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Indian conglomerate’s luxury hotel further delayed

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The opening of the Indian conglomerate ITC Ltd’s ambitious luxury hotel and mixed utility complex on Colombo’s Galle Face area has been further delayed. The project was granted “strategic development” status 11 years ago.

One of the reasons, as indicated by the company’s last annual report, is slow apartment sales caused by the adverse macroeconomic climate.

This week, President Ranil Wickremesinghe in his capacity as Investment Promotion Minister issued a gazette allowing WelcomHotels Lanka (Pvt) Ltd its third extension in seven years (the first was in 2016). The new inauguration date is June 30, 2024. It had earlier been scheduled to open mid-this year.

The project is located on 5.86 acres of prime sea-facing land in Galle Face. It was gazetted as a strategic development project in October 2012, thereby receiving generous tax breaks. It is also exempt from Sri Lankan foreign exchange regulations.

ITC’s 2022 annual report states that project construction activity ran on schedule till the third quarter of the 2018-2019 financial year but was then hit by disruptions arising from the Easter bombings followed by recurrent waves of Covid-19.

“The recent deterioration of the macroeconomic scenario in the country has exacerbated the situation,” it states. For instance it has affected “the sales velocity” of The Sapphire Residences luxury apartments (as they will be called). But the company expects apartment sales to gain traction as the project nears completion and the situation in Sri Lanka normalises.

ITC’s investment in the project as at March 2022 stood at US$ 262.5mn (INR 2,169 crores) according to the annual report, although the previous year’s report places the value at US$ 278mn by March 2021.

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