State land release would moderate real estate prices: Experts

From left: Guardian Group  CEO Ruvini Fernando, Western Region Megapolis Project  Head of Investments Nayana Mawilmada , CHEC Port City Colombo Consultant Thilan Wijesinghe  and  John Keells Holdings Property Sector President Suresh Rajendra  - Pic by Lasantha Kumara

Realising Megapolis ambitions will depend on the faster release of State land for more accessibly-priced real estate development and strong policy cohesiveness for implementation, experts said yesterday as the Government prepares to roll out fresh urban investment projects. Addressing a special forum by Guardian Acuity Asset Management titled ‘Investment Opportunities from the Western Region Megapolis Plan’, top experts, including TW Corp Chairman Thilan Wijesinghe and Suresh Rajendra of JKH who oversees the property segment of the blue chip conglomerate, noted that they were significantly encouraged by the steps taken by the Government recently. 

However, they emphasised the need for stronger policy planning and implementation, which would include a focus on rapidly releasing State-owned land for private sector development. 

“Over the past few years land prices in Colombo have been increasing at unsustainable rates because the Government has created a bottleneck to release land. Unless land release is improved quickly the overpriced rates make it impractical for companies to invest in ventures. Employment, investment and even tourism would be affected by this,” Wijesinghe told the gathering. 

He insisted that if the Government releases land then tourists who currently spend 1.5 nights in Colombo would increase it to three or four nights, raising revenues rapidly and attracting more tourists. Cheaper real estate would also attract more investors who would set up their offices in the capital and attract higher paid workers. The eventual goal of the Government should be to attract a multinational company to set up headquarters in Colombo to leverage development as the most liveable city in South Asia. 

“Our execution is very poor. There is a significant delay in implementing FDI projects and we need to resolve these issues. The upcoming Budget should ideally set the right policy consistency for investment. Our sequencing of projects and timeframes should also improve,” he added.   

Megapolis Projects Head of Investment Nayana Mawilmada concurred with the experts but insisted that the Government would establish structures including a Megapolis Authority in the coming months to manage and implement projects.    

“Sri Lanka is absolutely at an inflection point in its history. In the next five we could completely take off or mess it up royally so I think we need to converge to create this success story. I think we have a very ambitious plan, obviously, and we are looking at structural transformation but I think what that translates into is a whole new area of interesting investment opportunities,” he said.    

 “We are trying to engineer a structure for the city that can sustain us for the next 50 years. To contain sprawl we have to protect our natural resources including wetlands, forest and agriculture and we need to basically keep it that way. We need to restore and celebrate the amazing historic assets we have, manage the congestion, concentrate industries so we can better manage pollution and make it more efficient to invest in Sri Lanka.” 

The current goal of most Sri Lankans to build separate houses for their families is unrealistic as it uses up too much precious land resource, increases traffic and leaks workers to the periphery of the capital, Mawilmada said  

“We need to seriously look at housing, concentrating and densifying housing. We are looking at creating an enabling environment for complete economic transformation and Colombo is basically the canvas that this will play out on. The idea is to create a network of cities in the Western Province, which together form the most competitive liveable enclave in the Indian Ocean. So there is a lot of work to be done and it will be a long-term process.” 

The light rail system to be built with Japanese assistance of $ 1.2 billion is the biggest project under the Megapolis so far but it is likely to be the first in a long list of extensive ventures to be rolled out over the next few months. 

The Megapolis Authority is also expected to have the power to call for and approve its own projects independent of the Board of Investment (BOI). 

“We are putting together the legislation to establish a new apex institution called the Megapolis Authority and we are just launching into detailed feasibility on some of these investments and there will be policy reforms that need to come into place. We are starting to package these projects, which will come out in the coming months. But make no mistake this will be an extremely challenging job.”