Chinese developer Country Garden Holdings has closed all sales centers in mainland China for its flagship Malaysian housing project amid Beijing’s intensified crackdown on capital flight.
On Thursday, the South China Morning Post visited the project’s biggest Shanghai showroom on Tianshan Road, which only opened in October 2016. The gate was locked and the showroom empty.
A notice on the glass door said the showroom was “under renovation” but no renovation activities could be seen inside.
The Forest City project, covering 14 square kilometres of land on four artificial islands in Johor, Malaysia, was one of the best-known overseas properties among mainland Chinese residents due to Country Garden’s widespread promotion, including heavy advertising on state-owned television.
The development had been successful in attracting Chinese buyers by offering affordable prices and access to Malaysia’s visa program for long-term stays.
A Country Garden spokesman confirmed with the Post that it had shut all the sales centres in mainland China for renovation, but said the move had nothing to do with China’s capital controls.
The spokesman estimated there were dozens of Country Garden sales centres in China, without giving the exact number. To further curb capital outflows, the Chinese government in January banned its citizens from converting yuan into other currencies for overseas property purchases.
In the same month, Wu Bijun, general manager of Country Garden’s finance centre, who will become the company’s chief financial officer in April, told the Post that its projects in Malaysia had been affected by the government’s crackdown on capital outflows.
Alan Ho, a former sales agent at Country Garden’s Malaysia company, said about 90 per cent of Forest City buyers were from China. Guangdong-based Country Garden, China’s second-largest developer, has four residential projects in Malaysia.
Initiated in 2013, the Forest City project faced many challenges at the beginning. The proposed massive reclamation at the junction of Singapore and Malaysia raised concerns on both sides about its environmental impact, and work was suspended in 2014.
Construction restarted in 2015 with an expected investment of 250 billion yuan (US$36.2 billion) over 20 years and pre-sales were launched in 2016.
“We will develop apartments, villas as well as schools, hospitals, an exhibition centre and a financial special administrative region to achieve city-industry integration,” Country Garden president Mo Bin said at the time.
However, the Forest City project is losing its shine, according to Raymond Cheng, Hong Kong-based property analyst at CIMB Securities.
“The project doesn’t have much appeal to Malaysians while China’s crackdown on capital outflows will certainly slow its sales in China,” he said, adding that there probably would not be enough demand from Chinese buyers to keep sales going anyway.
Forest City has to date recorded contracted sales of about 20 billion yuan.
Shares in Country Garden slipped 3.4 per cent to HK$6.16 on Thursday.