Sri Lanka’s property market surges as Colombo land values rise 7.7%

Developers eye long-term investor confidence amid record deals and award-winning projects

Sri Lanka’s property sector is showing renewed signs of strength, with Colombo at the centre of rising land values, major acquisitions, and a recovering apartment market that is drawing the attention of both local and international investors. 

According to EconomyNext, land prices in the Colombo district rose by 7.7 percent in the second quarter of 2025, underscoring the renewed momentum in the capital city’s property landscape. This growth comes on the heels of increasing investor interest, reflected in record-breaking land transactions and a steady appetite for apartment living despite broader economic challenges. 

Record deals signal confidence 

Earlier this year, Newswire reported that Home Lands Group acquired a Colombo property valued at Rs. 4.5 billion, marking the largest land deal in the city’s history. The transaction is widely seen as a signal of long-term confidence in the market and a turning point for the property sector after years of economic turbulence. 

The momentum has not been confined to headline-grabbing deals. As Lankasara highlighted, Colombo’s property market has been recording steady growth, with demand bolstered by urban expansion, infrastructure projects, and rising middle-class aspirations. Industry experts note that these factors are creating a more favourable investment climate, particularly in prime districts. 

Apartments emerge as a strong asset class 

While land remains an attractive proposition, apartments are emerging as one of the most resilient asset classes in Sri Lanka. The Financial Times recently posed the question of whether residential apartments are the “best asset class in town,” pointing to their relative stability and long-term appreciation potential. Apartments not only appeal to end-users seeking urban convenience but also offer investors the promise of capital gains and rental income, particularly in sought-after Colombo neighbourhoods. 

Supporting this trend, Sri Lanka Guardian analysed the corporate role in housing, noting that developers and large-scale firms are reshaping Colombo’s urban fabric through new condominium and mixed-use projects. With demand for vertical living accelerating, the apartment segment continues to gain ground as a preferred investment avenue. 

Data confirms apartment market recovery 

Roshan Madawela, Founding Director and CEO of Research Intelligence Unit (RIUNIT) and a member of the Judging Panel of the PropertyGuru Asia Property Awards (Sri Lanka), believes the recent recovery is a pivotal moment for the sector. 

“When conducting the latest analysis of our real estate data (Q3 2025), one of the most positive observations that can be made is with respect to the recovery of the apartment market prices as a whole in Colombo measured in USD,” he said. “Whilst average apartment prices, measured in LKR did continue to witness an upward incline, even during Covid and the economic crises, much of the trend can be attributed to the unprecedented currency depreciation that took place in 2022. This rendered the LKR as somewhat useless as a tool to gauge the property market trends, especially if you are an international investor.” 

“However, the recovery in USD and other major currencies is all the more impressive because it withstood the depreciation and have since compensated for the drop in value of the LKR. Simply put, if you purchased an apartment property in Colombo in 2021 in foreign currency, you experienced some volatility in prices during 2022/23 but by 2024/25, you are in positive capital gains territory.” 

His assessment underscores why Colombo remains attractive to investors, with the city now offering measurable returns in foreign currency terms despite past economic volatility. 

Land market shows resilience 

Parallel to the apartment market, Colombo’s land sector has demonstrated remarkable resilience. Another Financial Times report observed that demand has been rising steadily across various segments of the land market, driven by a combination of infrastructure upgrades, aspirational buyers, and long-term confidence among developers. 

This resilience is evident in both prime city-centre locations and emerging suburban hubs, where affordability and connectivity are drawing sustained buyer interest. Analysts suggest that as infrastructure networks expand, the land market will continue to provide strong opportunities for capital appreciation. 

Developers at the forefront of transformation 

Within this growth story, developers are playing an increasingly pivotal role in shaping Colombo’s property landscape. Home Lands Skyline (Pvt) Ltd, as previously mentioned, has not only been at the centre of the city’s largest land deal but also emerged as a major force in the residential development space. 

At the 2024 PropertyGuru Asia Property Awards (Sri Lanka), Home Lands Skyline was named Best Developer, underscoring its contribution to the sector’s growth and innovation. The company’s projects also earned accolades in key categories: 

• Best Luxury Condo Development (Colombo): Waterdale Residencies, bordering Colombo 7 
• Best Waterfront Condo Development: Oceana Beach Resort Apartments & Villas – Wadduwa 

These recognitions illustrate how Colombo’s growth trajectory is being supported by projects that combine luxury, sustainability, and international appeal. By delivering high-quality residences, developers like Home Lands Skyline are not only enhancing Colombo’s skyline but also reinforcing investor confidence in Sri Lanka’s real estate market. 

Building long-term confidence 

As Sri Lanka’s property market rebounds, stakeholders are now turning their focus towards long-term sustainability and investor assurance. Analysts argue that stability in currency markets, transparent regulations, and continued urban development will be critical in translating the current momentum into durable growth. 

For developers and policymakers, this means prioritising affordability alongside luxury, ensuring infrastructure keeps pace with demand, and maintaining regulatory clarity for both local and foreign investors. 

Outlook: A cautious but positive trajectory 

While challenges remain, the prevailing mood in Colombo’s property market is one of cautious optimism. Land and apartment values are rising, landmark transactions are being sealed, and award-winning developments are setting benchmarks for design and quality. 

The resilience observed during past crises, coupled with the recovery in foreign-currency denominated property values, highlights the sector’s adaptability. With careful stewardship, Colombo is well positioned to cement its status as a competitive real estate destination in South Asia, offering both stability and long-term gains for investors. 

The article was originally published on asiapropertyawards.com.