Demand high for Sri Lanka Grade A property
ECONOMYNEXT – Demand for high-end commercial space in the Sri Lankan capital Colombo remains high, with top commercial developments maintaining close to 100 percent occupancy and being able to increase rents 10-15 percent once in two years, a property consultancy said.
The Research Intelligence Unit said in a statement that, in terms of the total number of office space buildings, Grade A developments only account for a small percentage of the total.
“The Grade A contribution to the cumulative stock is still estimated at around 53 percent due the much larger scale of these buildings,” it said in a report for the first quarter of 2017.
Over the next three years, the island’s commercial property market will see further significant additions to the inventory at the top end of the market with Colombo City Centre, Shangri-La and Waterfront making contributions.
“These mixed development projects will be positioned as commercial destinations that offer premier, state-of-the-art A Grade office spaces integrated with residential, retail and luxury hotels,” the statement said.
“With occupancy levels at the top commercial developments maintaining close to 100 percent over several years now, we can observe that there is still un-met demand for high-end commercial space in Colombo,” Roshan Madawela, chief executive officer of the Research Intelligence Unit said.
“Over the next several years, we expect supply to narrow the gap with demand which will continue to grow in correlation with economic growth.”
Research Intelligence Unit said there is “considerable bargaining power” existing with owners and managers of grade A office realtors vis-à-vis multinational companies and address conscious domestic corporates reflecting inelastic demand.
RIU said that at present owners and managers of premium institutional grade office space in the central business district core markets including postcodes like Colombo 00100, 00200 and 00300 are able to increase rents by 10 to 15 percent once in two years.
(COLOMBO, March 30, 2017)