Financial Times

Affordable housing in Colombo soon
By Suren Gnanaraj
Ten housing schemes are to be set up in the Colombo district by 2005 as part of the Urban Development Authority's (UDA) plans to provide 1,500 middle-income families with an opportunity to own a home.

The project is to be funded purely on the strength of private commercial banks and is also the first time that private construction firms in the M1 and M2 category are to be permitted to bid for tenders alongside state construction firms, on a design and build concept. "The UDA gave its criterion to the bidders and we wanted them to come up with the best design that could use the land to its optimum and also be cost-effective," Rehab Ariff, private secretary to the Minister of Western Region Development said.

These houses are to be built on 10 sites belonging to the UDA in Kolonnawa, Rajagiriya, Borella, Peliyagoda, Ratmalana, Homagama, Pannipitiya, Bandaranaikepura and Kollupitiya. The cost of each house will depend on the square area of the house and the location of the housing complex. The exact value is to be determined once the construction is completed and the government valuer is able to estimate the exact value of the land and building. "The prices will vary between one and two million rupees, but the two housing complexes in Colpetty (on prime land) will be targeted for the slightly upper-income groups," he said. "We are focussing on providing good, affordable houses and not cheap ones," he added. The area of each house will vary between 550 square feet to a maximum of 1250 square feet depending on each family's preference.

Another unique feature of this project is the reluctance of the UDA to build more than three floors in most areas, which would increase the amount of housing units it could provide. Ariff said that according to their research of the areas selected, people generally preferred walk-up flats (with staircases) as opposed to those with lifts, since the maintenance costs were relatively lower.

Once these housing units are sold, the residents would then form a management corporation with a chairman appointed by them to take decisions on their behalf for the purposes of security, maintenance and the development of other facilities. "The UDA will move out of the fray and will remain only as the owner of the land," Ariff said.

According to Fauzul Khalid, media secretary to the Ministry of Western Region Development, the UDA has begun to expand its focus from building bus stands and market complexes to one of providing for the communities priority needs such as housing. "I receive so many letters everyday from public servants, pensioners and other low income groups to provide them with affordable housing. We believe that this would solve part of the problem," he said.

The UDA hopes to commence its media campaign shortly to pre-sell the houses prior to its completion. However, as a result of the UDA's commitment to several private sector banks, each house will be sold on a purely commercial basis.

"We have to re-pay our loans for the first three housing projects in order to get the loans for the remaining seven, so we cannot afford to default payment," he said. Since anyone would be eligible to own a home, families with a stronger financial standing would be at an advantage above those who would generally pay on a staggered basis.

However, the UDA has invited several private sector banks to set up offices within its premises to grant special loans to those willing to purchase a housing unit. "Therefore, we have looked into the aspect of providing everyone with an equal opportunity to purchase a house," he said. The UDA also plans to bar a family from purchasing more than one housing unit.

After a nine-month delay, the Cabinet appointed Tender Board awarded the first three construction contracts for the housing projects in Kolonnawa, Borella and Kalapaluwawa-Rajagiriya, which will cumulatively provide a total of 600 houses before the end of 2004.

The UDA, which was previously under the Ministry of Housing and Construction, has been plagued by allegations of corruption and mismanagement, with a sizeable overdraft of Rs.200 million reported in 2001.

"We are using this project to re-build our credibility as an efficient and transparent authority, and we hope that the trust placed in us by the commercial banks would bear ample testimony of our current standing," Khalid said. At the end of the third quarter for 2003/04, the UDA had managed to muster a profit of Rs.15 million from its projects and hopes to net in a further Rs.5 million by the end of the fourth quarter. The UDA is also on the hunt for more of its land in the city in a bid to provide more housing for the increasing population in the Colombo district.

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