Steady progress on the construction of Port City Colombo in Sri Lanka

 

Identified as a potential turning point for Sri Lanka, the landmark Port City Colombo (PCC) development on a swathe of reclaimed land will start to take shape in 2018. Patali Champika Ranawaka, the minister of megapolis and western development, announced in January 2018 that a consortium led by China Harbour Engineering Company (CHEC) would invest $1bn in building three 60-storey office towers in the city. Ranawaka said the towers would form the centre of a new financial district for the city, and that the CHEC investment may catalyse further projects at the 269-ha site, which is being developed by CHEC’s parent company, China Communications Construction Company.

In the same month, Thulci Aluwihare, head of strategy and business development for CHEC PCC, said that construction on the site would start in 2018, with land reclamation to finish in the first half of 2019. Over 70% of the land had been reclaimed by February 2018.

Inputs 

The reclamation, one of the earliest stages of the project’s approximate 30-year development lifespan, is a huge undertaking in itself. The city will sit atop 70m cu metres of reclaimed sand, which is being extracted from the seabed by three dredgers. The project will also use 6m tonnes of rock. The work has had a substantial effect on demand for construction materials in Sri Lanka, benefitting local suppliers who are able to meet the contractor’s needs, but also putting a strain on the domestic supply of some items.

While this has led to heightened competition for inputs, it has also brought investment into manufacturing, which will boost local supply and could benefit the industry in the long term. For example, rising sand prices have had a knock-on effect on construction costs, and led Tokyo Cement to increase its manufactured sand capacity in the country. “Sri Lanka’s construction sector has strong momentum. The volume of projects is at an all-time high, with many exciting developments in the pipeline. Demand for local construction supplies will grow exponentially in the coming years, due to the proliferation of mega-projects,” Houliang Jiang, managing director of CHEC PCC, told OBG. Nonetheless, most materials – including those used to construct buildings at later stages of the project – will need to be imported.

Another benefit to the local construction sector is in terms of employment. Some 1000 people are working on the site, 75% of them Sri Lankan, and local subcontractors have participated where possible.

Rollout 

With reclamation progressing rapidly, CHEC PCC is in the process of attracting international investors to develop the project and acquire the units already planned. Interest is proving to be high.

The masterplan envisages a development area of 5.65m sq metres of built-up space, with 50% allocated to residential zones, 24% to commercial property and 12% to retail. The remainder will be for hotels, resorts, convenience stores and social infrastructure, including a hospital and an international school. The residential area will include 20,000 units averaging 120 sq metres and house a potential population of 80,000, while an additional 200,000 people are expected to commute to and from the city on a daily basis. With this in mind, the need to push forward with transport infrastructure projects in Colombo as a whole is ever more pressing. “PCC is going to be a game-changer for Colombo and Sri Lanka,” Steven Mayes, managing director of JLL Sri Lanka, told OBG. “It is going to be the new central business district and will be the catalyst to drive infrastructure development, thus demanding that the government address the infrastructure situation.”

The government is in the process of drawing up separate regulations for PCC to create an attractive investment and business environment, effectively making the city a special economic zone. The ultimate aim is to make PCC a financial and services centre for the wider South Asian region. Still, with such a long-term project, flexibility is necessary. The government and CHEC will revisit the masterplan every five years to ensure that development continues to reflect market demand.

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The Report: Sri Lanka 2018

Construction & Real Estate chapter from The Report: Sri Lanka 2018

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