At least 40 buyers of the massive development project in Johor are seeking refunds as China’s tightening of money outflow has made it difficult for them to raise money, says report.
KUALA LUMPUR: Some buyers of Forest City properties are seeking refunds as they cannot raise money from banks in China following stricter money control measures by Beijing.
The South China Morning Post (SCMP) reports that about 40 buyers have joined a WeChat group “to quit Forest City and get refunds”. The group was set up two weeks ago by one of the purchasers, Leo Wang from Hunan.
SCMP reports that these 40 and some others had made down payments for Forest City apartments but were now unable to transfer money out of the mainland or get their money back.
The dream of middle-class China nationals such as Laura Zhang, one of those on the WeChat group, to own properties in Malaysia is now in limbo.
In recent years, China has been seeing the largest wave of outbound investment. The mainland, SCMP reports, has lost nearly US$1 trillion in foreign exchange reserves from the peak in 2014.
This has resulted in Beijing ordering a halt to “irrational” outbound investment, especially that which ends up in overseas property projects.
According to the SCMP report, Zhang had been told the Forest City property was not only an asset that would appreciate in value but also one that offered a tropical, garden city lifestyle, access to high quality international education for her son, and a chance for the family to apply for the Malaysia My Second Home Programme, which allows foreigners to live in Malaysia on long-stay visas of up to 10 years.
Zhang said she and her friends and relatives, totalling about 20 people, were flown in to Johor to see the project last Sept 20. Zhang found out that the price of a property that she liked was a quarter of that in downtown Beijing.
They were also told, she claimed, that they could apply for the Malaysia My Second Home Programme, which allows foreigners to live in Malaysia on long-stay visas of up to 10 years, offering the families hope they would be able to commute between the mainland, Malaysia and Singapore.
She paid RM63,500 with her bank card as a 10 per cent down payment on a 59 square metre apartment.
However, this year, Zhang found that no bank on the mainland would help her pay for her overseas property.
She told SCMP she was now trapped in limbo and trying to get a refund.
Another Forest City purchaser, Vicky Wu from Guangzhou, was quoted as saying: “Now we understand all further instalments need to be paid abroad. But this is not allowed due to the foreign exchange controls from the Chinese government. If we do so, we will be put on the government’s black list.”
Wu is also on the WeChat group seeking refunds.
Forest City is a futuristic smart city project being built in Johor on four man-made islands spanning 1,385.6ha. Costing RM100 billion, it is expected to be completed within 20 years and will have a range of facilities, including housing units, offices and shopping malls.