Sri Lanka commercial space being snapped up: JLL
ECONOMYNEXT – Sri Lanka’s commercial space developers in the capital Colombo, are finding that new buildings coming to the market are being occupied quickly despite higher rents, indicating growing demand, James Lang LaSalle, a property consultancy said.
Sri Lanka’s had ‘Grade A’ office space of about a million square feet was about 95 percent occupied, Sunil Subramaniam, Head of Transactions at JLL in Colombo said.
"That means there is not enough supply," he said.
Demand was being driven mainly by domestic firms. Many companies which were in lower grade accommodations was moving up to better quality spaces or consolidating, which was driving demand.
Due to weak foreign direct investment, international firms looking for space was not a big driver of demand. In any case new firms first started small.
High electricity tariffs made operating costs in Colombo high compared to the region, officials said.
In the last two years about half a million square feet of space had come to the market and had been occupied.
New Grade A was coming up with few building under construction including Shangri-La and Cinnamon Life.
Domestic ‘Grade A’ rentals ranged from 250 rupee a square foot to about 380 rupees, with only one or two buildings of international quality.
Rentals have almost doubled since the end of a war in 2009.
The most popular areas were in central bank business district in Colombo 1, Colombo 2 and Rajagiriya.
But with rising rents, secondary areas like Colombo 5, 8, 9 were seeing more developments.
Sri Lanka’s shopping malls were also not of international quality, Subramaniam said.
Colombo’s main malls were developed around 20 years ago.
However in several new developments, international grade malls were being planned with global brands as anchor clients.