Yes I know there’s a bug in the screenshot, I’m not uploading again.
How much is land in suburban Colombo worth? People usually play it by ear, but this KPMG/RIU report has some hard data. Firstly, land in Sri Lanka is measured by the perch, which is 25 square meters. Essentially a block 5m X 5m, or about two parking spaces. How much is a perch in, say, Kohuwala compared to Rajagiriya? The KPMG/RIU Changing Cityscape report (short and worth reading) has data.
As you can see from above, the average price per perch ranges from Rs. 700,000 in Battaramulla to Rs. 1.7 million in Rajagiriya (of a limited sample). I somehow find that surprising (Rajagiriya can be kinda slummy) but it all seems to map out in terms of proximity to Colombo.
Going south, the most value is in nearby Dehiwela and Kohuwala, then less as you get to Mount Lavinia (which I think is more livable, but anyways). As you head inland to the east, Rajagiriya has the highest value followed by Battaramulla. I say I find this surprising because Battaramulla – essentially created surrounded Parliament – has evolved its own coffee-shops, restaurants, schools, and middle class signs of life. That said, I rarely if ever go there because the traffic is so horrendous, so I guess that does affect property values.
|Price Per Perch (Rs. Million)||Average Number Of Perches||Average Plot Price||Average Plot Price (USD)|
Note that the average plot price is my extrapolation, not theirs
Suburban Vs. Urban Prices And Risk
An interview in the report, with former Chief Valuer Mr. W. Seniviratne, says that average plot prices in Colombo proper can be 8-10 million per perch. Which is really expensive.
The only anomalies, however, is that people in semi-slummy corners of Colombo are selling land for less (at two or three perches a pop), but not really able to sell because there’s uncertainty as to what will happen to those areas. Will the government take them, will big developers come in and buy at a lower rate? Hence, in my limited experience, while 10-20 plots in Colombo 7 may have high value, a 2 perch plot in, say, Torrington may have little to no value at all.
Take Slave Island, for example. This area is situated between all the major city hotels, tourist attractions, nightclubs – right in the center of town. It should become developed as a local boutiquey shopping and cafe district, but if you come in as a small investor property values are effectively nil (if they’re selling at all). Right now Slave Island is the long time home of an old Malay community among others, and their plots of 2-3 perches are too small for big investors and too uncertain for small investors. So those property values are effectively in limbo until A) government smash or B) developer by. Moreover, the constant threat of government smash makes any sort of private investment extremely risky.
Hence everyone goes to the suburbs, where you can get bare land, build a decent sized house and have some security in your investment. In Colombo center the choices either seem to be to pay like $75,000 for two parking spaces or take an unacceptable amount of risk to lead gentrification. In the suburbs you can buy and live.
Please check out the full report from KPMG and the Research Intelligence Unit (RIU) – Changing Cityscape: Real Estate Market Brief Issue II, 2012. It’s short and very interesting.