Forest City developer suspends China sales to halt capital outflow: Report

KUALA LUMPUR — Beijing's clampdown on capital outflows may have forced Forest City's developer to close down all its showrooms in mainland China to stop sales to local buyers, the South Morning China Post reported.

The Hong Kong paper said a spokesman from Country Garden confirmed that all its showrooms have been closed down after its reporter found the company's flagship showroom in Shanghai locked and closed during a visit yesterday.

However, the spokesman said the close down was for renovation and not due to Beijing's capital policy.

"A Country Garden spokesman confirmed with the Post that it had shut all the sales centres in mainland China for renovation, but said the move had nothing to do with China's capital controls.

"The spokesman estimated there were dozens of Country Garden sales centres in China, without giving the exact number," the paper said.

The closedown came amid the Chinese government's ban on its citizens from converting yuan into other currencies for overseas property purchases. The ban order was issued in January.

In the same month, the general manager of Country Garden's finance centre, Wu Bijun, told SCMP that its projects in Malaysia had been affected by the government's crackdown on capital outflows.

At the same time the paper quoted Mr Raymond Cheng, a Hong Kong-based property analyst at CIMB Securities, as saying that Beijing's tightening measures on capital flows will severely affect sales in China.

"The project doesn't have much appeal to Malaysians while China's crackdown on capital outflows will certainly slow its sales in China," he said.

But Mr Cheng was also quoted saying that there would be insufficient demand from Chinese buyers to keep sales going anyway.

The Forest City project covers a 14 square kilometres of land on four artificial islands in Johor, Malaysia.

SCMP reported that the project is one of the best-known overseas properties among mainland Chinese residents due to Country Garden's widespread promotion, including heavy advertising on state-owned television.

The development had been successful in attracting Chinese buyers by offering affordable prices and access to Malaysia's visa programme for long-term stays, the paper added.

90 per cent of Forest City buyers were reported to be from China. MALAY MAIL ONLINE