“I didn’t care about my bail, I didn’t care about the money. I just had to leave”, he said.
China’s largest real estate developer, Country Garden, unveiled Forest City, a $100 billion mega project in 2016. At the time, China’s real estate boom was in full swing. Developers were borrowing huge sums of money to build for middle-class buyers both at home and abroad, according to the BBC.
In Malaysia, Country Garden planned to build an eco-metropolis with a golf course, water park, offices, bars and restaurants. The company said Forest City would eventually become home to nearly a million people.
Eight years on, the city is a reminder that you don’t have to be in China to feel the effects of the real estate crisis. Only 15% of the project is currently built, and the latest estimates suggest that just over 1% of the new city is occupied.
Despite being nearly $200 billion in debt, Country Garden told the BBC that it is “optimistic” that the plan will be fully realised.
“It’s scary here”
“Forest City has been called “a dream paradise for all mankind”. But in reality, it was designed for the Chinese domestic market, offering ambitious people the chance to have a second home abroad. Its sale prices were out of reach for most ordinary Malaysians.
For Chinese buyers, the property was like an investment that could be rented out to local Malaysians such as Mr Nazmi, or used as a holiday home.
In reality, it was intended for the Chinese domestic market, offering ambitious people the opportunity to have a second home abroad.
Indeed, Forest City, which is built on reclaimed islands far from the nearest larger town of Johor Bahru, has scared off potential tenants due to its isolated location, earning it the local nickname of “ghost town”.
“It’s actually terrifying,” says Mr Nazmi, “I was expecting so much from this place, but it was such a bad experience. There is nothing to do here.”
This city does have a strange atmosphere – it feels like a deserted resort.
A dilapidated beach with a dilapidated children’s playground, a rusting vintage car and, perhaps aptly, a white concrete “stairway to nowhere”. Signs by the water warn against swimming because of crocodiles.
In a specially built shopping centre, many shops and restaurants have closed – some units were simply empty construction sites. A surreal touch is an empty children’s train making endless circles around the mall.
In the adjacent Country Garden showroom, there is a huge model of the city showing what the finished Forest City will look like. A couple of bored-looking workers sit at a sales counter, with a sign hanging above them saying: ‘Forest City. Where happiness never ends”.
Of course, the biggest attraction here is the tax-free status. On the beach, you’ll find piles of discarded liquor bottles and local drunks.
When night falls, the city turns dark. There are several hundred apartments in huge blocks of flats, but no more than half a dozen of them have lights on. It is hard to believe that anyone actually lives here.
“It’s frightening,” says Joanne Kaur, one of the few residents I met, “Even in the daytime, when you walk out of the door, the corridor is dark.
It’s hard to believe that anyone actually lives here.
She and her husband live on the 28th floor of one of the flats – they are the only ones on the whole floor. Like Mr Nazmi, they are tenants and, like Mr Nazmi, plan to move out as soon as possible.
“I feel sorry for the people who actually invested and bought a home here,” she says. – If you were to do a Google search for Forest City, it would not be what you see here today. It should be the project that was promised to people, but it’s not.”
Talking to people in China who have bought a home in Forest City is not easy. The BBC was able to contact several owners indirectly, but they were reluctant to comment, even anonymously.
However, social media provides some unconfirmed evidence. One buyer from Liaoning province wrote under a post praising the development, “This is very misleading. The current Forest City is a ghost town. There is not a single person in it. It is far from the city, has incomplete housing, and it is difficult to get around without a car.”
Other comments ask how they could get their money back for their property, and one says: “The price of my home has dropped so much that I don’t even have words.”
Hard to sell
This frustration is felt throughout China, where the property market is in turmoil.
After years of indiscriminate borrowing by developers, the government feared that a bubble was forming and imposed tight restrictions in 2021. “Houses are for living, not speculating” was the mantra of Chinese leader Xi Jinping.
These measures have left big companies short of cash to complete huge projects.
In October, Country Garden was forced to abandon two projects in Australia, selling an unfinished building in Melbourne and another in Sydney.
Local political factors have also contributed to the current situation in Forest City. In 2018, Malaysia’s then Prime Minister Mahathir Mohamad restricted visas for Chinese buyers.
Some analysts have also questioned the wisdom of building a megapolis in a country with a volatile political and economic environment. The current Malaysian government is supporting the Forest City project, but it is unclear to the prospective buyer how long it will last and to what extent.
Other unexpected problems, such as the restrictions on travel in March and controls on how much money Chinese citizens can spend abroad, have made it particularly difficult for giants like Country Garden to launch projects abroad.
“I think they have probably pushed too much, too fast,” says Tan Wee Tiam of KGV International Property Consultants, “Before embarking on such an ambitious project, the most important lesson to learn is to make sure you have sufficient cash flow.”
“Country Garden insists that the current situation in the Chinese property market is just “noise” and that its Malaysian arm is “conducting business as usual”.
The most important lesson to learn is to make sure you have sufficient cash flow.
She also said that plans to include Forest City in a new special economic zone between Malaysia and neighbouring Singapore show that the project is “safe and stable”.
However, without access to cash, it is difficult to see how projects such as Forest City can be completed or how they will attract people to live there in the near future. At the moment, Chinese-built real estate is difficult to sell, to say the least.
Ambition and reality
When it comes to China’s real estate crisis, Forest City is a classic example of ambition and reality. Some local factors may have contributed to the current situation, but it proves that building tens of thousands of apartments anywhere else does not convince people to live there.
Ultimately, the fate of Forest City and hundreds of other projects across China rests with the Chinese Government. Last month, reports emerged that Country Garden had been included on a preliminary list of developers that will receive financial support from the Chinese government, although the extent of this support is still unclear.
I am glad I left this place – now I have my life back.
However, it is unlikely that people like Mr Nazmi will return: “I will certainly choose more carefully next time,” he says. – But I’m glad I left this place – now I’ve got my life back.”
A word of advice to everyone, choose your expensive purchases more carefully.
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