Malaysian High-End Housing Development Not Just for Chinese, Developer CEO Says

Country Garden Holding Co. is pitching its upscale housing development in Malaysia to buyers all over the world, not just to Chinese investors, its chairman said in remarks apparently meant to calm concerns that purchases by mainlanders are slowing down.

Yeung Kwok Keung, speaking at a news conference on Thursday in Hong Kong, called the Malaysian project “insignificant” in the company’s large overall property portfolio, suggesting that it isn’t worried about Chinese homebuyers who haven’t been able to buy because of the government more strictly enforcing measures to control money leaving the country.

The company is running three other projects in Malaysia, plus two others in Australia and Indonesia.

Country Garden’s sprawling $3.6 billion Forest City is planned for up to 100,000 people when it is completed in the 2030s. The project, in the southern Malaysian city of Johor Bahru on a causeway opposite Singapore, is being touted as a modern, ecologically friendly development.

But the development has attracted some controversy.

According to a Reuters report, $2.6 billion worth of housing units were sold last year, with buyers from mainland China accounting for 70% of purchases.

Caixin reported earlier this month that some mainland buyers had gotten around capital controls by buying Hong Kong insurance policies and using those policies to pay Country Garden. The housing project targets members of China’s emerging middle class who want to invest abroad but don’t have enough money to buy in the United States and Europe, Caixin also reported, citing a Malaysia-based salesperson for Forest City.

In early March, Country Garden idled its sales offices in China for Forest City, but said the step had to do with renovations rather than Beijing’s ongoing effort to combat individual investor capital moving offshore.

The Chinese government has been strengthening its oversight of Chinese nationals seeking foreign currency. As a result, anyone seeking to exchange yuan for foreign currency must tell the government the purpose of the foreign money and when it will be spent. The required form warns: “Do not use it to purchase property overseas.” Chinese nationals can obtain only up to $50,000 a year in foreign currency.

Contact reporter Coco Feng (renkefeng@caixin.com)