Property developer Country Garden Holdings has closed all its mainland China showrooms promoting its Forest City mega-development in Johor, as it looks to update its sales strategy and adapt to Beijing's clampdown on capital outflows.
The temporary closures come after the Chinese developer behind the US$100 billion (S$142 billion) project in the Iskandar special economic zone sold thousands of apartments, with Chinese nationals accounting for 70 per cent of buyers.
The company told Reuters yesterday that it was overhauling its Chinese sales centres "to better fit with current foreign exchange policies and regulations" and as part of its shift to attract buyers beyond the Chinese market.
China is tightening its grip on moving funds out of the country.
Tighter rules that took effect this year include requiring customers buying foreign currency at Chinese banks to specify how they will use the funds, and reminders that individuals are not allowed to invest in overseas property using a capital account. This has created extra challenges for firms or deals relying on Chinese investment.
When The Straits Times tried to contact Forest City's sales offices yesterday, phone lines for its Beijing and Shanghai offices had been terminated.
Staff from its Tianjin and Guangzhou offices confirmed that all showrooms had been closed for "upgrading", but said this did not mean sales to Chinese customers had been halted.
"Our staff will be able to provide further advice once we reopen," one said, but he was unable to give a date.
Country Garden business strategy chief Yu Runze told The Straits Times that the firm decided to close its sales centres to "refurbish our sales galleries, upgrade our marketing materials and retrain our sales professionals".
"We have always planned to sell beyond China and have therefore chosen to bring those plans forward this year," he said.
But Mr Yu also urged the Chinese government to be fair when it comes to capital controls.
The Forest City project is a major part of Malaysian Prime Minister Najib Razak's plan to rev up Johor's growth.
But critics fear that Chinese developers are flooding Johor's housing market, and that there is insufficient demand to meet the apartment glut.
Property analyst Loong Chee Wei said the showroom closures came as a surprise, and that talk is that other Chinese developers in Johor, such as Greenland Group and Guangzhou R&F Properties, have slowed down development of their projects.
China's state-owned Greenland is building office towers and apartments on 52ha in Tebrau, while Guangzhou R&F Properties has begun construction on the first phase of Princess Cove, with about 3,000 homes.
"Given the concerns of oversupply of high-rise residential units in Johor, it will be difficult to attract buyers from Malaysia and Singapore, who are the main buyers in Johor," Mr Loong said.
"Other potential buyers are from Taiwan, Korea, Japan and the Middle East.
"But demand from these (places) is small relative to Chinese buyers for Forest City."
• Additional reporting by Trinna Leong in Kuala Lumpur