Sri Lanka’s commercial capital, Colombo city is currently facing a dearth in supply of globally competitive corporate space as the demand for quality commercial space is rising, creating a huge opportunity for both existing and future office space developers, a recent study on the property sector by a local brokerage firm has pointed out. According to report titled ‘Colombo, a Modern City in the Making’ published by TKS Research currently the only sizeable designated office space in Colombo is just over two million square feet with occupancy at A grade office space averaging at 98% or almost fully occupied.
“With the receipt of peace dividend in 2009, a huge demand was created for office space in Colombo which, in turn, doubled the rental yield. Although four years have passed since then, still no major office space is added to the capacity,” the Volume II of the report released last week stated.It noted that with the development in the country into a services hub and increasing presence of international/multinational companies, a rapid augmentation of the corporate sector standards is evident in Sri Lanka and therefore, the country is currently in much need of globally competitive corporate space.
“However, out of the many upcoming developments in the city, only a limited space is allocated for offices as more prominence is given to apartments and hotels. A complex of 125,000 sq ft by Access Engineering is the only designated development whereas we believe another 500-700,000 sq ft would be added during the next 3-4 years by other planned mixed development projects (excluding Krrish),” the report elaborated.Meanwhile, the study also noted that the lack of office space has burdened the island’s lucrative IT Business Process Outsourcing (BPO) industry alongside the recently imposed 15% tax on leased property.
“The country is equipped with a large pool of talented IT personnel and infrastructure. However, the unavailability of sizeable space to entertain such large pool of resources is limited in the city and thus only Orion City caters to such demand,” it pointed out adding that there is a huge opportunity for both existing and future office space developers as the rentals in the city would significantly increase due to shortage in supply.
On the other hand, outlining that the current rental yield for A-grade office space varies from 7-9% in the key locations, whereas the same for second tier office space varies from 5- 6%, the report further highlighted that currently the rentals of A grade office space in Colombo (USD 213 per sq m p.a) is more or less on a par with the more established markets such as Kuala Lumpur and Bangkok which consist of 23.5mn sq ft and 13.8mn sq ft Grade A office space respectively. “Thus with the growing demand and the supply deficit we believe the yields on grade A office space to increase approximately 20-25% YoY in the medium term,” the study predicted.
- See more at: http://www.nation.lk/edition/biz-news/item/21914-colombo-lacks-quality-office-space.html#sthash.ZaEOzfjw.dpuf
“However, out of the many upcoming developments in the city, only a limited space is allocated for offices as more prominence is given to apartments and hotels. A complex of 125,000 sq ft by Access Engineering is the only designated development whereas we believe another 500-700,000 sq ft would be added during the next 3-4 years by other planned mixed development projects (excluding Krrish),” the report elaborated.Meanwhile, the study also noted that the lack of office space has burdened the island’s lucrative IT Business Process Outsourcing (BPO) industry alongside the recently imposed 15% tax on leased property.
“The country is equipped with a large pool of talented IT personnel and infrastructure. However, the unavailability of sizeable space to entertain such large pool of resources is limited in the city and thus only Orion City caters to such demand,” it pointed out adding that there is a huge opportunity for both existing and future office space developers as the rentals in the city would significantly increase due to shortage in supply.
On the other hand, outlining that the current rental yield for A-grade office space varies from 7-9% in the key locations, whereas the same for second tier office space varies from 5- 6%, the report further highlighted that currently the rentals of A grade office space in Colombo (USD 213 per sq m p.a) is more or less on a par with the more established markets such as Kuala Lumpur and Bangkok which consist of 23.5mn sq ft and 13.8mn sq ft Grade A office space respectively. “Thus with the growing demand and the supply deficit we believe the yields on grade A office space to increase approximately 20-25% YoY in the medium term,” the study predicted.
- See more at: http://www.nation.lk/edition/biz-news/item/21914-colombo-lacks-quality-office-space.html#sthash.ZaEOzfjw.dpuf
Sri
Lanka’s commercial capital, Colombo city is currently facing a dearth
in supply of globally competitive corporate space as the demand for
quality commercial space is rising, creating a huge opportunity for both
existing and future office space developers, a recent study on the
property sector by a local brokerage firm has pointed out. According to
report titled ‘Colombo, a Modern City in the Making’ published by TKS
Research currently the only sizeable designated office space in Colombo
is just over two million square feet with occupancy at A grade office
space averaging at 98% or almost fully occupied.
“With the receipt of peace dividend in 2009, a huge demand was created for office space in Colombo which, in turn, doubled the rental yield. Although four years have passed since then, still no major office space is added to the capacity,” the Volume II of the report released last week stated.It noted that with the development in the country into a services hub and increasing presence of international/multinational companies, a rapid augmentation of the corporate sector standards is evident in Sri Lanka and therefore, the country is currently in much need of globally competitive corporate space.
“However, out of the many upcoming developments in the city, only a limited space is allocated for offices as more prominence is given to apartments and hotels. A complex of 125,000 sq ft by Access Engineering is the only designated development whereas we believe another 500-700,000 sq ft would be added during the next 3-4 years by other planned mixed development projects (excluding Krrish),” the report elaborated.Meanwhile, the study also noted that the lack of office space has burdened the island’s lucrative IT Business Process Outsourcing (BPO) industry alongside the recently imposed 15% tax on leased property.
“The country is equipped with a large pool of talented IT personnel and infrastructure. However, the unavailability of sizeable space to entertain such large pool of resources is limited in the city and thus only Orion City caters to such demand,” it pointed out adding that there is a huge opportunity for both existing and future office space developers as the rentals in the city would significantly increase due to shortage in supply.
On the other hand, outlining that the current rental yield for A-grade office space varies from 7-9% in the key locations, whereas the same for second tier office space varies from 5- 6%, the report further highlighted that currently the rentals of A grade office space in Colombo (USD 213 per sq m p.a) is more or less on a par with the more established markets such as Kuala Lumpur and Bangkok which consist of 23.5mn sq ft and 13.8mn sq ft Grade A office space respectively. “Thus with the growing demand and the supply deficit we believe the yields on grade A office space to increase approximately 20-25% YoY in the medium term,” the study predicted.
- See more at: http://www.nation.lk/edition/biz-news/item/21914-colombo-lacks-quality-office-space.html#sthash.ZaEOzfjw.dpuf
“With the receipt of peace dividend in 2009, a huge demand was created for office space in Colombo which, in turn, doubled the rental yield. Although four years have passed since then, still no major office space is added to the capacity,” the Volume II of the report released last week stated.It noted that with the development in the country into a services hub and increasing presence of international/multinational companies, a rapid augmentation of the corporate sector standards is evident in Sri Lanka and therefore, the country is currently in much need of globally competitive corporate space.
“However, out of the many upcoming developments in the city, only a limited space is allocated for offices as more prominence is given to apartments and hotels. A complex of 125,000 sq ft by Access Engineering is the only designated development whereas we believe another 500-700,000 sq ft would be added during the next 3-4 years by other planned mixed development projects (excluding Krrish),” the report elaborated.Meanwhile, the study also noted that the lack of office space has burdened the island’s lucrative IT Business Process Outsourcing (BPO) industry alongside the recently imposed 15% tax on leased property.
“The country is equipped with a large pool of talented IT personnel and infrastructure. However, the unavailability of sizeable space to entertain such large pool of resources is limited in the city and thus only Orion City caters to such demand,” it pointed out adding that there is a huge opportunity for both existing and future office space developers as the rentals in the city would significantly increase due to shortage in supply.
On the other hand, outlining that the current rental yield for A-grade office space varies from 7-9% in the key locations, whereas the same for second tier office space varies from 5- 6%, the report further highlighted that currently the rentals of A grade office space in Colombo (USD 213 per sq m p.a) is more or less on a par with the more established markets such as Kuala Lumpur and Bangkok which consist of 23.5mn sq ft and 13.8mn sq ft Grade A office space respectively. “Thus with the growing demand and the supply deficit we believe the yields on grade A office space to increase approximately 20-25% YoY in the medium term,” the study predicted.
- See more at: http://www.nation.lk/edition/biz-news/item/21914-colombo-lacks-quality-office-space.html#sthash.ZaEOzfjw.dpuf
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