Kuala Lumpur (AFP)
An ambitious $ 100 billion island city under construction off the coast of Malaysia has found itself in troubled waters as the new government targets development, the latest in a string of China-related megaprojects launched under the ex-Prime Minister in the grip of scandal.
The futuristic skyscrapers and waterfront villas of Forest City are being built on four man-made islands in southern Malaysia, just an hour from the wealthy city-state of Singapore.
The project, which is expected to accommodate up to 700,000 people when completed in 2035, is being developed by Hong Kong-listed real estate giant Country Garden and a company partly owned by a powerful Malaysian sultan.
It is aimed at mainland Chinese investors as an alternative to more expensive properties in Singapore, with reports indicating that Chinese buyers have recouped around two-thirds of units already sold before construction is completed.
But development, which includes international schools, shopping malls, hotels and even an immigration center, was disrupted from the start.
The crackdown on capital outflows from China has affected demand, as it has become a lightning rod for public anger at China’s growing influence in Malaysia under the government of Najib Razak.
Environmentalists have also warned that dumping sand to reclaim land for the city could destroy marine life.
Today Prime Minister Mahathir Mohamad is lashing out at foreigners buying apartments in the vast development, threatening to add to a glut of new residential properties in southern Malaysia.
Malaysians are unlikely to buy or stay there due to the high prices and relatively remote location, while foreigners do not automatically get long stay visas when purchasing a property.
– ‘Built for foreigners’ –
With the shock defeat of Najib’s government in May and the election of Mahathir, who has long denounced the explosion of Chinese investment in Malaysia, speculation has intensified that Forest City could become a white elephant.
Mahathir, 93, has already set aside $ 22 billion in Chinese-funded projects under the former government during a visit to Beijing last month following criticism that the deals were unfavorable to Malaysia, and now he’s set his sights on Forest City.
Last week, he made some of his strongest comments to date on the development, saying he opposed the project because it was “built for foreigners, not Malaysians. Most Malaysians are incapable of it. to buy these apartments “.
He added that Forest City “cannot be sold to foreigners … We are not going to give visas for people to come and live here.”
His nationalist rhetoric did not comply with Malaysian laws – it is legal for foreigners to buy houses and apartments in Malaysia – and his office later clarified that he only meant that the purchase of a property does not automatically guarantee the residence of a foreigner.
But observers said Mahathir intended to undermine a project he had long hated. A subsequent announcement that the government was establishing a committee to review the terms agreed to set up development and foreign ownership there only added to the feeling the authorities may be trying to instill in it. a term.
What the committee might recommend is not yet clear. Analysts said the worst-case scenario in the short term could be the Johor state government, where the project is based, raising the minimum price for foreigners buying property or increasing levies.
Yes, Kim Leng, professor of economics at Sunway University Business School in Malaysia, said investors would be deterred and predicted that the developer might have to delay or scale back the project.
“Maybe they’ll put it on hold, or aim for something smaller,” he told AFP.
Malaysian real estate consultant Samuel Tan Wee Cheng has meanwhile warned against turning “the project into a white elephant,” the Star newspaper reported.
According to reports, only a fraction of the development work has been completed and only a small number of people, mostly staff, live there.
– Chinese nervousness –
During Najib’s nine-year rule, Chinese investment in Malaysia increased, but hasty deals fueled suspicions the leader was seeking help to pay off debts from a massive financial scandal.
Although Forest City is a private project, it was seen by many in Malaysia as another example of unwelcome influence from mainland China and there were concerns that it would become an enclave for wealthy Chinese.
In reality, however, analysts say it’s unclear who will inhabit the development, especially since foreigners must apply for long-stay visas through a separate program.
With one-bedroom apartments on offer for around $ 170,000, prices are out of reach for most Malaysians.
Despite its struggles, Forest City remained optimistic. A spokesperson pointed out that out of 20,000 properties launched at the end of last year, 18,000 have been sold, and said the development has brought investment and jobs to Malaysia.
Â© 2018 AFP