Business Times

Shangri -La objects to former Commercial property offer

New twist to controversial deal
By Bandula Sirimanna

Days after the Business Times hit the stands last Sunday with an explosive story on a deal being finalised to hand over the former Colombo Commercial Company (CCC) property located at a prime area in Colombo facing Beira Lake at Sir James Peiris Mawatha to a ’favoured’ blue chip group, a mega foreign investor is objecting to the sale on different grounds--- that a property he was offered was unfairly, much higher in price than the property deal in dispute.

Shangri -La, the global hotel company, that has been offered the army headquarters property is reconsidering the plan as the offer price is much higher than the Commercial property. Well –informed government sources said the army headquarters property is being offered at US $72 million for six acres (over Rs.7 billion at US $12 million an acre) whereas the CCC property is being sold at US$85 million for 11 acres (over Rs.8 billion at US$7.7 million an acre).

“The CCC land located in close proximity to Beira Lake, Hunupitiya Gangarama Temple, leading hotels including Jaic Hilton in Colombo and prime surrounding area is much, more, suitable for a hotel project, than the highly congested army head quarters property near the Galle Face residential area,” the source said explaining the Shangrila objection, which came after the Business story last week headlined “Controversy over proposed CCC property deal”.

The sources said that Shangri -La is very concerned about the low price of US$ 7.7 million an acre offered to the buyer of the CCC prime land situated just 500 meters away from the army headquarters land which was offered to them (Shangri -La) at a higher price of US $12 million an acre. The difference of US$ 5 million is highly unrealistic, according to a senior valuation officer who wished to be anonymous. The transaction is to be an outright purchase on free-hold basis, but must be be done at market rates of valuation. The CCC property deal was less than the market value, the sources said.

There were 31 applicants for the CCC property developed, but none was considered after which the blue chip firm came into the picture. The plan earlier was to develop the property which has been earmarked to build city hotels, trade complexes and malls by the Urban Development Authority in collaboration with the Bank of Ceylon (BOC). Later the BOC decided to withdraw following the decision to sell it to the Colombo firm.

The blue chip’s entry as a buyer came during discussions with top government leaders who accompanied President Mahinda Rajapaksa to the United Nations in New York in September.

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