Condo market continues to recover as single projects remain favourites among buyers

• Red-hot condo and housing markets offer diverging realities of Sri Lankan economy

Sri Lanka’s condominium market added more strength in the final quarter in 2021, continuing from the recovery seen from the third quarter, as people continued to choose vertical living in the city and its outskirts for increased convenience.

According to the fourth quarter Condominium Market Survey conducted by the Central Bank, which was published last Friday, the Condominium Property Volume Index, which gauges the relative strength of the industry based on sales, reached 250 index points, from a range of 150 to 200 index points in the third quarter, signalling higher take up in units. 

In the fourth quarter in 2020, the index hit a multiyear high of around 260 levels, the highest since its previous high of 310 reached in the first quarter 
in 2018. 

“The Condominium Property Volume Index has increased significantly during 4Q, 2021, with a notable increase of 49.0 percent, compared to 4Q, 2020 and with a growth of 48.4 percent compared to 3Q, 2021”, the Central Bank said releasing the survey results. 

The new and attractive projects, which are coming up both in the urban and suburban areas and the construction sector revival seen from the immediate aftermath of the pandemic, due to a combination of favourable factors, helped the condominium market to recover quickly even under no so favourable conditions came from the pandemic-induced lockdowns. 

The ultra-low interest rates prevailed since the third quarter of 2020 were the biggest catalyst for the condominium market turnaround in 2020 and 2021. 

“In the backdrop of inflationary pressures and relatively low levels of return earned on traditional investment avenues, investors are moving toward non-traditional investment avenues, among which investment on apartments is becoming increasingly popular,” the Central Bank said. 

Sri Lanka has a red-hot housing market, where the prices of apartments hit the highest levels in the last 10 years in the final quarter in 2021. 

According to the House Price Index compiled by Lankapropertyweb Research, Sri Lanka’s premier online marketplace for real estate of all kinds, between 4Q 2021 and 2020, the apartment values have increased by 17.68 percent, with the selling price of a three bedroom unit in Colombo having risen by 24.11 percent.

Meanwhile, “An observable shift is seen in the price categories of transactions. While 77 percent of transactions were priced below Rs.25 million a year ago, it has reduced to 49 percent in 4Q, 2021”, as more people are now buying units priced over Rs.25 million and Rs.75 million. 

“Moreover, the single condominium projects in the Colombo district remain to be the most preferred category in 4Q, 2021,” the survey found. 

Meanwhile, it was also found that “most condominium buyers were Sri Lankan residents and only a few condominiums were purchased by dual citizens and foreigners”. 

However, the headline numbers of the Sri Lankan economy were languishing. But the Sri Lankan media is overwhelmed with footages and headlines of daily sufferings of scores of people on the streets queuing up for kerosine, other fuels, cooking gas and milk power while the prices of all commodities have soared by between 30 to 100 percent in the last two weeks alone.