Construction sector momentum continues with 12.2% growth in 3Q

• Cement supply jumps 17.7% as physical activity rebounds
• Real estate and professional services benefit from infrastructure spillover

By Nishel Fernando

The Sri Lankan construction sector recorded a robust double-digit growth of 12.2 percent in the third quarter of 2025, maintaining its recovery momentum and catalysing broader activity across the real estate and professional services sectors. 

According to provisional estimates released by the Department of Census and Statistics (DCS), the construction industry generated Rs. 499.9 billion in Gross Value Added (GVA) at current prices during the quarter ending September 30, 2025. 

This performance secured a 6.0 percent share of the country’s total Gross Domestic Product (GDP) for the period. In real terms, measured at constant 2015 prices, the sector’s value addition rose to Rs. 253.2 billion, up from Rs. 225.6 billion recorded in the same quarter of the previous year.

The DCS highlighted that this expansion was underpinned by a notable improvement in the supply of key building materials, with cement supply increasing by 17.7 percent during the quarter. This uptick in physical activity was accompanied by a moderate rise in input costs, as the Construction Cost Index compiled by the Construction Industry Development Authority (CIDA) recorded an increase of 3.0 points during the period. 

The ripple effects of the construction drive were evident in upstream primary industries. The ‘Mining of construction materials’ sub-sector recorded a growth of 17.8 percent, contributing approximately 83.0 percent to the total value added of the mining and quarrying industry.  Furthermore, the State Timber Corporation reported a 49.0 percent surge in log production, which was explicitly linked to the increased demand arising from the growing construction sector.

The resurgence in physical infrastructure has stimulated related service sectors. Real estate activities, including the ownership of dwellings, recorded a growth rate of 3.5 percent in the third quarter, contributing Rs. 132.5 billion to the economy at constant prices. Supporting this trajectory, the formal corporate sector demonstrated robust sentiment, with the DCS noting that the combined quarterly turnover of nineteen listed real estate companies on the Colombo Stock Exchange increased by 24.1 percent compared to the same period in 2024.

This vibrancy in development and property transactions further drove demand for specialized expertise. The ‘Professional Services’ sector, which encompasses architectural, engineering, legal, and accounting activities, expanded by 3.7 percent during the quarter. The DCS report linked this performance to the construction boom, as developers increasingly sought architectural and engineering consultation for new projects. At current market prices, the professional services sector generated a value added of Rs. 147.0 billion.

On a cumulative basis, the construction sector has maintained a positive trajectory throughout the year. For the first nine months of 2025, construction activity expanded by 10.5 percent. The total value added by the sector for the nine-month period stood at Rs. 1.38 trillion at current market prices, accounting for 5.8 percent of the national economy. Similarly, real estate activities posted a cumulative growth of 3.3 percent for the first nine months, contributing Rs. 915.6 billion to GDP at current prices, while the professional services sector recorded a growth of 3.1 percent for the same period.