Malaysia targets expats in Singapore as Chinese-built Forest City homes ‘sit empty’

PM Anwar Ibrahim is luring foreign professionals next door with tax breaks and easy visa access, but investors are awaiting more clarity on the government’s new policy

Built by embattled Chinese developer Country Garden, Forest City has for years been a ‘ghost town’, since Beijing imposed capital outflow restrictions

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Condominiums at Forest City. Pegged to China’s ambitious Belt and Road Initiative, Forest City is Country Garden’s largest property development outside China. Photo: AFP

Published: 11:30am, 9 Sep 2023Updated: 5:55pm, 18 Sep 2023

Billed as a US$100 billion antidote to Singapore’s oversubscribed space, Forest City in Malaysia’s Johor has been given a fresh push by Prime Minister Anwar Ibrahim, who has dangled tax breaks and easy visa access for the legion of expats he wants to lure across the Causeway.

But investors are still shy to dive in, instead waiting for more clarity on the government’s plan to jump-start the flagging fortunes of the mega project by Chinese developer Country Garden, which is swamped by nearly US$200 billion of debt as China’s real estate sector teeters on implosion.

Anwar sought to reignite interest in the project in late August when he announced the creation of a Special Financial Zone (SFZ) in Forest City and the Iskandar Malaysia economic zone in the southern state of Johor, with low income-tax bands and multiple entry visas.

A man sits in the hallway of an empty Forest City Outlet Mall. Photo: AFP

The prime minister intends to recast the project’s reputation from a “ghost town” into a buzzing community with everything from affordable education and healthcare; a cheaper alternative for multinational companies based across the Causeway to expand or relocate some of their operations.

“Any announcement on improving the ease of doing business is important. It sends a good signal [to investors],” said Adib Zalkapli, a Malaysia director with political risk consultancy BowerGroupAsia.

It also offers a potential shot in the arm for Country Garden as China’s largest private property developer endures a torrid period of near-defaults on bond payments as it seeks to restructure its debts following record losses over the first half of this year.

“But it’s still early days before we see anything concrete, whether on the details of the special zone or whether there will be a surge of investments as a result of the announcement,” Adib added.