Forest City: Fewer than 60 China buyers want to cancel

Forest City development's sales gallery in Johor Baru. Chinese buyers of the development's units have been caught out by China's introduction of tighter rules to stem capital flight from the country, with many now unable to service payments after pla
Forest City development's sales gallery in Johor Baru. Chinese buyers of the development's units have been caught out by China's introduction of tighter rules to stem capital flight from the country, with many now unable to service payments after placing deposits.ST FILE PHOTO

The controversy surrounding the giant Forest City housing complex in Iskandar Malaysia has deterred few buyers from China, according to its developer.

Hong Kong-listed Country Gardens said yesterday that fewer than 60 buyers from the mainland want to cancel their bookings of apartments in the project. It added that it is in discussion with these buyers.

Chinese buyers at the US$100 billion (S$140 billion) development have been caught out by China's introduction of tighter rules to stem capital flight from the country, with many now unable to service payments after placing deposits.

Country Garden also temporarily shut its sales galleries in China last month, although it said that half of these have re-opened.

Two statements from the company issued yesterday and on Wednesday clarified earlier news reports, which said that Country Garden had agreed to refund Chinese buyers caught out by the new capital controls.

On Wednesday, the South China Morning Post in Hong Kong quoted Country Garden vice-president Zhu Jianmin as saying that buyers who have placed deposits on properties but are unable to service payments out of China can "cancel the transaction and there is no need to pay a forfeit fee".

But in the issued statements in the past two days, Country Garden emphasised that "cancellation after a sales and purchase agreement has been signed is deemed as a breach of contract".

"A penalty clause, ranging between 10 per cent and 30 per cent, kicks in only when a buyer decides to default on the payment or cancels the sales and purchase agreement," it said.

It also clarified that it had ceased travel-related support services for mainland Chinese travelling to Forest City since March 13.

Buyers have told the media that the developer had been offering travel subsidies to visit the development's mega showroom.

The Forest City project is the biggest of 60 developments in Iskandar Malaysia, and comprises four man-made islands in the Strait of Johor facing Tuas in Singapore.

It had RM11.54 billion (S$3.64 billion) in sales last year and sold 15,000 units, with Chinese nationals accounting for 70 per cent of the buyers.

Country Garden stressed yesterday that it "remains committed" to the development of Forest City, which is a project that will take "about 20 years to materialise".

"In 2017, we expect more diversified revenue from sales and rental from a variety of properties, such as offices, shopping malls, a new hotel and a golf course, in addition to residential properties," it said.

A version of this article appeared in the print edition of The Straits Times on April 07, 2017, with the headline 'Forest City: Fewer than 60 China buyers want to cancel'. Print Edition | Subscribe