By: Staff Writer
August 11, Colombo (LNW): Sri Lanka’s government has moved to turn some of the country’s most valuable public residences into revenue-generating assets, opening a potentially lucrative but politically sensitive chapter in its austerity programme.
In August 2026, the Finance, Planning and Economic Development Ministry invited Expressions of Interest (EOIs) from private investors for the adaptive reuse of a portfolio of State-owned heritage bungalows in Colombo 5. The properties, located along Stanmore Crescent, Paget Road and Skelton Road, are being offered under 30-year lease agreements, while ownership remains with the Government.
The proposal represents more than a real-estate transaction. It raises questions over how efficiently the State has managed prime public property, how much revenue can realistically be generated, and whether commercialisation will deliver value to taxpayers without sacrificing national heritage.
The government says the properties could support boutique hotels, heritage accommodation, restaurants, cafés, lifestyle establishments, tourism-oriented retail and other premium hospitality ventures. Investors are encouraged to submit innovative concepts, with each property to be evaluated independently.
The financial potential is considerable. Fifty government bungalows are understood to exist in Colombo 7 and Colombo 5 under the Ministry of Public Administration, traditionally allocated to former Presidents, Prime Ministers and Cabinet Ministers. A separate government plan has identified 24 luxury bungalows and official residences for long-term leasing to private investors and international bodies through a Public-Private Partnership model.
Even before accounting for land appreciation or commercial redevelopment, the rental value attached to these properties is substantial. Government evaluations of only three former presidential residences associated with Mahinda Rajapaksa, Chandrika Kumaratunga and Maithripala Sirisena put their combined monthly rental value at Rs. 7.5 million.
That figure suggests the State may have been sitting on an enormous underutilised property portfolio while public finances remain under pressure.
Yet the crucial question is not simply how much money the leases could raise. It is how the government will determine whether the public receives the best possible return.
The Finance Ministry has promised a transparent National Competitive Selection Process and says proposals will undergo competitive and objective evaluation. Investors can inspect the properties on August 12 at 10 a.m., with proposals due by August 25.
That compressed timetable places enormous importance on disclosure, valuation and competitive bidding. The government will need to demonstrate that lease prices reflect market realities and that commercially attractive properties are not awarded below their potential value.
There is also the unresolved question of what happens after 30 years. Private investors may shoulder refurbishment, maintenance and operating costs, reducing the burden on taxpayers. But poorly structured contracts could leave the State locked into weak returns while investors capture most of the upside.
The bungalow programme could therefore become a landmark austerity success—or another example of valuable public assets being managed without sufficient scrutiny.
The numbers may justify the strategy. The process will determine whether the public ultimately benefits.
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