Yes, a foreigner can buy real estate in Sri Lanka. But its complicated. I guess one of the biggest drawbacks is the constant changing of policies.

As of now a foreigner can't buy land in his name. He can lease from a local or form a company with a local and buy the property in the companies name. These are done to encourage investment in Sri Lanka.

Real estate brokers in Sri Lanka and not regulated. So almost anyone can claim to be a real estate agent. So you should be careful when selecting a real estate broker. Since I'm a local I haven't personally worked with anyone. But I'd recommend Lanka Real Estate going by this Forbes article and Ceylon luxury article.

Another critical thing you need to be concerned about it clear titles and deeds. Especially if you're buying in north and eastern provinces where there was a civil war for 30 years.

The island is need of investment so I don't want to discourage anyone from buying real estate in Sri Lanka. However real estate is a big investment so be careful about who you work with and be suspicious about cheap deals.

 

You're welcome Cyrilexpat. As you said trust plays a huge part and unfortunately highly publicized cases like Gillian Andersons case has made trusting Sri Lankans a bit hard for foreigners. Which is why its probably a good idea to go through a reputed company even though the cost is a bit high.
Also if you're looking for property to invest then it might be a good idea to go through the Board of Investment. You get tax concessions and many more benefits.

 

Yes, the local has the majority. A foreigner can own only up to 49% of the company.