Construction sector grows 12.2% in Q3

Sri Lanka’s construction industry posted strong double-digit growth of 12.2% in the third quarter of 2025, continuing its recovery and stimulating increased activity in related sectors such as real estate and professional services.

Provisional data released by the Department of Census and Statistics (DCS) show that construction contributed Rs. 499.9 billion in Gross Value Added (GVA) at current prices during the quarter ended 30 September 2025.

This output accounted for 6.0% of the nation’s Gross Domestic Product (GDP) over the period.

When assessed at constant 2015 prices, the sector’s real value addition increased to Rs. 253.2 billion, compared with Rs. 225.6 billion recorded in the corresponding quarter of 2024.

According to the DCS, the expansion was largely supported by improved availability of essential construction inputs. Cement supply rose sharply by 17.7% during the quarter, enabling higher levels of on-site activity.

At the same time, costs increased modestly, with the Construction Cost Index compiled by the Construction Industry Development Authority (CIDA) rising by 3.0 points.

Growth in construction also generated spill-over effects across upstream industries. The mining of construction materials sub-sector expanded by 17.8%, contributing around 83% of the total value added within the mining and quarrying industry.

In parallel, the State Timber Corporation reported a 49% increase in log production, directly attributed to heightened demand from construction projects.

The renewed momentum in infrastructure development supported growth in associated service sectors. Real estate activities, including dwelling ownership, grew by 3.5% in the third quarter, generating Rs. 132.5 billion in constant-price value addition.

Reflecting improved market confidence, the DCS noted that the combined quarterly turnover of nineteen listed real estate firms on the Colombo Stock Exchange rose by 24.1% year-on-year.

Rising construction and property activity also increased demand for specialised professional services.

The professional services sector—covering architectural, engineering, legal and accounting activities—expanded by 3.7% during the quarter.

The DCS linked this performance to increased project development, with developers seeking greater technical and consultancy support. At current prices, the sector produced Rs. 147.0 billion in value added.

Looking at year-to-date performance, construction activity grew by 10.5% during the first nine months of 2025.

Over this period, the sector generated Rs. 1.38 trillion in value added at current prices, representing 5.8% of the overall economy.

Real estate activities recorded cumulative growth of 3.3%, contributing Rs. 915.6 billion to GDP, while professional services expanded by 3.1% over the same timeframe.