Colombo Land said in April 2012 that it had entered in a agreement with owners of a block of land of undisclosed size, next to its southern car park for 221 million rupees.
At the time it was planning to build a 180-room city hotel, which was expected to start in late 2012 and be finished by 2014.
The firm said in its latest stock exchange filing that it would make use of a structure within the newly acquired land for retailing, and the hotel will be delayed.
"The interim plan is to refurbish the existing building with state of the art facilities in order to accommodate brands of high quality and international recognition," the statement said.
"Clothing, footwear, F & B and jewelry will be some of eh key areas of focus, having researched the demand for these specific sectors.
"The long-term plan of a mixed development remain the same except the timeline