Sri Lanka has a span of 6.5 million hectares and 80% it belong to government, that restricts foreigners from buying land. But the state cannot block the 20% private land be sold to foreigners despite the government levies a tax of 100%. In most cases the selling price is undervalued in deeds and the state loses much of the tax revenue while the local land owners, most of them ardent patriots supporting the present system, do not disclose the real amounts they gained through deals with foreigners.
Much of the private land in ancient Dutch Fort in Sinhala dominated Southern Province is now sold to foreigners, said a resident of the picturesque location adjacent to Galle harbor. Altogether, 10,000 acres of land island wide has been purchased by foreigners so far, says the Minister of Land and Land Development Jeevan Kumarathunga.
Meanwhile, the government is also looking for investors for state land. "Delegates from the Sri Lanka board of investment met with executives from Omaxe in New Delhi and others seeking investments and have liberal rules governing businesses," reported The Economic Times of The Indian Times.
It further said:
“With the civil war over, we are seeing a huge demand for housing,” said Puravankara group MD Ravi Puravankara. The group is planning to launch a villa project in Colombo. “We have already initiated the land acquisition process,” he added. It is aimed at the Sri Lankan diaspora who may return to enjoy the long-desired peace. But, it will cost them around $2 lakh each.
L&T has already laid the foundation stone for its commercial park in Colombo and is all set to invest around $150 million for its residential and commercial projects in country with a population of around 20 million, about a fifth of Maharashtra.
The commercial complex, a 51 storey building in Colombo city with 15 lakh square feet, will be called the Diamond Tower. “We plan to make this the tallest building in Sri Lanka,” said C Ignatius, director of the Sri Lanka board of investment. Larsen declined to comment for the story.
The Sri Lankan government is doing its best to attract overseas investors, especially from India, and has made the foreign direct investment rules simple. For an Indian real estate company to build complexes, all it needs to invest is Rs 2 crore. Also, there is no lock-in period for the investors. They can cash out and repatriate the money to India anytime they want.
“We have carried out an extensive research in Sri Lanka and our research shows that the country has huge potential for the developers,” Omaxe chairman and MD Rohtas Goel told ET. But, the company is yet to finalise its plans.
Sri Lanka, with many plantations, beaches and a colonial past, could draw global hospitality and manufacturing companies. “Many multinationals could also enter the country which would again increase the demand for commercial and office space,” said Cushman & Wakefield executive director Kaustuv Roy.
Government has demarcated an entire residential area in Sampur that was liberated from the Tamil Tigers a high security zone and thousands of residents of the villages still languish in refugee camps despite the government 'freed' them from the hold of the Tigers. Sampur is a Tamil residential area located close to Trincomalee natural harbor in the Eastern Province of Sri Lanka.
Emptied Sampur is given to India's National Thermal Power Corporation to build a 1000 MW coal power plant.
Government of Sri Lanka encourages local and foreign investors to invest in state land in the fields of agriculture, industry and tourism etc. It is targeting an FDI of $2 billion by 2010. According to government statistics, Sri Lanka received $889 million in FDI in 2008 and $400 million, so far, this year. The Board of Investment declined to comment on how much it expects the Indian real estate developers to invest.