Colombo is undergoing a huge change in its skyline and it’s clear that a major contributor of this is the number of apartment buildings that are coming up.
There is an enormous demand for apartments and commercial real estate in the city of Colombo and one might feel that there are too many apartment projects that are currently underway. As of now, there are approximately 3000 apartment units in town and this figure is expected to be above 6000 by 2018.
Are there enough buyers in the market?
Will people like the idea of living in an apartment?
Would there be an over supply of apartments?
The above questions are lurking on the minds of many people such as developers, investors, potential buyers and of course realtors. So what’s the deal? What’s really happening in Colombo with so much of construction etc?
The fact of the matter is that there is money in the country and there are buyers as well. The most distinguishing aspect would be the luxury type. Colombo still lacks in Super Luxury apartments and that is precisely where the void is. When considering the kind of projects that are underway, it’s quite clear that most of it is super luxury which caters to the lifestyle of the high net-worth individuals.
We must also not forget that apartments are bought not just to live, they are bought as investments by individuals as well as companies and there is a market there – a fairly big market. On top of that, there is an expat market as well. Colombo is on its way to become a leading city in the world and with so many expats and other international brands settling in, there will be the interest of the foreigners who would buy for various reasons. The current number of apartment units is certainly not enough.
Why is the current number of units not enough?
For the simple reason that there is nothing much to choose in terms of size and uniqueness. When considering the number of super luxury apartments, clearly there is a shortage. Yes, there are luxury apartments but there are not many super luxury apartments. I wouldn’t want to classify them here as I may sound biased if I may do so. One has to physically visit the complexes and then decide if it is anywhere close to luxury or super luxury.
It is also quite clear that there is a high demand of normal/basic apartments which are priced on or below the 20 million range and locals are very keen to invest in them. The biggest risk one takes when it comes to settling for a basic or normal apartment is the maintenance of the building/complex. Buying an apartment is one but maintaining the common areas is a challenge to all the residents.
The bottom line however with apartments – demand and supply is that now is not the best time to determine if there is an over supply or not, probably once we reach 2018, we would know if there is an over supply or whether the demand is still there as most of the projects are not complete and majority of the completed projects have done well in their sales.
Until then, fingers and toes crossed!!!