Port City Colombo gains investor traction amid delays and cost overruns
The Port City Colombo project has reached an important juncture characterised by growing investor confidence and palpable commercial development but also by persistent structural delays and financial inefficiencies that continue to question its ambitions as Sri Lanka’s flagship urban development.
Though international interest has increased, the latest audit findings show parts of the city’s physical backbone are incomplete, highlighting a gap between ambition and delivery.
Official data for the first nine months of 2025 shows encouraging movement on the commercial front: by May 2025, almost 80 per cent of the leasable space in the Port City Business Centre had been taken up by “Authorised Persons”, signalling solid market appetite.
That month also saw Swedish-based IGT 1 Lanka ink a major deal to lease two office buildings intended to house upwards of 500 employees – a tangible indication that operational activity is starting to take root within the SEZ (Special Economic Zone).
Over the years, the major foreign developer has been China Harbour Engineering Company, a subsidiary of the state-owned China Communications Construction Company, which is still instrumental in the progress of the project.
In a report for the financial year that ended on December 31, 2023 and released in October 2024, the Auditor-General’s Department points to major infrastructure delays and cost overruns.
By September 2023, it said, only 85 of 118 plots – or about 72 per cent – had received certificates of completion, even though the original target date was back in 2019. Landscaping work scheduled for completion in March 2020 was only 77 per cent complete by late 2023, while the main road, bridge, and tunnel networks remained barely half done.
The report also revealed serious financial concerns. A temporary sewage-treatment solution, initially budgeted at Rs. 1 billion, ballooned to an expenditure of Rs. 3.7 billion which is considered a direct loss to the government through mismanagement and procurement inefficiencies.
Recognising these delays, the government, in February 2025, extended the operational period of the Port City Project Management Unit until June 2027 – a clear signal that completion will take longer than planned.
Meanwhile, new regulations that came out in mid-2025 revised eligibility thresholds for “strategic businesses” operating within the SEZ, tightening incentives and reinforcing the need for genuine high value investment.
The success of the project hinges on whether the developer and government agencies can deliver long-overdue infrastructure while sustaining investors’ enthusiasm.
If they manage to bridge the gap in delivery within the new timeline, Port City Colombo could still achieve its aspiration of becoming a leading regional financial and business hub.
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