Land prices surge up to 20% as real estate market responds to lower rates and economic stability

SRI Lanka’s real estate sector is demonstrating robust signs of recovery and renewed investor confidence in 2025, buoyed by a stabilising economy and favourable market conditions.

- 

The latest ‘Real Estate Market Outlook Report 2025 (REMOR25)’ by LankaPropertyWeb (LPW) highlights a significant resurgence across the property landscape, with key indicators pointing towards sustained growth.

One of the most significant indicators of this recovery is the rapid appreciation of land prices in the Western Province. The report indicates an average year-on-year (YoY) increase of 12% in the region for 2025. Suburban areas are leading this surge, with land prices in the Colombo district’s suburban areas experiencing an average 20% increase. Piliyandala, for instance, recorded a 16% price increase, and both Athurugiriya and Homagama experienced 14% YoY growth.

This trend suggests a shift in investor focus from the historically saturated city centre to burgeoning suburban zones that offer strong infrastructure and development potential.

In contrast, Colombo 1-15 saw a more moderate 7% price increase, underscoring the increasing appeal of outer-city investments. Beachfront lands are also in high demand, with southern coastal areas seeing average asking prices of Rs. 2 million per perch, driven by tourism and interest from overseas buyers.