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New construction work appears to be bouncing back

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Construction work in progress at a new site in Pannipitiya Pic courtesy –Saliya Home Builders

Sri Lanka Purchasing Managers’ Index (PMI) for Construction indicates an expansion in construction activities in January 2024, as reflected by the Total Activity Index, which recorded an index value of 52.9.

This marks the first time that the index exceeded the neutral threshold since January 2022. Many respondents mentioned that new construction work is gradually becoming available, while some suspended projects also have recommenced on a limited scale during the month.

According to the PMI, new orders increased in January compared to the previous month. Most of the respondents mentioned that, at the moment, the availability of both foreign-funded projects and privately-funded local projects is higher.

Meanwhile, Ajith Ranabahu Rajapaksha, business development officer at Saliya Home Builders in Homagama told The Island that their company is receiving new orders to build homes as well as commercial facilities.

“We see a resumption of some construction projects after the pandemic and the economic crisis. There are many orders for renovations, extensions too. When the Central Bank raised interest rates during high inflation, it discouraged borrowing and slowed demand for the housing market. But now, as interest rates have come down significantly, consumer sentiments have changed in a favourable manner. I think if you are looking to build a house to live in or as an investment, this is a good time to take that decision. The banks also need to be proactive in boosting the construction sector by expanding credit facilities. Furthermore, the fact that Sri Lanka rupee has appreciated against the US dollar is another favourable factor in terms of importation of construction material,” Ajith said. -SN

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