Property market shows signs of growth despite high taxes, bureaucratic hurdles

Industry experts at the Lanka Property Show 2025 expressed confidence in Sri Lanka’s real estate sector, highlighting its potential for growth despite past economic challenges. While factors such as rising interest rates, currency depreciation, and fluctuating taxes previously impacted the market, experts were optimistic that stabilising interest rates, exchange rates, and tax policies will foster a more predictable and business-friendly environment for investors and homebuyers alike.

Building on this positive outlook, the Lanka Property Show 2025 reinforced the sector’s resilience and promising future. The event featured over 25 premier projects, including highly anticipated new launches, attracting a diverse audience of over 17,000 visitors both in person and virtually. The live stream on Facebook, LinkedIn, and YouTube also garnered an impressive 59,721 views, further cementing the show’s success. The strong turnout and enthusiastic engagement from buyers, investors, and industry professionals underscored the sustained demand for real estate in Sri Lanka.

Now in its ninth edition, the Lanka Property Show (LPS) — the country’s largest property expo  — was held on 15 and 16 February at the Kingsbury Hotel. Since its inception in 2017, the event has grown significantly, and in recent years, it has evolved into a hybrid physical and virtual show. This year saw an increase in visitors and exhibitors, reaffirming that buyers are actively returning to the market after the pandemic and economic downturn.

As in past editions, the Lanka Property Show 2025 hosted two engaging panel discussions, offering valuable industry insights. The first session delved into the growth and future of Sri Lanka’s property sector, examining key trends and market projections.

Kicking off the discussion, former Governor of the Central Bank Dr. Indrajit Coomaraswamy, shared his perspective on the evolving economic landscape. He noted that, unlike in the past, challenges such as high interest rates, currency depreciation, and tax instability are expected to stabilise. This shift, driven by stricter fiscal policies introduced through the Public Finance Management Act and the Central Bank Act, is set to create a more predictable and investment-friendly environment.

Discussing the current market landscape for developers, Prime Group Chairman, Premalal Brahmanage, highlighted that Sri Lanka has the highest construction costs in South Asia, making property development more expensive and limiting the supply of affordable housing. He emphasised the financial burden on developers, stating that from the first bag of cement to the final sale, direct and indirect taxes can account for up to 40% of each property transaction.

With the real estate industry contributing around 7% to the country’s GDP and generating substantial tax revenue, he urged the Government to provide greater support to the sector to ensure its sustained growth and affordability for buyers.

To address these challenges, the industry is actively exploring innovative solutions such as cheaper financing options, enhanced supply chains, and advanced construction techniques to improve affordability and sustainability in the market, added Brahmanage.

In summary of Brahmanage’s comments, the moderator, Dhananath Fernando, remarked, “it sounds to me like you’re in the business of paying taxes and in the middle of it building some property”.

Addressing the challenges developers face in attracting foreign buyers, Platinum Realty Investments Managing Director Kishore Reddy, urged the Government to expedite the implementation of investor visas. Despite being gazetted, these visas remain difficult to obtain, posing a barrier to international investment in Sri Lanka’s property market. He highlighted the need to make housing more affordable by addressing import barriers on essential building materials such as tiles, aluminium, and other construction materials. The imposition of cess and high duties on these imports increases construction costs, ultimately impacting both developers and buyers. By reducing such restrictions, the Government can facilitate more cost-effective development. He also noted that while the Rupee has depreciated against the dollar, property values have risen proportionally, ensuring that investors have not faced losses. This natural market adjustment, he emphasised, reinforces the view that real estate remains a secure and reliable investment option.

The panel discussion, moderated by Advocata Institute CEO Dhananath Fernando, also featured John Keells Holdings PLC Vice President Nadeem Shums and Sri Lanka Atomic Energy Regulatory Council Chairman and Property Law Consultant Saminda Jayasekara, providing an in-depth and balanced view of the future trajectory of the market.

Continuing with the theme of real estate and construction, the second panel discussion centred on the affordable construction of individual homes.

Moderated by University of Sri Jayewardenepura Head of the Department of Estate Management and Valuation Dr. Prathap Kaluthanthri, the panel featured Head of the University of Sri Jayewardenepura Department of Business Economics Dr. Janaka Fernando, Business Consultant Dr. Yasas Pathiranage, Urban Development Authority Deputy Director General Plnr. E.A.C. Piyashantha, and Chartered Architect Partner, Makevita and Ranathungarachchi Architects, Tharangika Ranathungarachchi.

The discussion covered vital themes for those looking to build houses, including passive design, locally sourced materials, adaptive design, green roofs and living walls, all aimed at reducing costs, improving efficiency, and enhancing affordability and sustainability of houses.

Concluding the discussions, industry experts emphasised the need for policy stability, affordable housing solutions, and streamlined investment processes to drive growth. With strong buyer interest, increased investor confidence, and ongoing discussions on key industry challenges, the event highlighted a promising path forward for the sector. As Sri Lanka’s property market continues to evolve, collaborative efforts between stakeholders and policymakers will be crucial in ensuring sustainable growth and greater accessibility for both local and foreign buyers.

This year’s event truly embodied its theme, “Everything Under One Roof for Property Buyers,” by bringing together a comprehensive range of real estate opportunities and services. Exhibitors showcased a diverse selection of apartments, houses, and land projects across the country, while four leading banks offered home loans starting from 11.5%. Attendees also had access to house builders, solar providers, free legal consultations, and expert advisory services on buying and selling — all conveniently available under one roof throughout the two-day event to fulfil their property buying process in the same location.

It was made possible with the support of its esteemed sponsors and partners. Platinum sponsors included Marina Square, John Keells Properties and Iconic Galaxy, while Gold sponsors included Baili Investment and Prime Group. The event was further supported by its Banking Partner, Commercial Bank along with the media partnership of Sirasa Media Network, Outdoor Media Partner Storm Media and Communication Partner Textware.