State Minister of Urban Development and Housing Arundika Fernando recently announced a groundbreaking initiative aimed at bolstering Sri Lanka’s economy. The Government plans to provide commercially valuable lands located in major cities to foreign investors, offering a lucrative opportunity for international businesses to contribute to the country’s growth.

Board of Investments (BOI) Director General R.M. Weerakoon revealed that the proposal would entail leasing out commercially valuable lands, including historic buildings, in prime locations within Colombo and Rajagiriya. The properties listed for investment include well-known landmarks such as the Gaffoor Building, Chalmers Granary, and the iconic 80 Club. This strategic move is expected to attract Foreign Direct Investment (FDI) and foster economic development in the country.

The process

Explaining the process, Weerakoon emphasised the BOI’s role in facilitating this opportunity for investors. The BOI will host the available properties on its website to increase visibility and provide potential investors with comprehensive information. 

The Urban Development Authority (UDA) will be responsible for allocating the lands, and if investors approach the BOI, they will receive full support and facilitation in the leasing process.

“There is a proposal to lease out commercially valuable land to foreign investors. We will be facilitating this through our website to provide more visibility for investors and some commercial properties in Colombo will be up on offer. At the moment, we have been given commercial properties to be advertised for investment. 

“These include historic buildings in Colombo such as the Gaffoor Building, Chalmers Granary, the 80 Club, and similar buildings. There are some properties in Rajagiriya as well. The UDA will be allocating land, but if the investor is coming through the BOI, we will facilitate it while the UDA will provide the land,” Weerakoon told The Sunday Morning. 

UDA Additional Director General Mahinda Withanaarachchi elaborated on the two methods through which commercially valuable lands would be made available for foreign investments. He noted that the competitive bidding route involved calling for Requests for Proposal (RFPs) and advertising the land, inviting bids from interested parties using a two-envelope system. Alternatively, the UDA has introduced a new system where investors can register a company with the BOI and directly procure the land from the UDA.

“There are UDA-owned lands across the island and we will give them for any development purposes, particularly those that come through FDIs. We have two ways of providing these lands. One is the competitive bidding route where we call for RFPs and then we advertise the land, get a valuation, and ask the investors to make a bid on a two-envelope system. 

“However, as there are less investors these days, we have introduced a new system where the investor can register a company with the BOI and then procure the land directly from us through the BOI. We have dispensed all identified UDA land for any investments using these two methodologies,” Withanaarachchi said, speaking to The Sunday Morning.

Lease types 

In terms of leasing periods, Withanaarachchi clarified that the UDA would offer either 99-year or 30-year leases based on the size and type of the investment. Lands with existing constructed buildings may be granted on a 30-year lease, considering the lower cost of investment due to available infrastructure. The lease period will be determined by a project committee, taking into account various factors such as the development period and investment type. The UDA is flexible in this regard, and lease periods may vary depending on the specific investment.

“We are giving these investments on 99-year and 30-year leases depending on the size and type of the investment. For example, when it comes to lands that already have constructed buildings, we tend to give them on a 30-year lease because the cost of investment is less as the infrastructure is already in place. All they may have to do is some refurbishment work or repairs, all of which can be recovered in 30 years or less. We have a project committee that decides all these points such as the development period, lease period, etc. 

“We don’t really have a minimum lease period as it all depends on the investment. We have had investments where we have given land on lease for five to 10 years. Nevertheless, the main periods are 30 and 99 years.” 

Preservation concerns 

However, Withanaarachchi highlighted that buildings of historical or archaeological significance would be protected from demolition. Investors seeking to lease such properties would only be allowed to undertake renovation or interior development, ensuring the preservation of Sri Lanka’s rich cultural heritage.

“There are instances where some investors want to demolish the building that is already on the land up for lease, but that will be decided by the UDA. Buildings of historical or archaeological value will not be allowed to be demolished. Such buildings can only be renovated or the interior can be developed.” 

By offering prime commercial lands in major cities, the Government aims to attract foreign capital, stimulate economic growth, and create more job opportunities for the nation’s workforce.

As Sri Lanka continues its efforts to recover from the economic challenges posed by the global pandemic, this ambitious move to lease commercially valuable lands signifies the Government’s commitment to foster a business-friendly environment. As the Government prepares to roll out this initiative, stakeholders and experts have expressed optimism about the potential impact on the nation’s economic landscape. 

Lands and buildings up for investment

According to the Urban Development Authority (UDA), the lands and buildings up for investment are: 

• High-rise mixed development project at Ass. No.12, D.R. Wijewardena Mawatha, Col. 10
• High-rise mixed development project at Ass. No.38, D.R. Wijewardena Mawatha, Col. 10
• High-rise mixed development project at Ass. No.40, D.R. Wijewardena Mawatha, Col. 10
• Multi-storied public car park with mixed development project at Norris Canal Road, Hospital Square, Col. 10
• High-rise mixed development project at Ass. No.3A and 5, Mihindu Mawatha, Kurunegala 
• Construction of cottage type houses and renovation, management, and operation of Dun Bungalow (Oakley Cottage) at Upper Lake Road, Nuwara Eliya
• Multi-storied public car park with mixed development project at Bogambara, Kandy
• Tea museum, Nawalapitiya 
• Rest house and former CeyBank Rest properties, tea museum, and tea experience centre, Col. 1
• Operation and management of former Colombo Dutch Hospital shopping precinct and former Marketing Department buildings at Colombo Fort
• Rest house development project for the UDA land situated at No.9, Karaitivu Road, Jaffna
• Mixed development project on UDA land at Sella Kataragama