“I managed to escape from this place,” says Nazmi Hanafiah with a nervous laugh.
A year ago, this 30-year-old computer engineer moved to forest city, an ambitious Chinese residential complex in Johor, at the southern tip of Malaysia, where he rented a one-bedroom apartment in a tower overlooking the sea.
After six months, Nazmi realized she had had enough. He didn’t want to continue living in what he was “ghost town”. “I didn’t care about the down payment, I didn’t care about the money, I just wanted to get out,” he says.
For this interview, we met in the same multi-storey tower where he lived. “I get goosebumps when I come back,” he says. “It’s very lonely here, just you and your thoughts.”
The largest Chinese real estate developer, rural garden, presented Forest City, a $100 billion megaproject, in 2016.
At that time, the Chinese real estate boom was in full swing. Developers received loans of impressive amounts to build properties at home and abroad, aimed at middle-class buyers.
In Malaysia, Country Garden’s plan was to create a ecological metropolis with golf course, water park, offices, bars and restaurants. The company said Forest City would eventually house nearly a million people.
Eight years later, the complex has become a reminder that you don’t have to be in China to feel its effects real estate crisis experienced in the Asian country.
To date, only 15% of the project has been built and recent estimates indicate that just over 1% of the total is occupied.
Even though I had to deal with a debts of almost $200 billionCountry Garden told the BBC it was “optimistic” about the completion of the project.
“It’s scary to be here”
Forest City was advertised as ‘a dream paradise for all mankind’, although in reality it was aimed directly at the Chinese domestic market.
The real estate initiative tried to give people with economic ambitions the opportunity possibility of having a house abroad next to his home in China.
The retail prices were out of reach for the vast majority of Malaysians.
For Chinese buyers, the property would be an investment that they could rent out to Malaysians like Nazmi, or use as a holiday home.
But Forest City’s isolated location – built on reclaimed islands, far from the nearest major city, Johor Bahru – discouraged potential renters and earned it the nickname “ghost town.”
“Honestly, it’s scary,” says Nazmi. “I had high expectations for this place, but it was a very bad experience. There is nothing to do”.
Forest City exudes a strange atmosphere: it looks like an abandoned holiday resort.
On the deserted beach there is an abandoned playground, a rusty old car and – perhaps rightly so – a “Stairs to nowhere” white concrete.
There are signs next to the water that advise against swimming due to the presence of crocodiles. Many shops and restaurants in the complex’s purpose-built shopping center are closed; some units are just empty construction sites.
In a surreal tone, there is an empty children’s train endlessly circling the mall in a loop.
Next door in the Country Garden showroom is a huge model showing what a completed Forest City would look like. At the concession stand there are a few bored looking employees with a sign above them that reads: Forest City. Where happiness never ends.
From afar, The area’s biggest attraction is its status as a free zone.
On the beach you will see piles of discarded alcohol bottles and some local drinkers, who are responsible for most of the human activity in the place.
As night falls, Forest City goes dark. The enormous apartment buildings that rise above the complex each contain hundreds of apartments. But no more than half a dozen have their lights on.
I find it hard to believe anyone lives here.
“This place is creepy”says Joanne Kaur, one of the few residents I meet. “Even during the day, when you walk out the front door, the hallway is dark.”
She and her husband live on the 28th floor of one of the towers; They are the only ones in the entire factory. Like Nazmi, they are renters and like him, they plan to leave as soon as possible.
“I feel sorry for the people who invested here and bought a house,” he says. “If you Google ‘Forest City,’ it’s not what you see here today. It should be the project that was promised to the people, but it is not,” he added.
Talking to people in China who bought units in Forest City isn’t easy. The BBC managed to contact a handful of owners directly, but they declined to respond, even anonymously.
However, social media offers some evidence of dissatisfaction.
A buyer from Liaoning province said in a post about the project: “This is very misleading. Forest City is currently a ghost town. No one. “It is far from the city, it has incomplete facilities and it is difficult to get around without a car.”
In other comments, a homeowner wondered how they could get her money back for her home: “The price of my unit has dropped too much, I have no words.”
A complicated sale
You see these kinds of disappointments all over China, where the the real estate market is in crisis.
After years of unbridled borrowing by developers, the government feared a housing bubble would emerge and imposed strict caps in 2021.
“Houses are for living in, not for speculationsaid Chinese leader Xi Jinping.
As a result, large companies no longer have liquidity to complete their massive projects.
In October, Country Garden was forced to abandon two projects in Australia, resulting in the sale of two unfinished investments, one in Melbourne and one in Sydney.
Malaysian political factors have also contributed to Forest City’s current situation.
In 2018, then Malaysian Prime Minister Mahathir Mohamad restricted visas for Chinese buyers, saying he did not want a “city built for foreigners.”
Some analysts have also questioned the decision to build a major project like this in a country where the political and economic climate is unstable. The current Malaysian government supports the Forest City project, but for buyers It is not clear how long the support will last and to what extent.
Other unexpected problems, such as travel restrictions during the pandemic and controls on how much money Chinese citizens can spend abroad, have hampered overseas projects by giants like Country Garden.
“I think they probably went too fast and too far,” said Tan Wee Tiam of KGV International Property Consultants. “Before launching a project as ambitious as this, the fundamental lesson is to learn that you need to make sure you have the necessary funding.”
This week, the world’s most indebted real estate company, Evergrande, faced a hearing on its bankruptcy proceedings before a Hong Kong court. Ultimately, the Chinese company was given a six-week extension to agree a repayment plan with its creditors, because the judge postponed the hearing for the seventh time.
Country Garden insists that the current situation in the Chinese real estate market is nothing more than “noise” and that its operations are based in Malaysia “They continue on their normal course.”
He also says plans to include Forest City in a new special economic zone between Malaysia and neighboring Singapore show that this project is “safe and stable”.
But without access to cash, it’s difficult to know how projects like Forest City can be completed or how they will attract people to live there.
Right now, real estate built in China is difficult to sell.
“It’s like a chicken and egg,” says Eveline Danubrata of REDD Intelligence Asia. “A developer often relies on pre-sales to finance construction. But buyers will not put their money down if they are not sure whether they will ultimately get the keys to their home.”
Ambition and reality
With regard to the Chinese real estate crisisForest City is a typical case of ambition versus reality.
Some local factors may have contributed to the current situation, but it is proof that building tens of thousands of apartments in the middle of nowhere is not enough to convince people to live there.
Ultimately, the fate of Forest City – and hundreds of projects across China – depends on the Chinese government.
Last month it was reported that Country Garden had been included in a preliminary list of developers set to receive financial support from the Chinese government, although the extent of that support remains unclear.
However, it is unlikely that people like Nazmi will live there again: “Next time I will choose more carefully. “I’m glad I left this place: now I have my life back,” he says. (JO)
Mabel is a talented author and journalist with a passion for all things technology. As an experienced writer for the 247 News Agency, she has established a reputation for her in-depth reporting and expert analysis on the latest developments in the tech industry.