ECONOMYNEXT – Residential land prices in Sri Lanka’s Colombo District have risen 14.4 percent in the first half 2025, from a year ago, followed by commercial land by 11.5 percent, a land valuation indication (LVI) compiled by the central bank.
Industrial land went up 8.4 percent in the first half of 2025, compared to last year’s first half.
The overall land value index went up 11.4 percent in the first half compared to last year.
The semi-annual (first half of 2025 compared to second half of 2024) increase was 8.3 percent indicating that most of the increase came in the first half of 2025.
Sri Lanka’s economy has recovered strongly amid stability provided by deflationary policy of the central bank but land values has some catch up to do after a currency collapse.
Low interest rates however could also push up asset prices.
In the past, suppressed rates have led to currency collapses and default and land have been one of the assets that gave protection to the people against rate cuts and monetary instability.
But people who do not hold real assets and fixed income financial assets get badly hit.
However continuously depreciating currencies supported by more classical style Mercantilists (competitive exchange rates) which destroy wages of workers, makes it difficult for wage earners to acquire land or build houses.
The index shows that following the steep currency collapse in 2022, the LVI index has not fallen absolutely (deflated) during the stabilization crisis that followed.
From the second half of 2022 (macro-economists busted the rupee steeply with the help of a surrender rule and inflationary open market operations in March 2022) to the second half of 203, the LVI index went up from 205.2 points to 219.8 or 14.6 points.
In the next 12-months the index continued to go up 236.8 point and has rise to 256.4 points over the year to June 2025. (Colombo/Aug29/2025)
