Via Nikkei Asia, an article on Port City Colombo, a still barren, sand-filled island built by the Chinese off the coast of Sri Lanka’s commercial capital:

A growing list of companies are looking to establish toeholds in Port City Colombo, a still barren, sand-filled island built by the Chinese off the coast of Sri Lanka’s commercial capital.

Optimism surrounding the new slab of real estate in the heart of the Indian Ocean clashes with the country’s grim economic picture and political turmoil, amid daily blackouts, protests and persistent talk of a potential default on foreign debt. Nevertheless, “there is high expectation this will be a game-changer,” one veteran commercial banker said of the early hints of an international city taking shape.

Senior officials at the Colombo Port City Economic Commission, the parliament-approved body authorized to vet investments in the project, have been fielding queries from Hong Kong businesses ranging from the banking, financial services and logistics sectors to trading houses.

This buzz comes with a touch of irony. Companies that make the move would be escaping Beijing’s tightening political and legal grip on Hong Kong. But they would be moving into a special economic zone promoted by China’s infrastructure diplomacy — a $1.4 billion investment as part of the Belt and Road Initiative (BRI).

“These companies in Hong Kong want to step out of the increasing authority of Beijing” as they make new plans and look to “potentially avoid trade tensions with their traditional markets,” Saliya Wickramasuriya, the commission’s director general, told Nikkei Asia. “They are moving to another location in Asia … [and] will make formal disclosures to the market if they get to the [foreign direct investment] stage.”

They are not alone. Some in Colombo’s small business world are agog at word of a U.S.-based international hospital chain and an elite British secondary school involved in discussions to carve out an early stake in properties being offered on a 99-year lease.

The behind-the-scenes negotiations come as the first phase of the Port City’s Colombo International Financial Centre — a three-tower, mixed development complex billed to attract total investments of $1 billion with its expanded second phase — moves off the drawing board.

LOLC Holdings, one of Sri Lanka’s largest conglomerates, has taken a joint stake with China Harbour Engineering Port City Colombo, the project’s main developer. The latter is the local company of CHEC, an affiliate of China Communications Construction Company, a development giant with a portfolio of multiple BRI projects in Sri Lanka.

LOLC’s stake in the $450 million initial investment adds to its portfolio of businesses across Asia and Africa in sectors as diverse as microfinance, agriculture and real estate. “We wanted to invest in this flagship project [because] it is part of our investment plan to build a real estate portfolio,” Imraz Iqbal, deputy general manager for business acquisitions at LOLC, told Nikkei. The “market-driven approach in LOLC enables us to take calculated risks.”

The Port City’s latest developments suggest that this prime patch of empty real estate between regional financial centers such as Singapore, Mumbai and Dubai is gaining firmer footing.

Launched in September 2014, during a visit by Chinese President Xi Jinping, the early stages of the project to reclaim land from the sea and then build the island were buffeted by Sri Lanka’s highly charged partisan politics. A right-of-center coalition government froze work on the Port City for a year after its electoral triumph in 2015.

To be completed over the next 20 years, it is expected to bring in $15 billion in all, with luxury hotels, residential towers and waterfront properties for the 80,000 expatriates and locals it will house. That would make it Sri Lanka’s largest FDI project.

More carrots to attract investors from the Middle East, India, Southeast Asia and China will be dangled after new banking laws are passed for the special economic zone to operate as a dollarized, offshore jurisdiction. “We expect the banking regulations to be ready by June this year, so we can go to the market to promote the Port City,” Thulci Aluwihare, assistant managing director at CHEC Port City Colombo, said in an interview. “So you can invest in dollars, seek rent in dollars, repatriate your currency in dollars — or any other designated foreign currency.”

But realizing the high hopes may be difficult with Sri Lanka’s $81 billion economy currently in the throes of a meltdown. A lack of dollars and diminished reserves have raised the prospect of the island nation defaulting on foreign loans, estimated at $6.9 billion this year, and being unable to pay for basic imports such as fuel, food and medicines. Public anger against the ultranationalist government’s policy errors is swelling, as families go hungry and neighborhoods are hit by power outages lasting over 10 hours each day.

Seasoned analysts reckon that Sri Lanka’s macroeconomic troubles cannot be sidestepped by the Port City’s promoters. “I cannot see a foreign investor coming in with this overhang,” said Dilshan Wirasekera, chief executive officer of First Capital, a prominent investment bank. “You need to show that the macroeconomic fundamentals are sustainable.”

Aluwihare conceded that Sri Lanka’s poor ratings and the economy sinking in a sea of red stand in the way of the Port City rising as a beacon of hope. “We need to justify that the country’s ratings will not have a significant bearing on the Port City,” he said. “It will be insulated because of the foreign currency [laws].”