Forest City: China's Private $100 Billion Ghost Town in Malaysia
Approaching the entrance to Forest City, a $100 billion investment in Malaysia by a consortium led by the Chinese real estate company Country Garden, a bridge has collapsed, forcing drivers to detour.
In the city, filled with palm trees, the streets, apartments, shops remain hopelessly empty.
Forest City, built to attract middle-class Chinese investors, has so far survived, despite a lack of commercial interest, China's capital controls, pandemic lockdowns, and public outrage in Malaysia over the rise of Chinese influence.
But its future is once again overshadowed by the financial difficulties of Country Garden, which within a few years has become China's largest private real estate company, but is now saddled with gigantic debt, approaching $200 billion.
Country Garden announced at the end of August record losses in the first half of 2023. Its creditors on Saturday accepted the restructuring of its debt, preventing in extremis the declaration of a payment freeze, which would have endangered thousands of projects on a global scale.
But the group has not overcome the problems. A 30-day grace period he was given in early August when he was unable to pay 22.5 million in interest to his creditors expires the day after tomorrow, Tuesday — when he faces the risk of default again.
"I hope Country Garden can overcome its financial difficulties," said Zhao Bojian, a 29-year-old Chinese man who bought one of the 26,000 apartments in Forest City for about $430,000 five years ago.
"If no one comes to Forest City, we won't be able to do any business here," he adds.
Bet
Built on an artificial island in the Straits of Johor, opposite the prosperous city-state of Singapore, Forest City is one of Country Garden's many big bets.
The project, part of the so-called New Silk Roads, an ambitious infrastructure-building plan to increase China's influence internationally, is partly owned by a powerful Malay sultan.
The private city has only 9,000 residents — orders of magnitude below the goal of reaching 700,000.
As darkness falls, when the workers who work on the construction sites leave, the island city with its four-lane highways is completely quiet. In the huge apartment buildings and skyscrapers, very few windows are lit.
On the deserted sidewalks one sees one after another closed shops, some with sealed court orders for debt payments that will never be made. Inside, trash strewn on the floors.
In a property of 45 floors, only two floors are used and the rest are sold, the person in charge confesses.
Most property owners in the city don't live there, a security guard explains: they simply bought them as an investment.
Mock-ups of the four man-made islands that would make up the city once the project is completed – a long way off – are enthroned in the exhibition hall for potential buyers, who are directed by signs in Mandarin Chinese, Malay and English.
Malayan Prime Minister Anwar Ibrahim is making efforts to prevent the project from collapsing. He announced the creation of a "special economic zone" and incentives such as low income taxes for permanent residents and various visas.
"For alcohol"
Analysts remain skeptical. Pressure on Garden City to pay off creditors on time "could have an impact on its ability to complete overseas projects," said Bernard Ou, an economist at asset-risk management firm COFACE and head of Asia. - Pacific.
A three-hour drive from Kuala Lumpur, Forest City attracts visitors who want to see its futuristic skyscrapers or buy alcohol, which is sold duty-free.
"Everybody comes here for the alcohol," says 32-year-old Dennis Raj from Singapore. "I wouldn't want to live here, it's a ghost town. The streets are dark and dangerous; there's no public lighting."
Only foreign workers, many of whom came from Nepal and Bangladesh, maintain some level of activity, cleaning streets, tending trees, guarding empty skyscrapers.
On a man-made beach littered with empty beer cans, some families picnic under palm trees and signs warning potential bathers against the danger of crocodiles.
"I came on vacation because I saw videos on TikTok," explains Nurszioua Zamri, a private employee, 30. "If you ask me if I would stay here, the answer is no
Architects
29/11/2023
