Colombo Property Market Monitor 1Q22

Sri Lanka clocked a GDP growth of 3.7% in 2021, recovering from the contraction of 3.6% in 2020. Despite strong exports and rebounded remittances during 1Q22, the economic performance remained subdued, mainly due to exacerbated difficulties in the external sector, which disrupted the daily market operations and economic activities. However, the economy is anticipated to gain headway with the tightened approaches in monetary policy enacted during 1Q22.

During 1Q22, the overall Colombo office market rentals surged notably, driven substantially by the significant depreciation of LKR against the USD. Consequently, Grade A buildings with moderate rentals experienced heightened occupier activity. Luxury and premium residential market demand buoyed amid the challenging environment. During 1Q22, moderate leasing activity provided relief to the prolonged muted retail market due to the festive season. The industrial market continued to remain resilient with strong demand and notable developments.
 

Key highlights

• Dwindled foreign reserves challenged economic activities

• Office market rentals notably surged

• Residential market demand remained persistent

• Fashion and apparel industry boosted moderate retail leasing activity

• Industrial and warehousing market witnessed significant development