Mahathir Bans Foreigners From $100 Billion Property Project

(Bloomberg) -- Malaysian Prime Minister Mahathir Mohamad said foreigners won’t be allowed to buy property at Country Garden Holdings Co.’s $100 billion project, or be granted visas to live there.

The Forest City project near Singapore had targeted buyers from China for its mixed-residential development, as well as investors from Indonesia, Thailand and Dubai. Malaysia’s My Second Home program allows wealthy foreigners to live in the Southeast Asian nation on a long-stay visa, with Chinese nationals being the largest group of participants.

“Our objection is because it was built for foreigners, not meant for Malaysians,” Mahathir said to reporters. “Most Malaysians are unable to buy those flats.”

Mahathir’s comments are inconsistent with what he said during an Aug. 16 meeting with Country Garden’s founding Chairman Yeung Kwok Keung, the company said in a written response to Bloomberg. During the 40-minute discussion, Mahathir said he welcomes foreign investments that can benefit Malaysia’s economic growth and job creation, according to the company.

Mahathir Bans Foreigners From $100 Billion Property Project

Since coming to power in May, Mahathir has taken a firm stance against foreign investments that he says don’t benefit Malaysians. He indefinitely deferred the $20 billion East Coast Rail Link project and a Trans-Sabah gas pipeline project backed by Chinese state companies after his visit to Beijing last week. But he still struck a conciliatory tone, saying he can’t blame the Chinese side for unfavorable contracts signed by the previous Malaysian government.

Seeking Clarification

Mahathir didn’t say how he would put a stop to foreigners buying the property at Forest City or how far-reaching the ban on visa approvals would be.

Forest City has complied with all laws and regulations and has the necessary approvals to sell to foreign purchasers, Country Garden said in its response. The company is seeking clarifications with the Prime Minister’s Office regarding the press conference, it said.

Country Garden’s shares pared gains to 2.2 percent after Mahathir’s comments, having risen as much as 3.9 percent earlier.

The Forest City project in southern Malaysia sits on four artificial islands, and once completed, will house approximately 700,000 people on an area four times the size of New York’s Central Park once completed. It will have office towers, parks, hotels, shopping malls and an international school. Construction began in February 2016 and apartments became available in May last year.

The projects were first marketed in China with thousands of buyers paying deposits for apartments that cost as much as double the rate per square meter paid by Malaysian home buyers. Last year, Country Garden shifted its selling focus to other foreigners, after mainland buyers were spooked by a Chinese crackdown on outflows. Sales at Forest City project fell 20 percent to 8 billion yuan in 2017, Reuters reported.

Malaysia’s My Second Home program was a selling point for the project given its lower investment thresholds compared with countries such as the U.S., Canada and Singapore. For Forest City buyers, Country Garden will cover their fees to apply for the program and help with the application, according to its marketing website.

To contact Bloomberg News staff for this story: Anisah Shukry in Kuala Lumpur at ashukry2@bloomberg.net;Emma Dong in Shanghai at edong10@bloomberg.net

©2018 Bloomberg L.P.

With assistance from Editorial Board