The large-scale land reclamation for housing developments carried out by Chinese developers in Iskandar raises many uncertainties, a Maybank research report has warned, saying any failure of these projects risks undermining investor confidence in the special economic zone.

“We are cautious on the massive land reclamation in Iskandar Malaysia,” the report said. “The execution and planning of such reclamation projects is complex and carry elements of risk and uncertainty. Hence, developers’ financial positions are paramount, else we may see projects being abandoned or price wars initiated to clear inventories or reduce sales risks by the developers. More importantly, the failure of any of these projects could erode buyers’ confidence and perception on Iskandar Malaysia.”

Several reclamation projects by Chinese developers have made headlines in recent months as they drew concerns from environmental groups to the Singapore government. Nonetheless, the projects have received the go-ahead from Malaysian authorities after they were scaled down in some cases.

One of them, Country Garden’s Forest City, is a massive 1,386ha development on four man-made islands off Johor near the Second Link with Singapore. Guangzhou R&F Properties’ Princess Cove project will see 30,000 homes built on a 46.9ha plot, part of which will be reclaimed along the coastline of Johor Baru. The reclamation will extend the Johor shoreline nearer to Singapore.

While Country Garden’s net gearing could potentially drop to 0.58 after securing HK$6.3 billion (S$1.1 billion) equity funding from China’s Ping An Insurance, Guangzhou R&F has the weakest financial position with a net gearing of 1.2 times, the Maybank report said. LEE YEN NEE