The land bordering D R Wijewardene Mawatha is owned by the government's Excise Department, Co-operative Wholesale Establishment, a state enterprise, Sri Lanka Ports Authority warehouse.
Private listed C W Mackie and Company, and the Sri Lanka Convention and Exhibition Centre also owns property. The UDA is negotiating with the current owners to release the land and relocate the land, the report said.
The UDA comes under Gotabhaya Rajapaksa, a brother of Sri Lanka's president Mahinda Rajapaksa. The UDA has powers under strict laws to appropriate private land.
The Sunday Island quoted H A Dayananda, the deputy head of projects at the UDA as saying that the agency expected proposals for a 5-star hotel, a shopping mall, restaurants, city hotels multi-stories car park, upmarket housing, a convention centre and cine complexes.
State land would be offered investors as 55 or 99 year leases at 'market value' with 25 percent of the value of assessed land to be paid up front and the balance in three years. Work has start within six months and be complete within three years.
Board of Investment tax concessions will also come with the project, the report said.
Along the shore of the Beira Lake, a 6 to 12 meter wide 'linear park' with a children's play area, water based recreational opportunities, open air entertainment, cultural activities and food outlets would be set up, the report said.
The state has already cleared 1,000 "unauthorized settlements around the area and 320 settlements on a reservation along a railway track" and near a temple on another part of the Lake Shore.
Land belonging to Colombo Commercial Company will also be offered for development, the report quoted Dayananda as saying.
The lake would also be dredged and water would be cleaned, the report said. The lake has blue green algae outbreaks common polluted waterways.