President Mahinda Rajapaksa has directed that the terms of the multi-million dollar Skyline Hotel and Rainbow multi-function projects by China National Aero Technology (CATIC) near Galle Face Green be reviewed.
The move, the Sunday Times learns, will mean that a large extent of land will not be sold outright to CATIC. Instead, President Rajapaksa has directed at a Cabinet meeting on July 13 that it be granted on a long-term lease. A government source said yesterday that the move stemmed from the President’s thinking that the properties for development should not henceforth be sold but given on long lease.
Economic Development Minister Basil Rajapaksa had earlier obtained Cabinet approval for the sale of seven or more acres of land for a “flagship investment project, from and out of the area in which currently the Army Headquarters is situated at Galle Road.” This is adjoining the ten acres of land already assigned for Shangri-La Hotels Lanka (Private) Ltd.
Hailing the CATIC move as a “significant value addition towards promoting foreign investment,” Basil Rajapaksa told his ministerial colleagues that CATIC would like to purchase the land at the same unit price as offered for Shangri-La Hotel. They have said that the purchase would be made in the name of Asia Prospects International Limited” (APIL), which is a company wholly owned by CATIC and registered in Hong Kong. At the time he made the proposal in January, this year, Mr. Rajapaksa said he expected an upfront payment that could vary from about US $ 75 million to US $ 130 million depending on the extent of the land that could be apportioned from the remaining 11 acres.
According to the Ministry of Economic Development, the likely investment value in a multi-function complex with a five-star hotel and a shopping mall would be nearly US $ 500 million. The Shangri-La Hotels acquired the land where Army Headquarters is now sited for US $ 125 million. They also want to construct a 500-room luxury hotel to be completed in 2013. The Ministry has estimated that it would cost between US $ 400 million and US $ 500 million.