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Will Johor bail out Forest City if it falters?

 | March 14, 2017

Amanah questions if state had conducted feasibility study on the project, in the wake of potential buyers from China being affected by capital control measures.

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PETALING JAYA: Amanah has asked the Johor state government if it would try to bail out the RM100 billion Forest City development project in the event it becomes a “great white elephant”.

The opposition party’s deputy president, Salahuddin Ayub, said China’s move to impose capital controls will have a drastic effect, in light of reports that the mega project mostly targeted buyers from China.

He questioned if the state government had conducted a feasibility study before embarking on the project, stressing that economists have predicted that there may be many abandoned projects emerging, especially in Johor.

“Was the ‘Team Johor’ state administration not aware of the possibility of an economic bubble, a speculative bubble and a financial bubble occurring as has happened in Dubai and Indonesia?” he said in a statement today.

He stressed that economists and property sector insiders at large have been concerned that the local market and that from the Middle East would not be able to fill in any void left by such a situation hitting Forest City.

“There is a big possibility that Forest City will become a great white elephant that will eventually be forced to be bailed out by the ‘Team Johor’ government,” he said.

Describing Forest City as a “super mega project”, he said that it is understood that almost the entire project is targeted for the market from China, leading to difficulties due to the current policy scenario there.

“As a clear example, the Chinese developer Country Garden who is building Forest City has already closed all its sales centres in China.

“This means there will be no new sales and the cost of this will be too big for the scale of Forest City which covers 1,385 hectares,” he said.

Hailed as a futuristic global metropolis, Forest City is planned to be built on four man-made islands. Costing RM100 billion, it was expected to be completed within 20 years and have a range of facilities, including housing units, offices and shopping malls.

Alan Ho, a former sales agent at Country Garden’s Malaysia operations, was reported as saying about 90% of Forest City buyers were from China.

On March 11, Bernama reported Johor Menteri Besar Khaled Nordin as saying that Forest City was not affected by China’s capital controls because it is open to international buyers.

He claimed that the project is not dependent on buyers from China, and is also marketed in Australia, the Middle East and Europe.

Forest City affected by China’s crackdown on capital flight

Spooked by anti-China talk, Forest City developer courts other buyers


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