Sri Lanka land prices rising faster: Jones Lang LaSalle
ECONOMYNEXT – Sri Lanka’s land prices which used to go up by 3 to 7 percent a year has started accelerating, rising 10 percent over past year, a top official of Jones Lang LaSalle, a real estate consultancy said.
"We have seen prices going up by 10 percent across and in the CBD (central business district) even higher," Gagan Singh, CEO – Business India & Chairperson Sri Lanka Operations told reporters in Colombo.
"There is optimism, there is buoyancy."
She said given the incentives announced in the budget, and measures under discussion there will be more investment and opening up of the economy.
The current administration has relaxed foreign investment is land, which were tightened under a ‘rural nationalist’ framework under the last regime.
JLS said there was strong demand for retail space with landlord demanding rent increases of over 30 percent, threatening the viability of some businesses.
From the second half of 2015 strong demand had come for office space with rents rising about 10 percent, she said.
"In retail the supply crunch is more," Singh said. "High street space is highly limited. Here too activity has been high and landlords in this case are asking for rents of 30 percent or more.
"And the occupiers are really struggling with the viability and are doing their best to push back."
However in residential apartments supply was strong and promoters may not be able to sell units as quickly as they used to in the past, she said.
Some analysts have warned the record low interest rates and money printing by the Central Bank may fire an asset price bubble in property.
Low interest rates from 2004 to 2008 generated mostly by fiscal dominance of monetary policy fired a property bubble that led to the crash of many sub-prime non-bank lenders in the country.
Sri Lanka’s central bank has a habit of suppressing market interest rates and then being forced to sharply hike rates leading to a ‘hard landing’ in the economy. (Colombo/Jan14/2016)