PETALING JAYA (June 23): It looks like Beijing’s capital controls could threaten to derail residential property sales around the globe that has been fuelled by buyers from China. And some of those likely to be heavily impacted are the China-financed projects in Johor.

According to a Bloomberg report, subsidised junkets that once flew in prospective buyers to development sites in Johor have dwindled, while some buyers who have put down money for deposits are mulling cancelling their purchases.

“I feel I’m on the horns of a dilemma,” Michelle Gao, who paid about 600,000 yuan (US$87,825) toward the 1.2 million yuan cost of a two-bedroom apartment at Country Garden Holdings’s vast Forest City development told Bloomberg. “If the project relies so much on Chinese buyers like me, how on earth are they able to sell in future? Will the construction ever finish?”

Six Chinese buyers interviewed for the Bloomberg report paid a 10% down-payment to Country Garden in showrooms in China by swiping debit or credit cards or using payment services such as Alipay.

Property agents now tell them they need to go to Hong Kong, Singapore, Malaysia or Macau to swipe their cards to pay the balance of instalments, or wire money to Country Garden’s overseas accounts.

Bloomberg reported that the buyers are concerned that would still make them liable under Beijing’s foreign exchange rules. The Chinese authorities recently announced that domestic banks will have to provide daily reports of clients’ overseas transactions of above 1,000 yuan.

Some Chinese buyers have already pulled out from their purchases in Johor.

In April, Country Garden Holdings announced it will refund money to mainland Chinese buyers of its Forest City development in Johor if they want to cancel their purchases.

In a report by South China Morning Post, Zhu Jianmin, vice-president of Country Garden said “they can cancel the transaction and there is no need to pay a forfeit fee”.

The company has also ceased all travel-related support services for mainland China investors travelling to Forest City since March 13 this year. It has also closed its Forest City sales galleries at around the same time.

The developer told Bloomberg that it has instead opened Forest City showrooms in Singapore, Kuala Lumpur and Jakarta, and plans to open more this year in Vietnam, Myanmar, Taiwan, Thailand, Japan, Dubai, the Philippines and Laos.

And it is also pushing ahead with the stage 2 development of Forest City, which will add eight sq km to the development, see the completion of tourism, healthcare and education facilities. These include three 18-hole golf courses, a five-star 306-room hotel and a medical centre operated by Taiwanese healthcare management provider MJ Group.

Country Garden is the second-largest developer in China. Aside from Forest City, Country Garden has three other developments in Malaysia, namely Central Park and Danga Bay, which like Forest City are also in Johor, and Diamond City in Semenyih, Selangor.

Forest City, covering 14 sq km of land on four artificial islands in Johor and with a gross development value of RM444 billion, has been successful in attracting Chinese buyers by offering affordable prices and access to Malaysia’s visa programme for long-term stays.

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