The commercial real estate market in Colombo has been going through significant changes over the past few years, and it is currently in a period of growth and stability. One of the significant trends in the industry is the growing popularity of flexible workspaces, which have become increasingly common in the city’s office market. Additionally, the appreciation of the US dollar and the stability in the current economic market have contributed to the growth and stability of the commercial real estate industry in Sri Lanka. The upcoming proposed elections are also expected to be positive for the industry.
Flexible workspaces have become a key trend in the Colombo commercial real estate market in recent years, with several co-working spaces and serviced office providers entering the market. The demand for flexible workspaces has been driven by a growing number of start-ups, small businesses, and freelancers who have recently revived their businesses and require flexible office solutions. Additionally, larger corporations have started adopting flexible workspace models to provide their employees with more flexibility and ensure agility in business operations. Further, due to the high inflation and massive hike in utility rates, large corporates are choosing flexible workspace operators over traditional real estate to optimise Capex and ensure agility in business operations. The current scenario in Sri Lanka has increased the cost of setting up a new office due to import restrictions and dollar appreciation; this also has led to companies adopting flexible workspace strategies.
According to a report by JLL Sri Lanka, the flexible workspace industry in Colombo has grown by 40% in 2021 – 2022, and the trend is expected to continue. The report also highlights that flexible workspaces have become increasingly popular among multinational companies looking for more efficient and cost-effective office solutions. This trend is likely to continue as the demand for flexible workspaces is expected to grow in the future.
Another factor contributing to the commercial real estate market’s growth in Colombo is the US dollar’s appreciation. The US dollar has been appreciating against the Sri Lankan rupee in recent years, making Colombo a more stable destination for foreign investors. This has led to an increase in foreign investment in the commercial real estate market, particularly in the hospitality and retail sectors. According to a report by CBRE, the commercial real estate market in Colombo saw a 10% increase in foreign investment in 2022.
The stability of the current economic market in Sri Lanka is another factor contributing to the growth of the commercial real estate market in Colombo. The government has implemented several measures to stabilise the economy, including the introduction of a flexible exchange rate regime and efforts to reduce the budget deficit. These measures have helped stabilise the economy, which has positively impacted the commercial real estate market.
Furthermore, the proposed elections in Sri Lanka are expected to be positive for the commercial real estate market in Colombo. The new government is expected to continue the current policies that have helped to stabilise the economy, which will provide a conducive environment for the growth of the industry. Additionally, the government has announced plans to introduce several initiatives to attract foreign investment, which will further boost the commercial real estate market.
In conclusion, the commercial real estate market in Colombo is currently in a period of growth and stability, driven by several factors, including the growing popularity of flexible workspaces, the appreciation of the US dollar, the stability of the current economic market, and the upcoming elections. The industry is expected to continue to grow in the future, driven by the demand for the proposed flexible workspaces and increased foreign investment. With the right policies and initiatives, the commercial real estate market in Colombo can potentially become a key driver of the country’s economic growth.