Concerns about China’s largest property developer, Country Garden Holdings, facing financial challenges have sparked discussions about the potential impact on its international ventures. However, industry insiders suggest that the negative effects of the debt crisis could be primarily driven by fear and perceptions.
Addressing these concerns, Country Garden has emphasized that its five property projects in Malaysia are operating smoothly and achieving strong sales performance, despite apprehensions about the company’s financial state. The developer asserts that it possesses substantial net assets and land reserves.
While evaluating various debt management approaches to address periodic liquidity issues and ensure sustainable future growth, Country Garden remains confident in its operations. The company faced total liabilities of US$194 billion by the end of 2022, raising questions about the outlook of projects like Forest City and other Malaysian endeavors.
Country Garden’s recent missed coupon payments and high liabilities have triggered uncertainty. However, the developer’s Malaysia and Singapore unit has clarified that its projects, including Forest City, Country Garden Danga Bay, Central Park, Lake City @ KL North, and Diamond City, continue to operate normally with robust sales.
Tan Wee Tiam, head of research at KGV International Property Consultants, noted that initial phases of these projects are largely completed. Forest City, the most ambitious overseas venture for Country Garden, aims to accommodate 700,000 residents across four reclaimed islands by 2035. This comprehensive development includes condominiums, residences, malls, office towers, and industrial parks.
Forest City’s progress has been significant, with completed condominium blocks and some landed homes. Challenges arose from pandemic-related travel restrictions, as a significant portion of the property owners were unable to occupy their units. However, experts believe that the situation is improving, aided by the special financial zone status granted by the government to boost economic activity in the area.
The Forest City special zone offers various incentives, such as multiple entry visas, expedited entry for those working in Singapore, and a flat income tax rate of 15% for knowledge workers. Despite uncertainties, insiders are optimistic about Forest City’s future and its ability to attract foreign investors and residents, supported by ongoing efforts to enhance occupancy rates, rental opportunities, and the local economy.