By NST Propety/ Kathy B. - August 29, 2023
KUALA LUMPUR: The financial problem at China's largest property developer, Country Garden Holdings, has generated concerns about the company's international projects, but the impact of the debt crisis should be limited to the "fear factor" and negative perceptions, according to industry insiders.
Country Garden said in a statement this week that its five Malaysian property projects are operating normally and with outstanding sales performance, despite fears that the company is in debt.
According to the company, it has significant net assets and land reserves.
Simultaneously, it said that various debt management methods are being evaluated in order to actively resolve the issue of periodic liquidity and ensure the company's long-term future development.
Country Garden faced total liabilities of US$194 billion at the end of 2022, with worries about the outlook of Forest City and its other Malaysian projects.
Earlier in August, Country Garden missed two coupon payments totaling US$22.5 million.
"To date, the overall operation of the region is safe and stable. Our company's projects in Malaysia are operating normally, and the sales performance is strong," the developer's Malaysia and Singapore unit said in a statement.
Country Garden's projects in Johor include the massive US$100 billion Forest City, Country Garden Danga Bay, and Central Park.
In the Klang Valley, the company also has projects in Lake City @ KL North, and Diamond City.
Tan Wee Tiam, head of research at KGV International Property Consultants, said that the initial batches of these projects are mostly completed.
Forest City is Country Garden's most ambitious overseas project, with a goal of housing 700,000 people on four reclaimed islands by 2035.
Malls, office towers, and industrial parks would complement the opulent condominiums and landed residences.
Country Garden Pacificview, Forest City's master developer, is 60 per cent owned by Country Garden. Esplanade Danga 88, a private Malaysian corporation owned by a Johor government agency and the state's Sultan Ibrahim Iskandar, owns the remaining 40 per cent.
The four islands facing Singapore's Tuas district would have totaled 2,000ha under the original Forest City masterplan.
So far, 1,400ha have been recovered, with half of this developed on one artificial island, accounting for around 15 per cent of the total.
According to reports, 30 condominium blocks have been completed, along with some landed homes.
Many of the residential blocks appeared to have few residents nearly seven years after the project's inception.
"This could be due to the fact that the majority, or close to 70 per cent, of the 26,000 units handed over to buyers were from China. Many of them were unable to come to Malaysia and inhabit their property due to the pandemic.
"We believe the worst is behind us. With the special financial zoning and incentives offered to encourage foreign investors and property buyers, we see light at the end of the tunnel for Forest City," said a Johor-based specialised property consultant.
He said that property brokers are working hard right now to help the owners rent out some of the units in Forest City.
According to him, Forest City is currently occupied by a mix of locals working in Johor Bahru and Singapore, as well as foreigners from China, Singapore, Japan, South Korea, Europe, and the United States.
He said the Shattuck-St Mary's Forest City International School, which is located within Forest City but runs independently of the project, reportedly has about 200 students enrolled.
"We believe that by the end of next year, it could exceed 350 students," he said.
Last week, Prime Minister Datuk Seri Anwar Ibrahim announced that the government has designated Forest City as a "special financial zone" to help the economy of southern Johor.
Multiple entry visas, fast-track entrance for individuals working in Singapore, and a 15 per cent flat income tax rate for knowledge workers are among the incentives offered for the Forest City special zone.
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