Demand for office space in the Sri Lanka`s capital Colombo is tipped to more than double over five years, led by information technology related firms and the financial sector, a property services specialist has said.
The newly opened Sri Lanka unit of Jones Lang LaSalle, an international property services company said industrial and tourism sectors will add to the demand.
Limited top grade office space in the city, has pushed demand down to inferior grade properties, the report said. Office stock in Colombo is expected to multiply 2.4 times in the next five-years to 12 million square feet.
Listed on the New York Stock Exchange, Jones Lang LaSalle advises clients on ownership, occupation, investments and raising funds for real estate.
The company opened its first office in Colombo on Tuesday, riding bullish post-war sentiments in Sri Lanka after a 30-year war ended in 2009.
`Our interests in Sri Lanka evolved over a time period,` said Alastair Hughes, Chief Executive Officer (Asia Pacific) told reporters in Colombo.
`We were watching Sri Lanka for about 18-24 months, giving advice to clients. We think the time is right for us to come here and we are delighted to be here.`
While banking, financial services and insurance have captured key real estate across Colombo, IT and its related services have also emerged as an attractive sector for real estate developers, the company said.
`Grade A` office space in Colombo, including multi-tenanted leased offices and captively-owned properties, is estimated at around five million square feet, with average occupancy of over 90.0 percent, Jones Lang LaSalle Lanka said in a report on the island`s property sector.
The company expects the financial services sector to generate demand for 4.5 million square feet of office space from branch expansions, which has grown seven percent a year, during the past decade.
Sri Lanka`s IT and outsourcing sector, which has over 40,000 people on its payroll in Colombo, is growing at over 20 percent annually, with low attrition rates of between 10.0-15.0 percent, Jones Lang said citing data by SLASSCOM , an industry grouping.
With the government targeting a billion dollars in revenue from100,000 employees, the information technology and business process outsourcing (IT/BPO) is expected to demand seven million square feet of office space between 2012 and 2015.
Gagan Singh, Chairperson Jones Lang`s Sri Lankan operation said Sri Lanka`s abundance of educated labour force, IT and growing infrastructure facilities, makes Colombo an ideal real estate location to develop BPO operations.
She said Colombo is competitively priced and has a lower upward wage pressures than many outsourcing destinations like India and the Philippines.
`For instance, rents in Colombo are slightly cheaper than Chennai and Bangalore in India,` Sing said.
`Sri Lanka is no longer in the waiting room, the country is on track to become a breakout nation, on an excellent platform for fast growth.`
The company initially plans to service the office, retail and hospitality sectors, with an eye on tackling premium and luxury residential property as the business gathers pace.
Anuj Puri, chairman and country head for Jones Lang in India said they would also match real estate investors with partners for debt or equity financing.
`Through our connections globally, our matchmaking services can arrange low cost debt or equity,` Puri said.