Forest City, a Chinese-funded residential complex in Malaysia, was once advertised as a dream paradise for nearly a million residents. However, only a handful of units are currently occupied, leading to warnings of its failure.
The project, part of China’s Belt and Road Initiative, was aimed primarily at the Chinese domestic market and priced beyond the reach of ordinary Malaysians. Now, the property has been called a “ghost town” due to its lack of tenants and eerie atmosphere.
Forest City’s tax-free status was once a major draw, but the complex now faces a multitude of issues including incomplete utilities and severe limitations on foreign spending by Chinese citizens, resulting in a significant downturn for real estate developers like Country Garden.
The recent financial troubles of Evergrande, a major Chinese real estate company, compound the uncertainty of Forest City’s future. With the real estate market in turmoil and uncertain political factors in Malaysia, the fate of Forest City remains unidentified.
Image source: AFP/Getty Images
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Forest City has a capacity of 1 million residents, but only a handful of the units are occupied.
23 minutes ago
“I managed to escape from this place,” said Nazmi Hanafiah, laughing a little.
a year ago The 30-year-old IT engineer moved to Forest City, a large Chinese-funded residential complex in the state of Johor. southern part of Malaysia This man was renting a one bedroom room in a high rise condo with a view of the sea on one side of the building.
After 6 months, he felt he would never be here again. He no longer wants to live in what he calls a “ghost town”.
“I’m not worried about the deposit I paid. I don’t care about money at all. I have to get out of here,” Nazmi said during an interview in the same condo building where he used to live.
China’s largest real estate development company, Country Garden, has launched this US$100 billion mega project. As part of the Belt and Road Initiative (BRI) in 2016
At that time, China’s real estate industry was at the peak of liquidity. Property developers are borrowing huge sums of money to invest in construction in China and abroad. The buyers are middle class.
In Malaysia, Garden Country plans to build a new city under the concept of an eco-friendly city. with many amenities Be it a golf course, water park, office building. Bars and restaurants At the time, the Country Garden announced that Forest City would be home to almost a million residents.
After eight years, Forest City has become a foreign country warning of its failure. Not only in China You can feel the impact of the real estate crisis. At the moment, only 15% of the Forest City project has been built, and according to the latest assessment it is found that Only about 1% of the total housing units which are occupied.
Despite owing more than $200 billion, Country Garden told the BBC it was “optimistic” that all plans would be completed.
“This place is very scary.”
At the beginning of the project, Forest City was advertised as It is described as “a dream paradise for everyone”, but in fact the project is mainly aimed at the Chinese domestic market. It is aimed at Chinese buyers who want to own a second home overseas, so the price set is beyond the reach of ordinary Malaysians.
From the point of view of Chinese buyers They consider owning real estate as These are one such investment that may be able to be rented to Malaysians like Nazmi. Or it can be home for a long holiday.
Photo source: COUNTRY GARDEN
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This is a picture of Forest City, where real estate developers China had imagined it.
Forest City is located on a reclaimed island. which is far from the city of Johor Bahru Due to its remote location, the property is devoid of tenants and has been called a “ghost town” by locals.
“Honestly, it was scary,” Nazmi said. “I had high hopes for this condo, but it was a terrible experience. There’s nothing to do here.”
Forest City had a strange atmosphere, it felt like an abandoned holiday resort.
On a deserted beach There is a ruined playground. A rusty antique car is parked. Which is perhaps appropriate for the white concrete stairs that look like stairs leading to nowhere. Regarding the area leading to the sea There is a sign warning not to swim because of crocodiles.
It looks as if the building was built as a shopping centre. Many shops and restaurants have closed. Some rooms resemble empty construction sites. If described in a surreal sense An empty toy train whirled around the mall, while the Chinese version of the song Heads, shoulders, knees and toes played on a non-stop loop.
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Signs on the beach warn people not to swim. Because there are crocodiles
In the building next door, the Ardd Wledig showroom, a large model of the city is on display to give an insight into what Forest City would look like if it were built. in the promotion department Two boring looking workers sat in their seats. Above them was written “Forest City, a Place of Endless Happiness.”
The biggest draw here is the area’s tax free status. in the beach area You will see piles of empty alcohol bottles. And there are pockets of local drinkers. who come to use this service
As night fell, Forest City looked like a dark hole. The apartment building that towers over the complex has hundreds of rooms, but less than five or six of them have lights on, making it hard to believe that people actually live there.
“It’s creepy here,” said Joanne Corr, one of the residents of the building the BBC came across. “Even during the day If you step out of the room door The corridors in the building are still dark.”
Joanne and her husband Living on the 28th floor, the couple were the sole occupants of the floor. It is rented as Nazmi. and the same They both planned to get out of here as soon as possible.
“I feel sorry for the people who invested and bought this place,” he said. “If you Google Forest City, you’ll see things on Google that are nothing like what it is now.”
“It should be a project that fulfills the promises made to the people. But it’s not like that.”
Image source: AFP/Getty Images
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Most restaurants and shops in the center are closed.
It is not easy to contact buyers in China. The BBC contacted a number of room owners. But they are reluctant to express their opinion. Even give an anonymous opinion.
However, on social media there is some evidence of this background. under the post praising the project One buyer from Liaoning Province wrote: “This is very misleading. Forest City is now a ghost town. There is nobody there. It is far from the city. Utilities are not complete. And it’s hard to get around if you don’t have a car.”
Another comment asked how they would get their refund back. One person wrote: “The price of the unit I bought has dropped significantly. I’m out of words to say.”
Hard to sell
Such turmoil is felt throughout China. The real estate market is in turmoil.
After many years of borrowing money from real estate developers The Chinese government fears that a bubble has formed. Therefore, regulations were published restricting lending in 2021. “Houses are for living. Not for speculation.” This is a famous phrase from Chinese leader Xi Jinping.
Consequences of China’s restrictive lending regulations make real estate companies Many large companies are running out of cash to complete construction projects.
Last October, Country Garden was forced to suspend two projects in Australia. They got the deal after selling an uncompleted property in Melbourne at a bargain price. and another in Sydney
Image source, bbc
Malaysia’s own internal political factors are also the cause of Forest City’s recent situation in 2018. Malaysian Prime Minister Mahathir Mohamad Announced a rule restricting the issuance of visas to Chinese property buyers, with Mr. Mahathir expressing his disagreement with the “Building a city for foreigners”
Some analysts have questioned the wisdom of building megaprojects in countries where the economic and political situation is uncertain. The Malaysian government is currently supporting the Forest City project, but only for those who wish to purchase units in the project. It is not clear how long the project will last.
As for unexpected issues such as travel restrictions due to the outbreak of COVID-19 and limiting the amount of foreign spending by Chinese citizens. It is another factor that causes the overseas projects of giant companies like Country Garden to come to an end.
“I think it was pushed too far and too fast,” said Than Wee Tiam, a real estate consultant at KGV International. “Before launching such an ambitious project, The important lesson to learn is Make sure you have enough cash.”
This week, Evergrande Real estate Company Chinese Nationality with the highest debt in the world It has been admitted to liquidation proceedings in the Hong Kong court. The court ordered a six-week rehabilitation for Evergrande in order to create a repayment plan for its creditors. Meanwhile, the judge adjourned the reading of the verdict for the seventh time.
Image source, bbc
Country Garden confirmed the latest situation in the real estate market. China only “Insignificant disturbance” and said that the real estate business in Malaysia can continue as usual.
Country Garden also said it plans to incorporate the Forest City project into a new special economic zone between Malaysia and Singapore. Declares this project to be “Safe and stable”
However, if you don’t have access to cash It’s hard to see a project like Forest City ever being completed. Including the difficulty of attracting people to live there soon. To put it politely, It is difficult to sell real estate built by Chinese investors.
“It’s a chicken and egg situation,” said Evelyn Danubrata of Redd Intelligence Asia. relies on pre-sales (Pre-build Sales) to raise funds for construction.”
“But buyers won’t put money down if they’re not sure. Will you finally get the key to the flat?”
Image source, getty images
Ambition and reality
In reference to China’s real estate crisis the Forest City case is a classic case of ambition clashing with reality. Although factors in Malaysia have played a role in the recent situation, But it has been proven that building tens of thousands of apartments in remote locations is not attractive enough to make people want to come and stay
In the end The fate of Forest City and hundreds of other Chinese projects depends on the Chinese government. In November, it was reported that Country Garden received an initial developer list. to receive financial support from the Chinese government But the details of the support are still unclear.
In another corner It is unlikely that a house seeker like Nazmi will return to Forest City.
“I’ll choose carefully next time,” he said, “but I’m happy to leave here. Now I have my life back.”
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