Reclamation of sea for real estate development

Discussions on the Colombo Reclamation and Real Estate Development Project in Sri Lanka are centred on environmental, livelihood as well as geo-political concerns

By Ariyarathna Herath Global developments

During the recent past, a number of small states and micro states surrounded by sea have resorted to reclaiming the sea as a means of overcoming natural limitations on infrastructure and real estate development. 

The most notable such examples are the Hong Kong airport development project, Singapore Changi airport and property development initiative, and the Palm City project in Dubai. These countries, with a limited landmass, have successfully expanded their resource base through reclaiming the sea. 

The Dubai Palm City project, funded 100% by the Emir of Dubai, carried high financial risks as utilisation of the new facilities could not be supported by any feasibility study or demand projection, due to the changing global economic landscape. Dubai nearly went in to recession, due to such extravagant projects. However, it is back in business and thriving.

Singapore, a city-state, reclaimed considerable extent of land for development of its highly acclaimed Changi International Airport as well as extending the Sentosa Island, which has been transformed from a tiny naval base in the colonial era to a major entertainment hub for the Singaporeans as well as tourists. That reclamation is an ongoing project. It is reported that Singapore has taken a policy decision not to develop the entirety of the reclaimed land for some time to maximise the return on investment through appreciation of the value of the property. 

In most, if not all, of these cases, initial investment for reclamation of sea had to be generated within the respective countries i.e. Dubai, Hong Kong, and Singapore. However, it is noteworthy that the reclamation of sea for real estate development currently branded as the Colombo Port City Project (CPCP) is not a government-financed project, as it is being financed by non-debt creating external inflows, which would add to the investment stock of the country.

Reclamation of land from water bodies takes many forms. For example, Holland, a low-lying country in Europe commenced reclaiming land from the sea several centuries ago. Beemster Polder of Holland is one of the earliest reclamation projects undertaken in 1612 AD, which added 70 Sq. k.m. of land. Tokyo Bay, Monaco, Gibraltar, city of Rio de Janeiro are a few other examples of reclamation work undertaken in various parts of the world. Haarlemmermeer Polder, (Haarlem’s Lake) located in the province of North Holland had been a water body until it was reclaimed in 1852. 

The Schiphol Airport, the fifth busiest airport in Europe is now located in a former low –lying tract of land, protected by dikes to prevent seawater from flooding the reclaimed area. Polders belong to three broad categories i.e. land reclaimed from a lake or seabed; flood plains separated from the sea or river with the aid of a man made barrier; marshes separated from water by a barrier and subsequently drained. Although located lower than the surrounding sea, former Haarlem’s Lake is today home to a thriving urban community, causing no adverse environmental impact for over one and a half centuries!

Background for reclamation of sea for Colombo Metropolis

Creating artificial islands is one example of land reclamation. Some prominent examples of such reclamation are Kansai International Airport (Osaka), Hong Kong International Airport and The Palm Islands, The World and Hotel Burj al-Arab off Dubai. It is to be noted that vast sections of coastal areas in China have been reclaimed from the sea by way of creating artificial island. Since 1949 to 1990s China had succeeded in reclaiming over12, 000 sq. k.m. of land, thereby demonstrating their experience in such work.

The reclamation and city development project of Colombo and adjacent areas, an extensively discussed subject these days, was originally mooted by the then Prime Minister, Ranil Wickremesinghe in the early 2000s. He held initial discussions with a Singapore-based Chinese company, which was keen on proceeding with project implementation. However, the prospective investor could not proceed due to difficulties in raising required investment financing. Unfortunately for Sri Lanka another decade passed, while the initial project lay dormant on the drawing boards. 

The revival of the interest in reclaiming land from the sea surrounding the island was witnessed in recent years due to two key reasons:

1. Return of the country to normalcy after a 30 years of armed conflict.

2. Emergence of Asia as the source of global economic production and services.

Emergence of 

constructive dialogue

Reclamation of the sea for infrastructure and real estate development naturally leads to critical analysis and discussion on possible impact of such development work on the environment as well as the livelihoods of communities living in the immediate vicinity of target areas. Environmental concerns become a clear priority due to the multifaceted nature of a project of this scale and magnitude.

It is clear that Sri Lanka is yet a virgin territory in respect of such ‘mega’ projects, unlike some other countries in Asia, such as Republic of Korea Singapore, Malaysia Thailand and the Gulf. The only exception was the Accelerated Mahaweli Development Program (AMDP) that was successfully completed in the mid-1980s. That project received international support and saw completion of several reservoirs such as the Victoria (The UK), Maduru Oya (Canada), Kotmale (Sweden), Randenigala (Germany) and Moragahakanda (Japan), within a short period of seven years instead of the originally targeted 30 years.

Quite understandably, concerns and debates over environmental impact of that massive project surfaced at that time. However, the government was able to address such concerns and complete the project without adverse developments, environmentally speaking. It is not surprising therefore, that the proposed real estate development on land reclaimed from sea in a highly populated area of the country generated much public scrutiny. 

In the case of AMDP, it was the state that was solely responsible for the development project. In the case of the CPCP it is a joint venture between the state and a foreign company. Naturally, development projects of this magnitude attracts the attention of many stakeholders, including environmental watch dogs, pressure groups and in the case of the CPCP, even foreign countries with diverse agendas. 

Environmental protection 

The main environmental concern of local interest groups has been that extensive sand mining and construction of a sizeable artificial island may result in erosion of the coastal belt probably from Negombo to Mount Lavinia and adverse impact of sourcing of local raw materials for construction, especially granite boulders. 

In this regard, the Sri Lankan authorities i.e. the Coastal Conservation Department (CCD), Central Environmental Authority (CEA), Geological Survey and Mines Bureau (GSMB) and the Urban Development Authority (UDA) play an important role and carry much of the responsibility, when it comes to undertaking necessary environmental studies, public consultations and the approval process. 

It is noteworthy that the Sri Lankan coastal conservation and environmental agencies have background information as well as analytical studies to assess the potential impact of a project of this nature, particularly on erosion of the coastline and preventive action to be taken. For example: The Detailed Design Report of South Harbour Terminal Extension is one such rich resource. 

The Colombo North sector erosion has been attributed mainly to the massive sand mining activities undertaken in the past in the Kelani River. The CCD has the necessary expertise and resources and it has already implemented a coastal stabilisation scheme with revetments; groynes off shore breakwaters and periodic sand nourishment, which have performed adequately, even after the construction of the South Harbour Breakwater in 2010. 

It has also been reported that though the South Harbour Breakwater has been in existence for the last four years, no significant erosion has affected the coastline, south or north of the Colombo Harbour. Furthermore, the South Harbour permit issued by CCD has a condition that if any impact and coastal erosion does occur on either side, up to 10 km corrective action has to be taken by the Port Authority. 

However, some environmental experts have claimed that there has been erosion north and south of the Harbour. The CCD considers such activities as localised and those were brought about by temporary, natural storm events.

The way forward

It is observed that there are contradictory claims by environmentalists and related official organisations responsible for the environment as well as coast conservation. One notable aspect was that the Sri Lankan partner of the CPCP was the Port Authority, an interested party to the project. This lacuna has now been addressed by appointing the UDA as the Sri Lankan counterpart. 

To address environmental concerns when the CPCP project is revived, the local counterpart should be made responsible for obtaining approvals from all governmental institutions without passing on that responsibility to the foreign investor. However, it should be the responsibility of the foreign investor to ascertain that the local joint venture partner has obtained all required approvals covering the process. 

Financial and social responsibility of the project promoters

Discussions on the Colombo Reclamation and Real Estate Development Project in Sri Lanka are centred on environmental, livelihood as well as geo-political concerns. It should be recognised, however, that the company responsible for the project would invest app. $ 1.4 billion on the reclamation part of the project and $ 20 billion in current prices will be realised upon completion of the project. 

The project is estimated to generate 83,000 local jobs. In the post conflict period no single company or country has come forward with an investment of such a magnitude. Over a period of time, the project would generate massive employment opportunities and skills for our youth, provide business opportunities for locals and transform Colombo into a highly-sought-after venue for locating international business. 

The promoters are contemplating a return on investment over a 50-year period. That is an extremely long gestation period in comparison with average industrial or service sector projects. Unlike short-term or medium gestation period projects, investors in a project of this nature have to be extremely cautious regarding the project outcomes as any negative impact of the project, would affect the investor as well as the reputation of Sri Lanka. 

The vision for Port City is to establish Colombo as the ultimate business and tourist destination in South Asia. The land created will attract local and international investments for shopping malls, hotels, apartments, an exhibition centre, educational institutions, healthcare facilities, theme parks, restaurants, etc. The Port City is planned to be very much a city for the people of Sri Lanka to be shared and enjoyed by all Sri Lankans.

Conclusion

The writer is of the view that the project should not be abandoned due to the fear of possible environmental threats. Instead the Government should ensure that requisite environmental assessment studies are carried out, public consultations are held, and all issues are addressed in a transparent manner. The foreign investor should satisfy itself prior to recommencement of the project that the Sri Lankan counterpart has obtained requisite approvals covering the reclamation work. 

In the final analysis, what should matter to the Government of Sri Lanka most is the improvement of the living standards of its people. Therefore, any project needs to be evaluated against the potential negative impact on the livelihoods of affected communities. While the project may enhance the prosperity of many in the medium to long-term, the Government cannot allow livelihoods to be harmed without prompt and adequate compensation. 

Several hundred families living along the coastal line north of Colombo are likely to suffer due to dredging and other project-related activities. Consequently religious leaders, NGOs and other voices from such areas have been presenting their case to the authorities. The writer firmly believes that such voices should be heard and appropriate settlements should be reached because at the end what matters are human beings. 

Furthermore, if the project generates good returns and has a positive overall impact on the development prospects of the country; it should be allowed to proceed with adequate safeguards. 

[The writer, BA Hons. (Pera), MA (Norway), PhD (Pera), is a Senior Lecturer in Economics at the University of Peradeniya.]