Record visitor numbers, a new state land bank and a clear approvals path — what foreign investors should know before developing a hotel, resort or villa project in Sri Lanka.
Sri Lanka's tourism industry has rebounded strongly. The country welcomed a record of around 2.36 million international visitors in 2025, with India the largest source market and Europe providing a large share of long-stay travellers. Major projects such as the US$1.2 billion City of Dreams integrated resort in Colombo, opened in 2025, signal renewed confidence. For investors, the opportunity ranges from boutique villas and eco-lodges to large resorts.
Where the opportunities are
- The south and west coasts — established beach destinations with strong winter demand from Europe
- The east coast — Trincomalee, Pasikudah and Arugam Bay, with a peak season that complements the south
- The hill country — tea-country bungalows and wellness retreats around Nuwara Eliya, Ella and Kandy
- Cultural and wildlife areas — the Cultural Triangle and national-park gateways
- Colombo — business hotels and serviced apartments, including around Port City
Finding land
Foreigners cannot generally buy freehold land, but they can take long leases — see our guide on land and property rules. In 2025 the Sri Lanka Tourism Development Authority (SLTDA) launched a digital tourism land bank, listing more than 3,000 acres of investment-ready land with plans to expand. Many state-owned plots are offered on 33-year leases, and private owners can also list land for sale, lease or partnership.
The approvals path
A typical hotel project involves:
- Project approval from the SLTDA, which also helps coordinate approvals from other agencies.
- Investment approval and incentives through the BOI, where the project qualifies — see our BOI guide.
- Environmental clearance — an Initial Environmental Examination or a full Environmental Impact Assessment for larger or sensitive sites.
- Coast Conservation Department permits for coastal sites, including required building setbacks from the shoreline.
- Local authority planning and building approvals, and fire, utility and other clearances.
- SLTDA registration and classification before opening.
Coastal and environmentally sensitive sites need the most time. Build this into your programme from the start — it is one of the most common causes of delay. Our article on construction approvals explains the environmental process in more detail.
Things to plan for
- Seasonality. The two monsoons mean the south-west and east coasts peak at different times of year. Portfolio or location choices can smooth occupancy.
- Construction delivery. Use contractors with appropriate CIDA grading and strong local references, and budget realistically for imported finishes and equipment.
- Operations. Decide early between management by an international brand, a local operator or your own team.
- Currency. Revenue is often earned in foreign currency while many costs are in rupees, which can be a natural advantage if it is structured well.
How Arwa Lanka helps
We have delivered coastal hospitality projects from land acquisition through CCD and environmental approvals to BOI incentives. We can help you find land, test feasibility and manage approvals and construction on the ground. Book a consultation.
This article is general information and not investment advice. Visitor statistics and rules change; confirm current figures with the SLTDA.
Sources: SLTDA — Investment support · Daily FT — Sri Lanka Tourism opens 3,000 acres of land (June 2025) · The Island — Record tourist arrivals in 2025 · AGB — Sri Lanka records 2.3M tourist arrivals in 2025