Sri Lanka’s ambitious urban modernization drive meant to transform key cities into modern, livable, and commercially vibrant spaces has come under renewed scrutiny following delays and questions surrounding the transfer and use of prime state lands in Colombo and other major cities.
Documents reveal that Cabinet approval was granted on 27 October 2020 to transfer both government and privately held lands to the Urban Development Authority (UDA) for a series of urban redevelopment projects islandwide.
The move was part of the broader national strategy to rejuvenate Colombo, Kandy, Galle, Jaffna, and other urban centres under the National Physical Plan and the Urban Regeneration Programme led by the Ministry of Urban Development and Housing.
Under Cabinet Memorandum No. MUD/H/2020/CP/37, dated 12 October 2020, the UDA was authorized to take possession of 45 identified lands, some already occupied by private clubs and institutions.
Among these were three high-value plots totaling 1.8274 hectares, which housed the Otters Aquatic Club and the 80 Club Colombo—two long-established social institutions in Colombo’s most valuable real estate zones.
Although the Cabinet decision permitted the UDA to develop, open, and repurpose these lands for public use, the Authority has yet to utilize them effectively for commercial or public benefit.
According to finance ministry observations issued on 16 October 2020, any revenue generated through the commercial use of these lands was to be credited to the Consolidated Fund, after deducting UDA’s acquisition and development expenses.
However, more than four years later, none of the targeted lands have been commercially developed, raising concerns over administrative inefficiencies, political interference, and potential underutilization of valuable public assets.
Senior sources within the UDA acknowledge that procedural hurdles and disputes over property rights have delayed progress.
The controversy unfolds against the backdrop of several high-profile urban transformation projects currently under implementation.
These include the Colombo City Beautification and Waterfront Development Project, the Beira Lake Restoration and Promenade, the Battaramulla Administrative City, and the ongoing Port City Colombo mega development. Collectively, these initiatives are aimed at reimagining urban spaces, easing congestion, and attracting foreign investment.
The Urban Regeneration Project, launched with support from international agencies such as the World Bank and Asian Development Bank, has already resettled over 50,000 underserved families from informal settlements to modern housing complexes, particularly in Colombo North and East.
Yet critics argue that while the UDA’s housing component has shown visible results, commercial land utilization has lagged, undermining potential revenue generation.
Urban economists point out that strategic use of government-owned land could inject billions into state coffers through public-private partnerships (PPPs), retail complexes, or green urban spaces. “Land in Colombo 7 and surrounding areas is among the most valuable in South Asia.
The longer these assets remain idle, the greater the economic opportunity cost,” said one senior economist familiar with the process.
Meanwhile, opposition lawmakers have demanded a Parliamentary oversight review into why lands earmarked for development such as the Otters and 80 Club properties—remain inactive, and whether their temporary status has benefited any private interests.
As Sri Lanka intensifies its urban renewal agenda amid fiscal strain, the issue highlights a deeper challenge how to balance modernization, transparency, and accountability in managing the country’s scarce urban land resources.
Whether the UDA can translate Cabinet approvals into tangible results will be a key test of its institutional credibility and the government’s broader urban development vision
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