Investor Perceptions of Macroeconomic Factors When Making Real Estate Investment Decisions in Colombo Municipal Council Area, Sri Lanka

Abstract

This research examines the investor perceptions of macroeconomic factors when making real estate investment decisions in the Colombo Municipal Council Area, Sri Lanka. Using stratified sampling and quantitative analysis, the study found that the Gross Domestic Production growth rate and exchange rate positively influence investor perceptions, with 40% and 73% of investors considering these factors, respectively. Despite high inflation, 80% of investors consider real estate as a hedge against inflation. In contrast, Average Weighted Prime Lending Rate and Average Weighted Fixed Deposit Rate negatively affect investment demand, and it considered by 79% and 66% of investors, respectively. The Inflation Rate, Average Weighted Prime Lending Rate, and the Exchange Rate are the primary factors considered by the Real Estate Investors when making investment decisions. The COVID-19 pandemic and financial crisis impacted over 76.5% of investors significantly. Notably, 52% of investors expressed discomfort in investing in real estate under the current economic conditions.