Home Address: Paradise

By Bruce Palling and Tessa Laughton/Galle

It wasn't long ago that most South Asia tourists gave Sri Lanka a wide berth. As recently as 2001, Tamil Tiger separatists hit the international airport, destroying three Airbuses and killing seven soldiers. But for more than a year now, the land that Marco Polo called "the finest island of its size in all the world" has been at peace, and optimism seems well placed despite the government's sinking of a rebel boat last week. Tourist arrivals at the island, where English is widely spoken, reached 393,000 last year, approaching levels not seen since the civil war broke out in 1983. Some visitors are finding the country's combination of golden beaches, temperate hill country, Buddhist temples and graceful residences so charming that they want to claim a piece of Sri Lanka for themselves.

A property boom has begun, focused near the island's southwest tip at the historic Dutch fort of Galle, where 17th century seawalls shelter colonial houses, picturesque churches and mosques on narrow streets. There are fewer than 200 homes inside the citadel walls, now a UNESCO-designated World Heritage site, and in the past several years foreigners have bought at least 40 of them.

Two years ago, you could pick up an elegant, if somewhat tumbledown, four-bedroom house for less than $50,000. Prices have since doubled or tripled, but restrictions on foreign ownership have been lifted, allowing any future profits to be repatriated without penalty.

Charles Hulse, an Arkansas native and a Galle real estate agent, for years split his time between Paris and the Greek isle of Hydra before settling in a tastefully restored Galle house with interiors fit for Architectural Digest. Hulse notes that the cost of restoring a fort house usually runs more than half the purchase price.

Geoffrey Dobbs, a publisher based in Hong Kong, has converted two historic Galle mansions into hotels. The Sun House and the Dutch House (011-94-74-380-275; from $100) offer the island's most luxurious colonial accommodations. Like other early investors, Dobbs rents out sumptuous villas at Weligama and Tangalla, both within a short drive of Galle, for several hundred dollars a night. Deep-sea fishing is available, as are snorkeling and scuba diving around the southern-coast coral reefs. And Dobbs plans to build the island's first yacht club.

Colombo, the capital, is a colorful blend of bazaars, modern stores, temples and nightclubs. In the hills northeast of the city is the former royal capital Kandy, home to the Temple of the Tooth, which features a relic said to be Buddha's upper-left incisor. To the north stand a 5th century rock fortress and the splendid ruins of two ancient cities. In the central hill country, green tea plantations stretch like corduroy over the slopes surrounding the resort town of Nuwara Eliya (Above the Clouds). A stay at the Hill Club (011-94-52-226-53; $60) will take you back to British colonial days, with white-gloved waiters serving five-course, Western-style dinners (men, wear jacket and tie).

Hideaway-resort king Adrian Zecha, of Amanresorts, is restoring Galle's 300-year-old New Oriental Hotel, a veritable museum of Dutch-colonial furnishings. He is also creating a beach resort in Tangalla and will no doubt take his celebrity clients with him. If Sri Lanka is calling you, now is the time to make a move.