Business Times

State land in Colombo up on grabs on upfront payment/ 99-year leases

By Bandula Sirimanna

The Government is actively pursuing a policy of offering state land on upfront payment terms on 99-year leases without tender procedures with one of these projects – the sale of 8 acres of the former Colombo Commercial Co complex – yet to be finalized.

Urban Development Authority (UDA) officials said that the policy is based on the need to cut through the bureaucracy in quickly leasing out land and also since most of such land is in ‘sensitive’ areas, near Temple Trees, the President’s House Colombo Port and headquarters of the military. They acknowledged that the Colombo land development projects will be awarded under unsolicited project proposal basis, with necessary cabinet approval. These lands will be made available for private sector developers under this initiative.

The new land policy is a shift from the earlier direction where 13 acres of land at Galle Face was sold outright to Shangri-La (8 acres) and for US$125 million and to Catic for $136 million. Finance Ministry officials said draft laws were being prepared to pave the way for outright purchase and leases but these plans have been reversed now to that of offering leases only.

On Wednesday, UDA Chairman Janaka Kurukulasuriya, announced that a 2- acre block at the same 10 acre Commercial complex had been sold to an Indian party, Indocean Developers (Pvt) Ltd, leaving 8 acres to be sold.

The sale of this complex has been shrouded in secrecy after one party was tipped to get it without any procedure due to the backing of a powerful official. This blue chip firm had earlier promised an upfront payment of Rs 8 billion but the payment is yet to be made. This firm along with another local conglomerate – making inroads into tourism and services and two more foreign companies are vying to acquire the 8-acre land. When asked, Mr. Kurukulasuriya said the UDA has not made any selections as yet.

Indocean Developers (Pvt) Ltd will construct a US$400 million shopping and residential complex on the 2-acre land. The company has paid $32 million (Rs. 2.5 billion) for a 99-year lease of the land in front of the Beira Lake.

Meanwhile Colombo’s skyline will be changed with the government’s ambitious plan to make Colombo an international business and financial centre integrated with tourism and accommodation facilities. Charmers Granaries and Transwork Square shopping complex projects in Colombo will commence shortly after handing it over to two prospective investors following unsolicited project proposal basis.

The adjoining car park and a land bordering Chatham Street and Hospital Street in Fort will be developed as a tourist entertainment venue as part of the project, “The former Dutch Hospital will be turned into a hotel and shopping complex preserving the ancient structure and the archeological value,” Mr. Kurukulasuriya said without disclosing details about the investors of the project. At least two private buildings between Chatham Street and Hospital Street have been demolished to make way for the project while more buildings are also to be pulled down. The total extent of this block land is around 9 acres. Dozens of other underutilised land blocks close by have also been identified, he said.
Another 18 acres of Colombo land will be made available for investors for construction of hotels and shopping complexes.

Mr Kurukulasuriya said the Indoocean project had been endorsed by President Mahinda Rajapaksa and was being directed, supervised and inspected by Defence Secretary Gotabaya Rajapaksa. He one acre at the Commercial complex, which belonged to Jansahakthi Insurance has been set aside to construct a road which would connect Sir James Peiris Mawatha and Staples Street. “The stretch of Sri James Peiris Mawatha will be open only for pedestrians and we have to provide facilitates to conduct the Gangarama perahera annually,” he said.

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