Aussie bldg sale at below market prices

Last week’s sale of the former Australian High Commission premises has raised questions as to whether L. B. Finance got it cheap in a prime area that commands around Rs 6 million per perch price but real estate developers say building restrictions may have led to the discounted price.

The 103-perch block was sold for Rs.450 million at little over Rs 4.3 million a perch. “High rise apartments cannot be built in this area. That is why one could purchase it at a bargain price of Rs.450, million for a land in this area,” a property development agent said. He said that the City of Colombo Development Plan passed in 1999 July has categorised Colombo into nine development zones. “They are called the Concentrated Development Zones, Mixed Development Zones, Commercial Development Zones, Port Related Activity Zones, Primary Residential Zones, Special Primary Residential Zones, Parks and Playgrounds, Environmental Conservation Zones and Recreational Zones. This particular area in Cambridge Place where the Australian High Commission was situated is categorised as a Special Residential Zone,” he explained.

He said that a Special Residential Zone can have developments ranging from dwellings and flats, dormitories, children’s homes, homes for the aged, diplomatic high commissions, consulates and with certain restrictions hotels, lodges and restaurants.

Nimal Perera, Director LB Finance told The Sunday Times FT that the dwellings and flats category stipulates that the housing units should have a maximum of three floors including the ground floor. “This is one of the reasons that the land was sold at a bargain price,” he said.