Nov 22, 2016 (LBO) – A 100 billion dollar Chinese-made city in Malaysia, near the border of Singapore, is set to reshape real estate in the region.
Country Garden’s Forest City, on four artificial islands, will house 700,000 people on an area four times the size of New York’s Central Park, Bloomberg reported.
Construction began in February and about 8,000 apartments have been sold, the company said.
At the Forest City launch in March, Malaysia’s Prime Minister Najib Razak said the development and three other mega projects will fuel Johor’s growth in the coming years.
“I believe that Johor’s future economy is in good hands with these projects, which will certainly change the state into a new economy powerhouse,” he said.
Other projects are the planned Kuala Lumpur-Singapore high-speed rail that will have stops in Johor, the Gemas- Johor Baru double railway tracking, and the Pengerang oil and gas hub.
Forest City is the biggest of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, known as JB, that could add more than half-a-million homes.
“Chinese companies have come to Malaysia as growth in many of their home cities is slowing, forcing some of the world’s biggest builders to look abroad to keep erecting the giant residential complexes that sprouted across China during the boom years,” Bloomberg reported.
Country Garden, which partnered with the investment arm of Johor state, launched another waterfront project down the coast in 2013 called Danga Bay, where it has sold all 9,539 apartments.
China state-owned Greenland Group is building office towers, apartments and shops on 128 acres in Tebrau, about 20 minutes from the city center. Guangzhou R&F Properties Co. has begun construction on the first phase of Princess Cove, with about 3,000 homes.
Country Garden said in an e-mail it was “optimistic on the outlook of Forest City” because of the region’s growing economy and location next to Singapore.
“The Chinese are attracted by lower prices and the proximity to Singapore,” said Alice Tan, Singapore-based head of consultancy and research at real-estate brokers Knight Frank LLP.
“It remains to be seen if the upcoming supply of homes can be absorbed in the next five years.”
The influx of Chinese competition has affected local developers like UEM Sunrise Bhd., Sunway Bhd. and SP Setia Bhd., who have been building projects around JB for years as part of a government plan to promote the area.
A decade ago, Malaysia decided to leverage Singapore’s success by building the Iskandar zone across the causeway that connects the two countries.
It was modeled on Shenzhen, the neighbor of Hong Kong that grew from a fishing village to a city of 10 million people in three decades.