, there is still a path forward for the industry.

Iconic Developments is well-positioned to navigate the upcoming housing crunch in Colombo. Iconic Developments has established itself as a leading developer in the Sri Lankan real estate market, with a reputation for delivering innovative and high-quality projects that meet the evolving needs of the market. The company’s commitment to excellence has earned it a loyal customer base that values its attention to detail, customer satisfaction, and sustainable development practices.

Highly sought-after developer
Iconic Developments’ track record of success, commitment to excellence, and customer-centric approach make it a highly sought-after developer in the Sri Lankan real estate market, poised to navigate the upcoming housing crunch in Colombo and deliver sustainable, innovative projects that meet the evolving needs of the market.

Moreover, Iconic Developments has already taken steps to ensure that it has a strong pipeline of projects in the coming years. By strategically acquiring land in key areas of Colombo and investing in the latest technology and construction methods, the company is well-equipped to deliver new projects that meet the evolving needs of the market.

In conclusion, while the challenges facing the Sri Lankan real estate industry are daunting, the future remains bright for developers who are willing to adapt and innovate. By focusing on quality, sustainability, and customer satisfaction, developers can thrive in the post-crisis landscape, and create a better future for everyone.
(Rohan Parikh is the Managing Director of Iconic Developments and has had a 20 plus year career in Real Estate Development and graduated from the Wharton School of Business in the U.S.)