Challenges for affordable housing in Colombo

Sri Lanka’s gross domestic product (GDP) is likely to grow a further 7.0 percent by end-2016. Interestingly, the services sector contributes the lion’s share, 61 percent, to GDP. With strong growth in the services sector in the recent past, it has managed to create noticeable employment opportunities, helping public wages and salaries rise sharply. As per Sri Lanka’s Department of Census and Statistics (DCS), the estimated average household income per month at national level was Rs.45,878 in 2012/13 in Sri Lanka. Mean estimated household income increased by 25.9 percent from the previous survey year (2009/10) respectively.

Colombo, the largest city and commercial capital of the country, since 2009 has seen improved confidence in the investment market which triggered an escalation in property values. Apart from the various infrastructure projects, an increased migration to Colombo (both from the rural areas and from outside the country) have emerged as the reasons behind real estate price rises.

The rising number of high-net-worth individuals and other income segments resulted in a growing demand for housing. To fulfil the demand, developers continued acquiring land within the central and secondary sub-markets. Due to the limited availability of land in the city, select locations within the central and secondary sub-markets saw faster growth in land prices of around 7-8 percent on average annually.

Increasing construction costs, high borrowing costs have made apartment prices unaffordable. As a result, the apartment market is largely restricted to only high-income-earning resident Sri Lankans (RSLs), non-RSLs and foreigners.

Hence, Colombo’s select current demographic conditions stress on unaffordable real estate to lower income group.

  •     Only the top 20 percent of income-earning households can afford to buy their dream homes in Colombo or its suburbs.
  •     Even the top 10 percent of households with a mean monthly income of around Rs.0.3 million can only afford a two-bedroom lower-mid property in a secondary location.
  •     Even in suburban locations, the top 10 percent of income-earning households may not be able to purchase a two-bedroom upper-mid apartment.
  •     Therefore, apartments in the Central sub-market and in upper-mid and luxury projects in the secondary sub-market have to rely on high-net-worth individual residents and foreigners.
  •     Limited income earners of Colombo are forced to opt for properties that are at least 20-25 kilometres away from the city limits.

The government understands the current disequilibrium and to minimise the social inequality, it has been emphasising on affordable housing schemes.
The concept of affordable housing revolves around some key parameters such as:

Provision of basic amenities
The provision of basic amenities such as sanitation, adequate water supply and power to the dwelling unit is crucial. In addition, community spaces and amenities such as parks, schools and healthcare facilities in the neighbourhood are desirable.

Cost of the house
While assessing the affordability of the buyer, the cost of the house should consider not only the purchase costs of the dwelling unit, but also the maintenance costs.

Location of the house
An affordable housing project should be located within reasonable distances from workplaces and should be connected adequately through public transport, since housing plus transportation costs will greatly affect affordability.

According to Sri Lanka’s Urban Development Authority, in government promoted schemes, the number of affordable houses is going to double. Population migration from the rural areas to the city suburbs is expected to grow; however initiatives taken by the government may not be sufficient.

The following aspects could be considered to revive the segment on affordable real estate:

  •     The government can offer financial support to average income earners for the purchase of affordable housing.
  •     Make the construction sector more worthwhile for young people by offering opportunities for better qualifications and personal development to overcome labour shortage.
  •     The infrastructure of the suburban areas should be developed so that dependency on the city is reduced.
  •     Private developers are to be incentivised by engaging more and offering tax rebates. Administrative streamlining can be offered.

Housing needs of the economically weaker segment could be fulfilled if well-rounded efforts are made by the governments and private builders. This will not only create the synergy in real estate prices but also create the possibility of balancing the ecosystem of the city.
(Gagan Singh is the Chairperson of Jones Lang LaSalle Sri Lanka)


Source – Dailymirro Sri Lanka

9 thoughts on “Challenges for affordable housing in Colombo

  • November 27, 2017 at 12:20 am

    Please send your housing project’s details with the price

  • February 18, 2018 at 12:31 pm

    Dear Sir,
    Am the moment am staying in a rental a middle salary person.i like to buy a government house for monthly payment.i have three kids in school age .also there studying in government school in Colombo.please be kind enough to give me a house under monthly payment.
    Thank you.

  • August 27, 2018 at 9:12 am

    Please send your housing project’s details with the price

  • February 1, 2019 at 11:01 pm

    Please Send me details to buy a house on monthly installment payments. I am 29 years. I would like to have a longer term since then it will be much affordable for me. Please email me details to

  • February 13, 2019 at 3:15 am

    dear sir
    i’ll like to buy a house on monthly installment payments now im living in a rental house and i’m a middle salary preson so please be kind enough to give me a house.
    thank you sir

  • July 20, 2019 at 11:17 am

    Plz send me the details to buy house on monthly instalments payment….

  • August 15, 2019 at 10:26 am

    sear sir
    me & my wife both are working as teachers in government school since 2007. both we are in mid thirties now & living in a rent house with our two kids.
    i’ll like to buy a house on monthly installment payments so please be kind enough to give me a house.

    please email me details of your houshing plan.
    my email id
    thank you sir


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