APPD Market Report Article

Colombo

May 31, 2022

29.6%

LKR 101

Rents
Rising

Demand for warehousing in Sri Lanka’s capital remains resilient

  • Despite the economic headwinds, Sri Lanka’s overall industrial warehousing (Grade A, B and C) demand remained resilient, predominantly driven by the FMCG and export-oriented manufacturing and logistics industries.
  • Keells supermarkets provided a new facelift to the FMCG sector, sparking interest across the industry. Utilising a premium Grade A facility as its distribution centre, Keells leveraged on its state-of-the-art amenities.

Supply delivery increases the in Ja-Ela – Katunayake corridor

  • Keells supermarkets added a 260,000-sq ft premium Grade A warehousing space to the stock in Kerawalapitiya Industrial Park. The warehouse is equipped with cutting-edge technology such as temperature control and increased health and safety standards.
  • Access Engineering announced the largest warehousing facility in Sri Lanka, a 700,000-sq ft Grade A space, to be built in Ekala on 14 acres of land. The project is being carried out on a build-operate-transfer basis, to be leased to a leading multinational firm.

Rentals continue to surge across corridors and grades

  • Though most of the Grade A warehousing in Greater Colombo is self-owned, rentals in the market stood at LKR 90-130, recording a robust y-o-y growth of 29.6% at the end of 1Q22. In addition, Grade B and C rentals were in the range of LKR 65-85 and LKR 50-60, respectively, both indicating positive growth.
  • The upward trend in rentals across corridors continued throughout the 1Q22, posting a q-o-q increases up to 11%. Grade B rentals in the Port corridor ranges from LKR 70 to 90 while the Ja ela- Katuayake corridor ranges at LKR 70 to 85, Wattala – Paliyagoda at LKR 65 to 80, and Wellampitiya – Kaduwela along with the Kelaniya – Sapugaskanda at LKR 65 to 75.

Outlook: Robust Grade A supply pipeline expected in the medium term

  • Overall future supply in the market is forecasted at 750,000 sq ft in the medium term with a noteworthy Grade A supply of 400,000 sq ft. The rising demand is likely to be absorbed as major logistics players are expected to enter the market with Grade A supply.
  • Increased investment is anticipated in the industrial parks outside Colombo as the development is rapidly progressing despite challenges.
Note: Greater Colombo Logistics & Industrial refers to the Greater Colombo prime logistics market.

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