Colombo land prices jump 11.4% led by residential land values

• Growth in prices nearly doubled from growth seen in 1H14
• LVI reached 256.4 by 1H25

The land prices in the red-hot Colombo district, measured by the Land Valuation Indicator (LVI), jumped 11.4 percent in the first half of 2025 from the same period in 2024.
The growth in the prices nearly doubled from the growth seen in the first half of 2024, which came in at 6.9 percent over the same period in 2023.
The index reached 256.4 by the end of the first half of 2025, from 230.1 index points a year ago.
Meanwhile, the prices measured semi-annually or the change between the second half of last year and the first half of this year too rose by 8.3 percent, the highest in recent times. This reflects the continued growth in the land prices in the Colombo district since the country coming out of the worst of the economic crisis in 2022 and most of 2023.
The sharp ascent in the land prices, especially in the Colombo district, reflects the demand for lands in the most bustling city in the country from the buyers across all sectors – residential, commercial and industrial – due to its improved infrastructure, logistics and living standards in the recent past.
Despite taking a dip or in fact a sharp slowing in the Colombo land prices during the height of the economic crisis, the prices started rising again since the beginning of 2024, with the declining interest rates started making their way through the economy, reinvigorating the property and real estate activity.
However, it was not until the first half of 2025 a more meaningful recovery in those activities became acutely visible and felt more meaningfully in the economic data, as the economy started growing at a faster pace, coming off fast from two years of decline.
The lower interest rates, growth in the economy, as reflected in the gross domestic product data and also the sustained expansion in the construction activities, as reflected by the Purchasing Managers’ Index data, proved helpful in gauging the land prices, particularly in places like Colombo.
For instance, the residential sector contributed most to the LVI in the first half of 2025, with the index rising by 14.4 percent from the same period last year.
This was followed by the commercial sector, of which the index rose by 11.5 percent and the industrial sector, which rose by 8.4 percent.
In the values recorded semi-annually too, the residential LVI recorded the highest increase, followed by the commercial LVI.
With the current low interest rates and fast- recovering economic activities across almost all sectors, it appears that the current growth in the Colombo land values would persist in the foreseeable future.