Published on and written by Cyril Jarnias
Sri Lanka, this paradise island in the Indian Ocean, is attracting more and more foreign investors seeking beachfront properties. With its white sand beaches, turquoise waters, and tropical atmosphere, the country offers numerous opportunities to acquire your dream home facing the ocean. In this article, we reveal the best places to invest and guide you step by step through the process of purchasing real estate in Sri Lanka.
The Hidden Gems of the Sri Lankan Coastline: Where to Invest?
Sri Lanka boasts over 1600 km of coastline, offering a great diversity of landscapes and atmospheres. Here are the most sought-after regions for purchasing beachfront property:
The South Coast: A Booming Tropical Paradise
The south coast of Sri Lanka has become one of the most sought-after destinations for real estate investment in recent years. Dream beaches like Unawatuna, Mirissa, or Tangalle attract many foreign buyers.
- Unawatuna: Known for its crescent-shaped beach and calm waters, it’s the ideal spot for a vacation home
- Mirissa: Renowned for whale watching, this resort town offers good rental potential
- Tangalle: Its wild and preserved beaches make it a prime location for nature lovers
The West Coast: Between Vibrancy and Authenticity
The more developed west coast offers a good compromise between modern infrastructure and tropical charm.
- Bentota: Its long golden sand beaches and water sports make it a safe bet
- Hikkaduwa: A surfer’s paradise, this lively resort attracts a young and international clientele
- Negombo: Close to the airport, it’s a practical choice for a second home
The East Coast: Untapped Potential
Long neglected, the east coast has seen renewed interest in recent years. Prices are still attractive and the potential for capital gains is significant.
- Trincomalee: Its natural harbor and pristine beaches make it a promising destination
- Arugam Bay: A renowned surf spot, it’s an ideal location for seasonal rental investment
- Passikudah: Its shallow bay is perfect for families
Good to Know:
The south coast remains the most sought-after and expensive, but the east coast offers great opportunities at more affordable prices. Consider diversifying your search to find the hidden gem!
Buying property in Sri Lanka may seem complex for a foreigner, but by following these steps, you can realize your project with peace of mind.
1. Understand the Legal Framework
In Sri Lanka, foreigners can buy apartments above the 4th floor of a building. To purchase a house or land, you need to create a Sri Lankan company in which you hold 100% of the shares.
2. Define Your Budget
- $200,000 to $500,000 for a beachfront apartment
- $300,000 to $1,000,000 for an ocean-view villa
Don’t forget to include additional fees (notary, taxes, etc.) which represent about 5% of the purchase price.
3. Find the Ideal Property
Use a reputable local real estate agency. They know the market well and can guide you in your search. Don’t hesitate to visit several properties and take your time.
4. Perform Necessary Checks
- The seller is indeed the legal owner of the property
- There are no disputes or mortgages on the property
- Building permits are in order
5. Negotiate and Sign the Sales Agreement
Once you’ve found your ideal property, negotiate the price and conditions. A 10% deposit is typically paid upon signing the agreement.
6. Finalize the Purchase
The final deed of sale is signed before a notary. The balance of the price is paid, and you officially become the owner of your little piece of paradise!
Good to Know:
Get assistance from a local lawyer specialized in real estate throughout the process. Their expertise will be invaluable in avoiding unpleasant surprises.
Riding the Investment Wave: The Advantages of Buying in Sri Lanka
Investing in real estate in Sri Lanka offers numerous advantages:
- A growing market with strong capital gains potential
- Prices still attractive compared to other tropical destinations
- An exceptional living environment between dream beaches and lush nature
- Favorable tax conditions for foreign investors
- The possibility to generate rental income thanks to booming tourism
Taxation Focus
- No annual property tax
- Tax on rental income: only 14%
- Real estate capital gains: taxed at 10% if the property is sold within 3 years, exempt beyond that
Good to Know:
Sri Lanka offers a residence visa for real estate investors. A significant advantage to fully enjoy your property!
Despite all its advantages, investing in Sri Lanka also carries certain risks. Here are some points to watch out for:
- Political instability: Research the country’s situation before investing
- Natural risks: Some coastal areas are exposed to cyclones or tsunamis
- Administrative complexity: Procedures can be lengthy and tedious
- Language barrier: English is spoken, but not always fluently
- Cultural differences: Business practices may differ from Western standards
- Get assistance from trusted local professionals (lawyer, real estate agent)
- Take the time to get to know the country and its culture before investing
- Carefully check all documents and permits
- Ensure your property is covered by adequate insurance
Good to Know:
Patience is a virtue in Sri Lanka. Processes can be slow, but keeping your cool will help you successfully complete your project.
Conclusion: Sri Lanka, a Prime Destination for Your Beachfront Investment
Buying a beachfront property in Sri Lanka is a unique opportunity to own a little piece of paradise while making a promising investment. With its dream beaches, rich culture, and booming real estate market, the island offers an ideal setting to realize your tropical escape dreams.
Whether you choose a luxury villa on the south coast, a modern apartment on the west coast, or a character home on the east coast, you will surely find the property that meets your expectations and budget.
However, as with any investment abroad, it is crucial to research thoroughly, surround yourself with competent professionals, and take your time. With proper preparation and a little patience, your purchase project in Sri Lanka will turn into a rewarding and potentially very profitable experience.
So, ready to dive into the Sri Lankan real estate adventure?
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
