Sri Lanka’s luxury residential condominium prices would stagnate or come down in 2018-2020 due to large levels of unabsorbed supply, Ravi Abeysuriya, group chief executive of Candor Group said.
“Some developers may use more aggressive competitive tactics due to threat on profitability,” he said speaking at the Lanka Property Web Investor Forum 2017 in Colombo recently.
“Significant demand from untapped sources such as foreign high net worth individuals are needed as the supply glut is mostly present in the luxury segment.”
Over 5,000 units are expected to become available in the next three years with about 2,800 in 2018.
Abeysuriya says this level of supply may not be absorbed with current sources of demand.
“However, large price corrections are not expected due to the low level of leverage in the system and large pool of constrained investors.”
“The state has a role to play by improving investor confidence. Capital gains tax may dampen demand from investment driven investor class.”
Roshan Madawela, chief executive of the Research Intelligence Unit, a firm which specialize in real-estate market studies, said that the top end of the market will remain as the most challenging.