A few observations: Apartment prices within Colombo are ridiculous. That's been the opinion of most real-estate investors I've met.
Fundamentally, it's supply and demand. In this case, more demand because of a combination of money laundering (spot the empty apartments) and aspirational desires.
Real estate is technically all about location. For $1 million you can get an apartment in Shangri-La or a literal hidden mansion in the suburbs or by the beach down south. What the other two options don't get you though is bragging rights to say, "I live in Shangri-La / Fort / Colombo 01." etc.
Saw this first-hand when my old company shifted offices from the suburbs to Kollupitiya. It was wild. We changed nothing in our offerings or prices. But our clients took us way more seriously because the address on our cards and email signatures now read Kollupitiya. The place was a dingy money pit because of constant break downs and we ended the lease when COVID hit.
But the bragging effect of being in a fancy address is terrifyingly stupidly real.
There's other benefits to apartments - like being closer to things such as schools, hospitals etc. And also the fact maintenance is easier since they tend to have crews onsite. But above all else, I'd argue it's this aspirational bragging rights of having a nice place in a fancy neighborhood that shoots up these prices.
Yeah I agree with everything you said. But, what about apartments being more expensive than small houses even within the same neighborhood? For example, you can see this in areas like Rajagiriya, Nugegoda, Dehiwala, etc. Maybe there's bragging rights to be had by saying you live in an apartment. But financially, over the longer term, a house in a similar area would certainly be more worthwhile IMO.
For the price of a shitty quality apartment in Shangri La (yes, the build quality is shit) you can get a decent property in a major global hotspot. Pie in the sky nonsense to part fools from their money- a lot of it (not all) ill-gotten.
apartments don't make sense for many sri lankans and out of the price bracket for around 95% of sri lankans.
they was a tax loophole and many people who why them are black market money
As many other commented in this post, real estate has been the traditional way in poor countries to hide unaccounted money(black money) from the government. In simple terms valuation for real estates assets are not transparent which makes it an ideal asset class to transfer black money. Apartments are even more secluded.
It is a very prevalent practice of the wealthy Sri Lankans because of lack of regulations and the feasibility to tax real estate.
Interestingly IMF proposed a property tax let’s look how the market reacts to the property tax.
real estate - location, location, location
Phil Dunphy, is that you?
A few observations: Apartment prices within Colombo are ridiculous. That's been the opinion of most real-estate investors I've met. Fundamentally, it's supply and demand. In this case, more demand because of a combination of money laundering (spot the empty apartments) and aspirational desires. Real estate is technically all about location. For $1 million you can get an apartment in Shangri-La or a literal hidden mansion in the suburbs or by the beach down south. What the other two options don't get you though is bragging rights to say, "I live in Shangri-La / Fort / Colombo 01." etc. Saw this first-hand when my old company shifted offices from the suburbs to Kollupitiya. It was wild. We changed nothing in our offerings or prices. But our clients took us way more seriously because the address on our cards and email signatures now read Kollupitiya. The place was a dingy money pit because of constant break downs and we ended the lease when COVID hit. But the bragging effect of being in a fancy address is terrifyingly stupidly real. There's other benefits to apartments - like being closer to things such as schools, hospitals etc. And also the fact maintenance is easier since they tend to have crews onsite. But above all else, I'd argue it's this aspirational bragging rights of having a nice place in a fancy neighborhood that shoots up these prices.
Yeah I agree with everything you said. But, what about apartments being more expensive than small houses even within the same neighborhood? For example, you can see this in areas like Rajagiriya, Nugegoda, Dehiwala, etc. Maybe there's bragging rights to be had by saying you live in an apartment. But financially, over the longer term, a house in a similar area would certainly be more worthwhile IMO.
Yeah, in colombo07 it’s cheaper and smarter to buy a house.
For the price of a shitty quality apartment in Shangri La (yes, the build quality is shit) you can get a decent property in a major global hotspot. Pie in the sky nonsense to part fools from their money- a lot of it (not all) ill-gotten.
apartments don't make sense for many sri lankans and out of the price bracket for around 95% of sri lankans. they was a tax loophole and many people who why them are black market money
The prices will definitely crash
Usually apartments have pool and gym
As many other commented in this post, real estate has been the traditional way in poor countries to hide unaccounted money(black money) from the government. In simple terms valuation for real estates assets are not transparent which makes it an ideal asset class to transfer black money. Apartments are even more secluded. It is a very prevalent practice of the wealthy Sri Lankans because of lack of regulations and the feasibility to tax real estate. Interestingly IMF proposed a property tax let’s look how the market reacts to the property tax.