Chinese developer Country Garden to pump more money into Forest City, widen reach to other markets

SINGAPORE — Chinese developer Country Garden is firing on all cylinders and revamping its strategy to revitalise its US$100 billion (S$135.6 billion) Forest City project at Iskandar, Johor in Malaysia, after residential unit sales were hit by China’s restrictions on local Chinese buying property overseas to curb capital outflows.

Having pumped in around RM4.7 billion (S$1.5 billion) in the Forest City project last year, the Hong Kong-listed developer will be investing around RM5 billion this year, according to Mr Yu Runze, chief strategy officer, Country Garden Pacificview.

The company is aggressively diversifying its customer base in the region and will be opening more than eight sales offices across new focus markets including South Korea, Japan, Taiwan, Thailand, the Philippines and the United Arab Emirates. In an interview with TODAY, Mr Yu said the company would also be expanding its existing showrooms in Malaysia, Singapore and Jakarta, after shutting down all of its mainland China showrooms earlier this year.

Country Garden is also set to launch its premium high-rise “sky villas” spanning 3,000 to 4,000 sq ft at rates not far off from last year’s prices of its condominium units. “In that sense, it will be a price cut as we are packing in more value into our new product range,” Mr Yu said.

The luxury apartments with private pools are likely to be priced within a range of around RM1,600 to RM1,800 per sq ft versus RM1,100 to RM1,300 that the developer charged for its condominium units.

“We do see a slight drop in our sales this year compared to the same period last year. But we have a strategy in place to spruce up demand and maintain sales going forward. There is nothing to worry about … Besides diversifying beyond China and launching a compelling new product range, we are also enhancing the industrial component in the project and investing in infrastructure. We are expanding to the mainland (Malaysia) and connecting better,” Mr Yu said.

Raising eyebrows amid a perceived slowdown, Forest City sold around 15,000 homes last year, most of which were lapped up by Chinese nationals. “Lots of people misinterpreted our last year sales success as they saw a lot of residential units pushed into the market. They thought ours is another huge residential project. Actually, we are not. The reason to go first with the residential is we needed cash to be recycled as investment.”

Mr Yu noted that, although there might be a drop in Chinese individuals buying overseas properties with the Chinese Government tightening measures to restrict capital outflows, Chinese corporates will continue to invest as they expand operations beyond their home ground.

The Chinese developer inaugurated its industrial Building System factory at Forest City in the Iskandar region to manufacture ready-to-fix concrete housing structures including beams, columns, staircases and balconies with capacity to cater to about 1 million sqm of built-up area. Touted to be the largest in the world, the facility will meet the entire production requirement for construction work at Forest City. Another three such facilities will be added over the next few years, aimed at catering to local and regional demand.

Country Garden also signed alliances with 21 companies on Friday (Aug 4), aimed at transforming the upcoming development into a healthcare and recreation tourism hub. According to the company, the idea is to develop eight key industries, including tourism, healthcare, education and training, and e-commerce services to serve the region.

Among the partners is the Malaysian Healthcare Tourism Council, which will help develop programmes that promote Malaysia as a destination for assisted reproductive health services in China. With the rising interest in medical tourism, China-based Foshan Hospital, which has a 61-year history of integrating medicine, education and research, will combine traditional Chinese medicine with Western medicine to focus on orthopaedics and traumatology in its first joint venture outside China.

“By attracting and partnering with companies that are aligned to our eight core industry verticals, we will be better able to create specialist hubs that deliver a range of services to residents and visitors alike … We are also looking at partnering Singapore companies, particularly in the area of healthcare and vocational training. Singapore presents opportunities we just cannot miss,” Mr Yu added.