Arcade Independence Square, Sri Lanka
Photo Credit: Image by Freepik
On this page: Lessons learned on repurposing or adaptive reusing of old assets as they give second chances for revenues to the government, otherwise idle. Find case studies below, or visit the Guidelines on Innovative Revenues for Infrastructure section and the Content Outline, or Download the Full Report.
Project Summary: Background Arcade - Independence Square (Arcade) is by far one of the most important refurbishment and development projects undertaken by the Sri Lankan Ministry of Defence and the Urban Development Authority (UDA) which converted the old Auditor General’s Building into a grand and trendy shopping and entertainment destination spending Rs. 700 million (USD 1.98 million) for the renovation.1 Project Structure The arcade provides office spaces, commercial outlets, entertainment rooms and all other facilities while preserving its original architectural design and magnificence, opening new opportunities for employment.2 Arcade Independence Square generated a monthly income of Rs. 10 Million (USD 27,800) in 2014 but revenues gradually declined from 2015 while it was under UDA management. Considering this, the UDA board decided to lease the Arcade to the private sector to generate greater revenue. The Department of Valuation recommended that Rs. 120 Million (~USD 330,000) should be obtained as annual lease.3 Currently, Arcade is being operated by Odel PLC as a luxury boutique experience destination, adding its cluster of operating and managing high-end shopping malls in the country. In 2021, Odel PLC yesterday said it entered into an agreement with the Urban Development Authority (UDA) to lease, operate and manage Arcade Independence Square for a period of 10 years (with option to renew for another 10 years).4 Odel PLC, a subsidiary of Softlogic Holdings PLC, concurred to pay Rs. 10 million monthly (USD 27,800) and Rs. 120 million (~USD 330,000) as a total upfront fee at the time of signing the agreement. They also paid another Rs. 240 million (~USD 660,000) towards security deposit. Softlogic Holdings PLC is a diversified conglomerate in Sri Lanka engaging in multiple industries such as ICT, Healthcare, Retail, Financial Services, Automobiles, and Leisure.5 Footnote 1: Restoration of Historical Buildings in Sri Lanka Footnote 2: 'Arcade Independence Square' Colonial Buildings Restored to their Grandeur Magnificence Vested in Public Footnote 3: UDA was losing revenue; State Min. gives reasons for leasing Arcade Colombo Footnote 4: Softlogic’s Odel to operate Arcade Independence Square from April Footnote 5: Arcade Independence Square’s 10-yr lease: Another retail giant also engaged in bidding, Godahewa
The Guidelines have not been prepared with any specific transaction in mind and are meant to serve only as general guidance. It is therefore critical that the Guidelines be reviewed and adapted for specific transactions To find more, visit the Guidelines to Implementing Asset Recycling Transactions Section Overview and Content Outline, or Download the Full Report.
Updated: March 8, 2024
TABLE OF CONTENTS
I. Innovative Revenues for Infrastructure (IRI)
2. Introduction to Commercial Value Capture (CVC)
3. Applying CVC in Infrastructure Projects
2. Case Studies in CVC from International Experiences
• Advertising and Marketing in High-Footfall Public Areas
• Naming Rights in Stations and City Icons
• Commercial Uses of Virtual Spaces
• Commercial Uses of Physical Places and Virtual Spaces Created on the Back of Public Infrastructure
• Control of Real Estate Development Rights to Enhance Value
• Leveraging Climate Opportunities
• Usage of Facilities During Off-Hours or Off-Seasons
• Repurposing or Adaptive Reusing of Old Assets