A huge project in southern Malaysia by a Chinese property developer has become the latest victim of Beijing’s crackdown on capital flight.
It may be doomed unless the builder/developer shifts its strategy and finds new buyers from non-China sources.
China has tightened capital flight of individuals, and this may hurt the sale to Chinese citizens.
The developer, Country Garden has closed showrooms in mainland China for its flagship $100bn Forest City development in response to measures by Chinese regulators that have made it harder for individuals to move money out of the country, said the Financial Times today.
The developer said in a statement on Friday that it was renovating the sales centres “to better fit with current foreign exchange policies and regulations”.
Forest City, a township of glossy apartments and manicured lawns being built on reclaimed land at the southern tip of Malaysia, is heavily reliant on mainland Chinese, who account for about 70 per cent of buyers so far.
But the project is yet to start, said a source from Johor’s Iskandar region.
The project is a joint venture between Country Garden and a company controlled by the Sultan of Johor.
The Sultan and former Prime Minister of Malaysia Mahathir Mohamad had a spat on the Forest city.
Mahathir said he doubted that many Johor Malays and Chinese are buying or going to buy these apartments.
There just aren’t that many Malaysians to buy all these properties. Bloomberg, in the same report, mentioned 60 other developments similar to Forest City, and these are also being sold to mainland Chinese, he said.
FT said Country Garden is now seeking to broaden its customer base for Forest City, opening an office in Dubai last year in an effort to attract Middle East buyers.
It has already sold some apartments at Forest City to Koreans, Japanese and Russians.
The project have provoked fear of Chinese economic dominance.