PETALING JAYA: Country Garden Holdings Co Ltd (CGH) of China is seeking a bigger market for its property developments in Iskandar Malaysia, Johor, particularly Forest City.
Following restrictions on the outflow of funds from China, the property developer is now seeking the services of international agencies to market its products to buyers in Asia and beyond.
“We are actively expanding our customer base into the overseas markets,” said CGH chief strategy officer Dr Yu Runze.
“We are targeting buyers and investors from the international markets. CGH will set up show galleries in the targeted overseas markets to attract global investors and home buyers to Forest City,” he said in response to questions from StarBiz on the impact of the recent measures imposed by China on its property projects.
“So far, we have seen encouraging response from property roadshows, industry conferences and networking sessions that we have organised in the Middle East and Asean regions,” he said.
Following the restrictions imposed by China in respect to its residents taking money out of the country, purchasers of property overseas have had problems in terms of securing financing.
In this respect, CGH to date has received inquiries from not less than 60 buyers in China indicating that they would like to cancel their bookings.
“We are currently in discussions with them,” said Yu.
In November last year, China imposed restrictions on its companies and residents taking money out to stem the decline in its reserves, exacerbating the depreciation of the yuan.
The initial focus fell on corporate deals, particularly mergers and acquisitions by the Chinese corporate sector. The focus subsequently turned on individuals who are only allowed to exchange and/or transfer up to US$50,000 worth of yuan annually. The aim of the controls was to stabilise the value of the yuan as torrents were gushing out of China.
CGH said in a statement that it remained committed to the development of Forest City, which comprises a series of four reclaimed islands with a combined acreage of about 3,500 acres in the Johor Straits. One island has been reclaimed as of today, while the other three are works-in-progress.
“This is an ambitious project that will take about 20 years to materialise. As a project targeting international buyers and a global market, we are on track to building and delivering the residential and commercial units on schedule to our buyers and investors,” Yu said.
The company sold more than 15,000 residential units in the whole of 2016 and these sales have been formalised with the signing of sale and purchase agreements (SPAs). Forest City was officially launched on March 6, 2016.
“We would also like to clarify that cancellation after the SPA has been signed is deemed as a breach of contract. A penalty clause ranging between 10% and 30% kicks in when a buyer decides to default on the payment, or cancels the SPA.”
Yu said the terms and conditions outlined in the SPAs are in accordance with laws and standards and accessible in both English and Chinese at its sales galleries.
Having sold over 15,000 residential units, CGH has now gone into the second phase of its marketing strategy, which is to diversify its revenue from the sales and rental of its commercial properties, which comprise offices, shopping malls, a hotel and a golf course, in addition to residential properties.
The company is discussing with more than 30 companies and investors from the tourism, education and healthcare sectors on setting up their regional hubs there. Alternatively, they could jointly develop and manage real estate assets in Forest City, Yu said. Announcements will be made in the coming months.
On reports that the property giant closed all its Forest City sales centres on the mainland, Yu clarified that since March 13 this year, its sales galleries in China had “ceased” all travel-related support services for mainland Chinese travelling to Forest City.
“This means mainland Chinese buyers who are interested in the Forest City project will have to find their own way to our sales gallery in Iskandar Malaysia. Our sales galleries worldwide are still operating in accordance with laws and standards,” Yu said.
According to CGH’s property consultant VPC Realtors (JB) Sdn Bhd, mainland Chinese buyers on two charted flights were flown into Johor’s Senai Airport from Shenzhen and Guangzhou last year.
VPC’s property consultant Bruce Lee, who has been working with CGH on its Johor developments, said the Chinese capital controls on Forest City would be temporary.
“The controls will not have a permanent or deadly impact on Forest City. In fact, this is a ‘blessing in disguise’ for CGH because it will force the company to slow down a bit in terms of residential sales because it has sold units faster than contractors’ capability to build them,” Lee said.
He reckoned the Chinese would get used to the US$50,000 cap before sales pick up again.
“The average price of Forest City is about US$200,000. They do not cater to the super-rich Chinese who invest in properties in the United States, the United Kingdom and Australia. Those who buy into Malaysia are from the average income group.”
Lee said CGH’s own marketing team sold the 15,000 residential units within a year.
“They do not, and need not, seek the services of property agents. But now, as they embark on the second phase of their strategy, they are seeking the services of international property agents to sell and rent their commercial properties,” he said.
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