The impact of COVID-19 pandemic on the demand and supply of apartment projects in Sri Lanka

Abstract

Apartment market can be recognized as one of the marketplaces severely affected due to the unprecedented global pandemic of COVID-19, which is currently driving towards a disequilibrium state. Hence, this paper aimed to investigate the impact of COVID-19 pandemic on the demand and supply of apartment projects in Sri Lanka. The qualitative research approach was followed in order to accomplish the research aim. A comprehensive literature review followed by fifteen semi-structured interviews were conducted with apartment industry experts during the empirical investigation. Collected data was analyzed using manual content analysis. The findings revealed, how each market determinant affected the demand and supply of apartments respectively during the COVID-19 pandemic resulting numerous challenges on the market participants, directing the apartment market towards a disequilibrium state. Urban living fears, demographic shifts, unemployment shocks, consumers’ financial concerns, tourism crisis along with several other factors caused demand to be dropped while approval delays, lesser investments, lack of funding, developers’ failures, market imperfection and construction delays majorly affect the supply of apartments. Although demand for apartments in some market segments showed recovery with the new normal adaptation followed by several positive market aspects, demand dropped within the rental market and upper tier remains constantly. However, supply side is worsening overtime since financial losses are lessening developers’ supplying capabilities, while the crisis within the construction sector getting more affected due to the country’s economic downturn.