Land prices in Western province increase by 74% from 2018 to 2021
According to the annual Land Price Index released by Lankapropertyweb, Sri Lanka’s number one real estate platform, in the Western province (except the Colombo Municipality area) the overall land price values have increased by 74 percent from 2018 to 2021.
The company also revealed that on an annual basis, the increase in average land prices between 2018 and 2021 was 15 percent (annual effective rate). As a result, if an investor were to invest in property and hold it for four to five years, his initial investment would multiply largely over time.
When compared with the fluctuations in interest rates for fixed deposits, these values are a major contrast proving further towards the profitability of the real estate industry in the country.
Between the first quarters of 2019 to 2021, fixed deposit rates have reduced from 11.41 percent to 6.29 percent. While the land price acceleration in the Western province slowed down from 22 percent in 2019 to 18.56 percent in 2021. This is especially significant given that in most countries across the world, the real estate market has experienced major downturns with the spread of COVID-19.
During the last four years, a growing demand for land in the suburbs was also witnessed with price increases being reported from Kolonnawa, Hanwella, Peliyagoda and Welampitiya in the Colombo district. Cities such as Kelaniya, Dompe and Kadawatha in the Gampaha district showed price increases as well, providing further evidence to the changing patterns of Sri Lankan property buyers.
Among these cities, however, what topped the list in fluctuation during the four years was Ingiriya in the Kalutara district. The land prices in the city had experienced a 246 percent increase from 2018 to 2021. This is an annual average increase of 51 percent with a 109 percent increase between 2020 to 2021.
The record of Ingiriya was followed by Angoda (195 percent) that ranked the second and Kolonnawa (183 percent), which had the third highest land price fluctuations from 2018 to 2021. The data further revealed that on an annual average basis, the increase in land prices in the former between 2020 to 2021 was 69 percent while the latter was at 4 percent. Commenting on this Lankapropertyweb Head of Research Tharindu Jayarathne said, “When we analyse the land price movements for the last four years, it is inevitable that the demand has driven away from district capitals to suburbs, which have development agendas. Most prices are tagged with infrastructure development prospects.”
With the changes in infrastructure taking place across the Western province, people’s motive to shift towards the suburbs of Colombo and other parts of the province has continuously risen over the years. Budget proposals towards housing development plans, highway construction projects and transportation convenience of non-durable products like vegetables, has led to certain cities experiencing triple digit appreciation during the four years.
In Colombo this was recorded in Angoda, Kolonnawa, Hanwella, Peliyagoda, Wellampitiya, Hokandara and Homagama. While in the Kalutara district, triple digit land price increases were seen in Ingiriya and Wadduwa. In the Gampaha district Kelaniya, Dompe and Kadawatha showed similar patterns as well. Besides the increasing trend in prices, lands in certain parts of the country still remain quite affordable and under a price of less than Rs.1 million. However, these lands also experienced an appreciation of over 100 percent per perch since 1Q of 2018.
Hanwella in the Colombo district and Dompe in the Gampaha district showed hikes of 168 percent and 156 percent during the four years, with an annual average rate of 39 percent and 37 percent, respectively, in the ‘under one million per perch’ segment.
A highlight in this data is that lands in Homagama also fall into this category of ‘Under Rs.1 million’. The land price data showed a fluctuation of 103 percent from 2018 to 2021 and an annual average of 26.62 percent (annual effective).
As of this year, the government announced that over eight development projects are to be commenced in Homagama. These projects include a wholesale exchange centre in Meegoda, a granary in Dodagama, a sports city in Diyagama, a knowledge city and mega supermarket in Homagama, a biodiversity city in Barawa, an apparel town in Ingirya-dodagama and an export city in Kahathuduwa. This is further expected to drive land prices in Homagama to increase in the near future. The average prices in the Colombo municipality between 1-15 have recorded minor fluctuations when compared to the rising demand for lands in the suburbs. In Colombo 1, 2, 4 and 5, land prices have increased slightly while Colombo 3, 6, 8, 9, 12, 14 and 15 have reduced when compared with the 2020 average per perch prices.
Two years ago, the land prices in these areas were higher and in demand. But with the changing patterns of Sri Lankan house buyers property prices have impacted largely.
While most price fluctuations during the four years were recorded from cities in the Western province, Kandy in the Central province, Galle and Matara in the Southern province and Kurunegala in the North Western province also showed changes in land prices. From 2018 to 2021, the land prices in Kandy increased by 45 percent while in Matara the records revealed an increase of 12 percent.