Colombo District’s land value records impressive growth in 1H

Wednesday, 23 August 2023 03:42 - - {{hitsCtrl.values.hits}}

The Land Valuation Indicator (LVI) for the Colombo District has displayed robust growth in the first half of 2023 achieving a remarkable score of 215.3, according to its compiler, the Central Bank said.

The annual increase of 15.2% signifies a noteworthy expansion, reversing the declining trend observed in the LVI over the last two years.

The Central Bank said the rise in LVI has been attributed to consistent upticks across all sub-indicators; Residential, Commercial, and Industrial LVIs, each contributing significantly to the overall upward trend. The respective annual increases in these sub-indicators were recorded at 17.2%, 15.1%, and 13.5%.

During the first half of 2023, LVI demonstrated an encouraging semi-annual growth rate of 4.9% in comparison to the second half of 2022. The Central Bank said the highest contribution to this increase was from Residential LVI followed by Commercial and Industrial LVIs, each playing their part in shaping the overall positive trajectory.

However, while the LVI showcased commendable growth during the first half of the current year, there was a noticeable deceleration in the semi-annual growth rate. This deceleration is indicative of a moderation in the pace of LVI’s expansion, signalling a potential stabilisation in the market.

Analysts said the surge in LVI attests to the buoyancy of the real estate sector in the Colombo District, reflecting healthy demand across various property categories. The substantial increase in all sub-indicators underscores the diverse nature of this growth, spanning from residential to commercial and industrial properties.

The Land Price Index (LPI) compiled from 1998 to 2008 on an annual basis and from 2009 to 2017 on a semi-annual basis, covering 5 DS divisions in the Colombo District. Subsequently, from 2017 onwards, its geographical coverage was enhanced to represent all 13 DS divisions in the Colombo District and hence it was rebased considering 1st half of 2017 as the base period. From 2020 onwards LPI was renamed as Land Valuation Indicator (LVI) and continued to be released on a semi-annual basis.

Per perch, bare land prices are obtained from the Government Valuation Department on a semi-annual basis.

Considering the diverse nature of land use, and the necessity of maintaining homogeneity, three sub-indicators for residential, commercial and industrial lands are computed separately for each DS division using the average per perch bare land price in the area. The LVI is the simple average of these three sub-indicators.