Sri Lanka: Colombo prices are rising while sales are falling
The Colombo market is doing two things at once, and the pair is what should inform a decision to buy rather than rent.
On the Central Bank's condominium survey for the first quarter of 2026, the price index for new Colombo apartments reached 284.4 against a 2019 base, up 18.5% on the year. Over the same period the sales volume index fell 15.2%. Land values tell a gentler version of the same story: the Colombo residential land indicator rose 6.7% year on year, and the district's overall land indicator is up about 23.6% since the second half of 2023.
Prices climbing while transactions thin is not the profile of a broad, liquid market. A further detail from the same survey: 51% of units in ongoing projects were merely reserved rather than sold, and buyers are predominantly Sri Lankan residents purchasing for immediate occupancy, mostly from their own funds rather than with a mortgage.
For this calculator, that argues for caution on two inputs. Be conservative with the appreciation rate, since the index is being set by a shrinking number of transactions, and be realistic about the selling costs and time to sell, because falling volumes are what an exit actually runs into.
Two taxes that change the buy side
Capital gains tax has applied since 1 April 2018, at 10% for individuals and 30% for companies. It is not a recent reintroduction, and it is payable within thirty days after the end of the month in which the gain is realised.
The exemption that matters most here is for a principal place of residence: the property must have been owned for the three years before disposal and occupied for at least two of those three. Buying to live in and selling within three years therefore lands in charge, which is worth modelling if your horizon on this page is short.
On the renting-out side, a resident individual deducts 25% of total rental income as rent relief before tax, against a personal relief of Rs. 1,800,000 a year and a rate scale beginning at 6%. If the comparison you are running involves letting the property rather than living in it, that 25% is the single largest adjustment to make.