Yesterday’s headlines read that foreigners can no longer purchase a home in the project that drew Chinese buyers, but today’s news is the foreign sale ban on Forest City is still not yet decided.
- A giant development of a US$100 billion new city to eventually house 700,000 people on four man-made islands near Singapore
- Built by China’s Country Garden Holdings in a joint-venture with businesses held by the Johor sultan
- Malaysians living in Johor complained of large numbers of Chinese people snapping up properties in Forest City, besides concerns of environmental damage, a glut in the property market, and the impact of land reclamation on fisheries
- Country Garden has developed just a fraction of the planned reclamation of 20 sq km, where Chinese nationals accounted for about 70% of apartment buyers last year
Housing and Local Government Minister Zuraida Kamaruddin said the prime minister’s remark yesterday that foreigners may not buy units at the Forest City development in Johor has yet to be formalised in policy.
She told the developer to write to her ministry to clarify Dr Mahathir Mohamad’s declaration.
Zuraida added that any resolution must also involve the Finance Ministry and the Johor government.
“For the time being, it is still undecided if they can sell property to foreigners.
“We must assess (the situation) and then provide the prime minister with a report,” she told reporters today
Meanwhile, Johor Housing and Rural Development Committee chairman Dzulkefly Ahmad said the prime minister’s statement yesterday came as a shock for the state government.
“We are still trying to make sense of this new move as we have yet to be informed,” he said.
He added that they would seek clarification from the Prime Minister’s Department.
“We already have in place a requirement that foreigners can only purchase properties worth RM1 million and above.
“The previous government also introduced policies to include international zones within the project and other parts of Johor,” he said, referring to the zone foreigners are allowed to purchase units from.
The developer of the mammoth project maintains that it has complied with all laws and regulations with regards to approvals needed to sell their property to foreign buyers.
It said Dr Mahathir’s statement did not correspond with the outcome of a meeting between the prime minister and Founder and Chairman of Country Garden Holdings, Yeung Kwok Keung.
In a statement, the company said the two had a 40-minute closed-door meeting on 16 August 2018, prior to the prime minister’s visit to Beijing.
“During the meeting, Tun Mahathir reiterated that he welcomes foreign investments which could create employment opportunities, promote technology transfer and innovations that could benefit Malaysia’s economic growth and job creation,” said the company.
It added that the prime minister’s comments on the issue could have been taken out of context by the media.
“We are currently in touch with the Prime Minister’s Office for clarifications, as we believe Tun Mahathir’s comments may have been taken out of context in certain media reports.
Dr Mahathir Mohamad yesterday declared that foreigners will not be granted visas to live in the giant Forest City real estate project on the country’s southern tip.
It is not his first broadside against the plan by Chinese developer Country Garden Holdings to create a new city that would eventually house 700,000 people on reclaimed land near Singapore, but it could be his most damaging.
The company has been targeting foreigners more than Malaysians for sales of the apartments.
A top official at the project told Reuters last week that in the weeks immediately after 93-year-old Dr Mahathir came back into power through GE14, demand for the apartments had weakened, and that the uncertainty remained a concern.
The prime minister’s latest comments are likely to exacerbate those concerns.
“One thing is certain, that city that is going to be built cannot be sold to foreigners,” Dr Mahathir said at a news conference on Monday in Kuala Lumpur in response to a question from Reuters.
He said the government’s objection was “because it was built for foreigners, not built for Malaysians. Most Malaysians are unable to buy those flats.”
Country Garden’s Chinese buyers now make up about two-thirds of the owners of the Forest City apartments that have been sold so far, with 20 percent from Malaysia and the rest from 22 other countries, including Indonesia, Vietnam and South Korea.
Dr Mahathir had capitalised on popular disquiet about Chinese investment pouring into Malaysia during his election campaign. He even said in a speech last December that he hoped Forest City would become an actual forest with baboons and monkeys as residents, according to local media reports.
Since becoming prime minister again he has put the brakes on several China-backed projects, including the US$20 billion (RM81.9 billion) East Coast Rail Link project and a natural gas pipeline project in Sabah. Plans for a high-speed rail link from Kuala Lumpur to Singapore, which was expected to be a big boost to the Forest City project, have also been suspended.
Forest City’s sales have picked back up in recent weeks, and the developer has been seeking to change the project’s image. Country Garden is trying to make it appear more Malaysian and less Chinese, according to the official, Ng Zhu Hann, who is head of strategy.
Country Garden is also willing to acknowledge for the first time that if demand falters it will have to slow down the building of the development. It is eventually intended to be a US$100 billion city, with apartment blocks, houses, office towers, hotels and shopping centres on four man-made islands.
“If the demand is there, we will build. If it’s not there, we will slow down,” Ng said in an interview at the gleaming Phoenix Hotel, one of the finished new structures on the first of the reclaimed islands.
“So there’s no worry of a ghost town, oversupply – if the demand is not there, we won’t be building.”
Dr Mahathir’s victory is the second big threat that the development – which is a partnership between Country Garden and the Sultan of Johor – has faced in the past couple of years.
Beijing’s moves to stem capital outflows imposed after the yuan plunged in late 2016 hurt mainland Chinese demand for the apartments.
Ng said what he called the “Chinese Stigma” is the biggest hurdle facing the project.
“What the Malaysian government does not want is a Chinese enterprise coming to Malaysia, taking government contracts, affecting the project opportunities of local developers, making the money and going back,” Ng said.
This has prompted a change in hiring strategy as Forest City seeks to recruit more Malaysians like Ng into senior management positions.
“My predecessor was a Chinese. In the past, our management had only one Malaysian, which was head of legal. This (my) position is usually held by a Chinese, but now I’m here,” said Ng, who is ethnic Chinese but from Malaysia.
Ng said that the political uncertainty had hurt investor sentiment.
“It’s not that people don’t want to invest, but people are now: ‘Let’s wait and see. What if they change their policy again?’ Political stability is one, policy stability is another.”
At the end of a 30-minute drive from the crossing from Singapore through palm oil plantations and jungle, the once sleepy town of Gelang Patah known for its mangroves and fishing villages now has a skyline of skyscrapers.
This futuristic development is only half of the first of four artificial islands envisioned for the development – only 2.7 square kilometres of the planned reclamation of 20 square kilometres.
Work to build more high-rise residential towers, townhouses and commercial buildings is continuing full steam, with dozens of heavy-duty trucks carrying sand and materials while cranes dot a skyline that is growing taller and denser as high-rise apartments rapidly approach completion.
Forest City is barely inhabited, with only a handful of staff living at its service apartments and guests at its hotel.
But earlier this month, an international school opened its doors to the first 60 students – mostly from China and also from South Korea – to its 22-acre campus planted with “vertical gardens,” an Olympic-size pool and three yoga studios.
The Shattuck St Mary’s school campus is designed to accommodate 1,000 students.
The first 482 owners will get the keys to their new homes by September.