- Project company and govt. to earn US$ 3.4bn and US$1.8bn respectively fromland sales
- Foreign investors expected to purchase land plots worth US$ 3.6bn
By Nishel Fernando
The marketable land plots of Colombo Port City (CPC) are likely to be priced above Rs.13 million per perch on 99-year lease which would bring a minimum of US$1.8 billion revenue to the government and US$ 3.4 billion for the project company, CHEC Port City Colombo, according to an independent study carried out by Pricewaterhouse Coopers (PwC).
CHEC Port City Colombo, a unit of China Communications Construction Company (CCCC), holds 116 hectares and the government the remaining 62 hectares of marketable land of CPC, which is divided into 74 land plots.
CCCC has invested US$1.4 billion for reclamation of land and infrastructure development of CPC and in return, it has received 62 hectares of marketable land on 99-year lease from the government.
According to the report, foreign investors are expected to purchase land plots worth US$ 3.6 billion or 70 percent of marketable land plots.
CHEC Port City has scheduled its first overseas launch at World Cities Summit 2020 in Singapore this July along with several road shows.
However, PwC stated that Rs.13 million is a conservative price based on the land prices in the neighbourhood while noting that several other factors may appreciate CPC’s land prices.
“The pricing for each plot will be based on several factors within the Port City. As the Port City is segregated into five different precincts, the plots in each precinct will have different uses and building regulations. Further, the connectivity within the Port City will also be a key factor in determining the convenience and price for each plot. In addition, recognition of Port City as a Special Economic Zone (SEZ) may also affect the pricing of the land,” the report noted.
The nominal land price in Colombo 01, which borders CPC, is estimated over Rs.20 million per perch. Meanwhile, the common land of 91 hectares based on the initial investment made by CHEC Port City on the reclamation was valued at Rs.5.6 million per perch, amounting to US$ 512 million.
The total value of marketable land was estimated to be around US$ 5.2 billion.
PwC estimates FDI flows during the construction stage to be around US$ 5.6 billion and around US$ 740 million worth of FDI flows per annum in the operational stage based on retained earnings, post repatriation of profits by the companies operating within CPC.
The report stressed that CPC would be a catalyst in attracting FDI to Sri Lanka in the future.
“It is expected that there will be spill over effects as well, as Port City may encourage FDI flows outside the project. Taken together, the Port City should be a key driver in attracting FDIs in future Sri Lanka,” it said.
CHEC Port City completed reclamation of 269 hectares of land from sea in January 2019, ahead of schedule, and the breakwater construction was also completed in June 2019.
At least, the construction of a yacht marina and US$ 400 million mixed development project is scheduled to commence within this year. The project company has also signed around 200 MOUs with potential investors mainly from India, Middle East, South East Asia (predominantly Singapore) and China.