By: John S. Morlu II, CPA
Coconut Bonds and Real Estate Goldmines: Sri Lanka’s Investment Climate and Hidden Opportunities
Come for the beaches, stay for the margins. What you don’t know about investing in Sri Lanka might cost you — or make you a fortune.
You’ve heard of emerging markets. Now meet one that’s re-emerging — battered, brilliant, and brimming with potential.
Welcome to Sri Lanka — a post-crisis phoenix rising from the ashes of inflation, IMF bailouts, and mass protests… into a land of undervalued assets, strategic geography, and silent resilience.
Yes, things went south. But now, it’s the kind of place where a $1 investment could become $10 — if you play it right.
Let’s unpack the opportunities.
1. Post-Crisis = Pre-Boom
Sri Lanka defaulted on its foreign debt in 2022 — a historic low.
But that’s where the story starts, not ends.
Since then:
- The IMF approved a $3 billion stabilization loan
- Inflation has dropped from over 70% to under 10%
- Interest rates are declining slowly
- A new tax regime and restructuring plan is in place
Translation: the worst is (mostly) over. And savvy investors know — you buy when there’s blood in the streets, not when champagne’s flowing.
2. Real Estate Is Cheap — and Beautiful
Tourism collapsed in 2020–2022. Guesthouses, boutique hotels, beachfront plots, and hill country villas are selling at distressed prices.
In 2024:
- You can buy coastal land for under $20/sq ft
- Mid-size hotels in Galle or Ella are available at a 40–60% discount
- Colombo apartments are bouncing back, with strong rental demand
Want to build a wellness retreat? An expat condo complex? A co-working lodge? Sri Lanka’s property market is quietly **ripe**.
Bonus: Foreigners can own property through BOI-registered companies, and long-term leases are flexible.
3. The Colombo Stock Exchange (CSE): Undervalued and Underwatched
The CSE has been through a roller coaster — but now features some of the cheapest valuations in Asia.
Companies in sectors like:
- Banking (Commercial Bank, Sampath)
- Consumer goods (Nestlé Lanka, Hemas)
- Construction and engineering (Tokyo Cement)
- Apparel exports (Hayleys, MAS Holdings)
Many are trading at single-digit P/E ratios — while paying 5–9% dividends.
With political stability improving and earnings recovering, the upside is strong.
4. Renewable Energy = The Big Bet
Sri Lanka imports nearly 40% of its energy — a vulnerability during crises.
Now, the push for solar, wind, and hydro is a top national priority.
Opportunities include:
- Solar mini-grid investments in rural areas
- Wind farms in the north and northeast
- Battery storage and grid tech
- PPPs in off-grid electrification
The World Bank, ADB, and USAID (Pre-Trump) are already pouring millions into the space. You could piggyback with a smarter, nimbler project.
5. Tourism: The Sleeping Giant
Tourism was once 12% of GDP. Post-crisis, it’s back with a vengeance.
Sri Lanka welcomed over 2 million tourists in 2024, with projections of 3 million by 2026.
Opportunity zones:
- Luxury wellness and ayurveda retreats
- Eco-lodges and glamping sites
- Cultural and culinary tours
- Surf hostels and digital nomad hubs
There’s even a push for ‘workation visas’ and remote worker packages. If Bali could do it, so can Galle.
6. Manufacturing and Exports
Sri Lanka has strong export capabilities in:
- Apparel (top brands source from here)
- Rubber and tires
- Tea and spices
- Gems and jewelry
Labor is cheaper than India or Vietnam, and BOI incentives include tax holidays, duty exemptions, and customs fast-tracking.
Sri Lanka also benefits from trade access under GSP+ to the EU — a sweetener for any export-oriented business.
7. Infrastructure and Construction
With major highway, port, and metro projects resuming, the construction sector is heating up again.
From private public partnerships (PPPs) to BOOT projects, there’s real demand for:
- Urban transit
- Port city infrastructure
- Industrial parks
- Affordable housing
China, India, Japan, and multilateral banks are all investing. Smart capital can co-invest or subcontract.
8. Fintech and Digital Banking
With over 40% of Sri Lankans unbanked, there’s demand for:
- Mobile money
- Microinsurance
- Digital lending
- e-KYC and ID solutions
Licensing is strict, but the central bank is cautiously welcoming digital innovation. Sandbox regulation is now active.
Plus, diaspora remittances (over $6B/year) create a giant informal money flow that fintech can help formalize.
9. The Caveats
Let’s be clear — Sri Lanka isn’t a fairytale.
Risks include:
- Policy reversals and regulatory friction
- Currency shocks (watch the rupee)
- Corruption and bureaucracy
- Land titling issues
But in every risk lies mispriced reward. The key? Local partners. Legal counsel. Chartered Accountant. And patience.
Final Thought: Sri Lanka Is the Anti-Hype Opportunity
You won’t hear CNBC hyping Colombo. But the smart money is already circling.
The next 5 years are Sri Lanka’s pivot window — a chance to go from default to dynamo.
If you have vision, values, and risk-tolerance — this island is your sandbox.
Just remember: fortune favors the bold, especially when the tea is hot, the rupee is low, and the sunsets are ridiculous.
About the Author
John is an entrepreneur, strategist, and founder of JS Morlu, LLC, a Virginia based CPA firm with multiple software ventures including www.FinovatePro.com, www.Recksoft.com and www.Fixaars.com . With operations spanning multiple countries, John is on a mission to build global infrastructure that empowers small businesses, entrepreneurs, and professionals to thrive in an increasingly competitive world. He believes in hard truths, smart execution, and the relentless pursuit of excellence. When he’s not writing or building, he’s challenging someone to a productivity contest—or inventing software that automates it.