- UDA roadmap consists of 3 main development clusters – Real Estate and Townships, Tourism and Leisure, and Logistics and Transportation Hubs
- Current portfolio comprises 9 real estate projects, 9 hotel and tourism projects, 9 leisure and recreational projects, 1 logistics project, 3 multi-storey car park projects and 300,000 housing units planned by 2025
- UDA aggressively pursuing PPP investment model
- Godahewa says utmost priority is to improve returns of investment while adhering to rules and regulations when forming partnerships
- Tells global companies Sri Lanka well on course to become modern and competitive economy in region
Urban Development and Housing State Minister Dr. Nalaka Godahewa successfully showcased an impressive array of multi-million dollar socio-economic investment and development projects outside Colombo at the Sri Lanka Investment Forum this week.
His presentation drove home the fact that attractive opportunities for global companies in Sri Lanka are not confined to the Colombo Port City alone but countrywide.
“We believe that urbanisation will bring about a range of interconnected investment opportunities in environmental, physical and societal contexts. This includes building of airports, ports, road and rail networks, bridges, water and sewerage systems, waste management systems, telecommunications networks, grids of electricity and buildings of all sorts,” Godahewa told the virtually-held SLIF. In that context, he told over thousands of virtual attendees of SLIF that the Government had introduced a system of ‘C-shaped Economic Corridors’ in the national policy framework, connecting ports and airports and integrating all existing and proposed business zones together.
“We will develop Colombo, Hambantota, Jaffna, and Trincomalee as four main commercial cities and establish them to be connecting centres of the national and international network, as they consist of ports and airports of Sri Lanka,” he said.
Additionally, Kandy, Anuradhapura, Gampaha, Ratnapura, Galle, Badulla, Mannar, Batticaloa, and Kurunegala have been identified as cities that will be developed as national cities in the master plan mainly because of their historical, social and economic value and their interconnectedness with the C zone.
Cities such as Puttalam, Negombo, Pottuvil, Dambulla, Matara, Nuwara Eliya and Buttala will be developed as connecting cities to the four multi-dimensional commercial cities and national cities, Godahewa said.
According to him, the integration of all major cities, townships and business zones would lead to a local ‘agro industrialisation’ outcome and ensure value-added production processes, which could be used to improve our global market share.
He said easy access and fast connectivity to the proposed economic corridors must be supported by a well-managed road network spread across the country. Taking that into consideration, the Government has given high priority to the country’s road network as well.
“We will develop a 100,000 km alternative road system to facilitate a higher level of access to main roads and expressways, while all internal and rural access roads will be improved to facilitate access to the alternative road system,” the State Minister said.
The successful integration of these economic corridors to the national economy depends on building adequate real estate such as housing and commercial spaces, modern infrastructure developments and sustainable urbanisation.
He said the Urban Development Authority had therefore developed a road map that consists of three main development clusters, namely Real Estate and Townships, Tourism and Leisure, and Logistics and Transportation Hubs, to identify and address such demands.
SLIF was told that addressing of Sri Lanka’s acute housing problem had begun with the construction of over 50,000 multi-storey apartment units for urban low-income and middle-income families through housing and mixed development projects. “Our goal is to complete 300,000 housing units by 2025,” Godahewa said.
According to him, these housing and mixed development projects spread across different cities and suburbs entail investments ranging from $ 20 million to $ 400 million and the expected IRR of is 15% or more.
Showcasing that the Government has firm plans, Godahewa listed some of the priority projects such as 16.5 hectares of Welikada prison land at Borella with the land ideal for a commercial and housing development project; 15 hectares of land at Kirimandala Mawatha in Narahenpita, ideal for a township project consisting of commercial and housing spaces, such as hospitals, schools, service sector office spaces, recreational parks and some entertainment venues; five hectares of land at Summit Flats, Colombo 7 deal for a mixed development residential project; and four hectares of land at Chalmers Graneries in Colombo 1 ideal for valuable for a commercial, transportation or maritime related development.
Focusing on the tourism and leisure cluster, Godahewa said the UDA had currently identified 5.2 hectares of land at Oakley Cottage in Nuwara Eliya for a Scottish cultural heritage hotel and cottages project and five hectares of land in front of Lake Gregory in Nuwara Eliya for a theme park project.
He also listed another highly-anticipated and lucrative leisure project – the Beira Lake Front redevelopment, having 100 land plots around the lake. It will be able to accommodate an abundance of restaurants and pubs, outdoor dining areas, cinemas and other entertainment activities, making it one of the best night life venues not only in Sri Lanka but also in the South Asia region.
“The minimum investment of these projects can vary between $ 150 million to $ 350 million and the expected IRR is 16% or more,” the State Minister told the SLIF.
In the logistics and transport cluster, he said priority had been given to 24 hectares of land occupied by the former Sri Lanka Broadcasting Corporation at Ekala, Ja-Ela to build a warehousing, supply and logistics hub. The expected investment is approximate $ 140 million and the IRR is 15% or more.
“As the apparel and manufacturing industries continue to grow, a few more warehousing and logistics hubs too will be added to our project pipeline,” Godahewa revealed.
He said that the UDA’s traditional investment model offerings to the investors so far had been on lease basis only and these leases usually varied from 35 years to 99 years. “With the aim of attracting new private capital that has not been available before, we have recently introduced a Public-Private Partnership investment model to the UDA,” he said.
This new approach, Godahewa said, would help the UDA to allocate project risks to parties who could manage them best.
“These PPP projects will be operated as profit-sharing joint venture partnerships, and these joint ventures can be structured as Special Purpose Vehicles for asset allocation and cash flow distribution purposes. These SPVs are usually structured with a non-recourse status, so that they can be isolated from any financial and other risks of the owners of the SPV. They are separated from the parent sponsoring companies due to legal or tax reasons, which can be a great advantage for the private investors. Optimising asset utilisation via SPVs can open up multiple revenue streams to the stakeholders too,” Godahewa said.
He revealed that the UDA’s current portfolio consisted of nine real estate projects, nine hotel and tourism projects, nine leisure and recreational projects, one logistics project and three multi-storey car park projects. The maximum duration of these projects is five years and the payback period is typically four to five years.
“There are many benefits to the investors when choosing us as their project partners. Access to lands that are situated in prime locations with premium market value, experiencing faster approval process, enjoying special tax concessions, having accesses to readily available utilities and infrastructure are some of them. Our utmost priority is to improve returns of investment while adhering to the rules and regulations when forming partnerships and work with investors delivering the projects according to our road map,” the State Minister told the SLIF.
Focusing on the global attendees of the event, Godahewa said SLIF was timely when Sri Lanka was gearing up to become a competitive economy in the region. He said global interests via SLIF reflected their confidence in Sri Lanka’s ability to become a modern and competitive economy in the region.
“I invite you to walk with us on this journey, and with right partnerships, I assure you that you will be able to witness and benefit from the emergence of Asia’s new miracle in the foreseeable future,” the State Minister said.