KUALA LUMPUR, Aug 23 — The recent debt crisis at China-based Country Garden Holdings is causing a spillover effect in Malaysia, where the company’s subsidiary has several large-scale developments in Johor.

Several Forest City property owners and agents in Johor are concerned that Country Garden might not be able to complete its projects here now, Singapore-based news outlet Channel News Asia (CNA) reported today.

It cited Johor-based KGV International Property Consultants executive director Samuel Tan saying that it is inevitable that Country Garden Holding’s debt issues in China will also trigger negative sentiments among current residents and prospective buyers in Malaysia.

He described it as a valid concern by some of these residents that Country Garden in Malaysia might also default and trigger cash flow problems that will impact the completion of their projects.


“If demand is slow, they will stop launching any new products. This is a practical and pragmatic stance by any developer,” he was quoted a saying.

Tan was responding to fears that construction for the remainder of Country Garden’s Forest City, Danga Bay and Central Park projects in Malaysia may not be completed after the Chinese developer’s recent steps to divest its property ventures outside China.

Since the Covid-19 pandemic started, the Forest City project under Country Garden’s Malaysian arm, Country Garden Pacificview Sdn Bhd (CGPV), has been described as a “barren ghost town”.


CNA cited several Forest City home owners expressing concern about the drop in value of their properties with one claiming that the house bought several years ago at around RM700,000 is now worth only RM400,000 at today’s market price.

Tan told CNA that the overall negative sentiment at the Country Garden prices might drive prices and rental rates further down – especially for property owned.

He gave an example that the prices of apartment units in Country Garden Danga Bay for instance, have dropped 50-60 per cent since it was launched.

“If the fear persists, there will be auctions of homes and prices will continue to go down,” he was quoted as saying.

Another concern for condominium owners in Country Garden Danga Bay is related to their strata titles, CNA reported.

It cited the home owners describing the ongoing process to get their strata titles as “slow” due to the developer’s administrative process as well as local government agencies.

Several home owners fear that this process will not be completed given that the developer may be impacted by Country Garden Holding’s financial issues in China.

According to the CNA report, industry experts said that in the event that Country Garden Holdings in China defaults and goes under liquidation, there is a valid concern that residents in Johor would have to undergo an administrative process to submit proof to liquidators that they are indeed the rightful owners.

It added that such a process could incur additional cost.

Real estate lawyer NG Vinod of Law Chambers of VinSa and Ian told CNA that the China parent company would have to realise all its assets including shares it holds with its subsidiary companies in Malaysia.

He added that it will include the developer of the Danga Bay project – Country Garden Danga Bay.

According to Vinod, if Country Garden Danga Bay is liquidated, residents who do not already own their strata titles might be forced to show proof that they are indeed the owner of the unit.

“The liquidator will have to verify whether that particular unit was indeed sold to this particular individual and generally, liquidators will charge a fee for doing that,” he was quoted as saying.

He added that the liquidator will likely charge a fee to ascertain that these residents are the genuine owners of the property.

On what Country Garden’s Malaysian management CGPV can do to ease residents' concerns, Tan pointed out that the onus is on the company to clarify its financial position and whether it is impacted by the debt issues faced by the parent company in China.

He said shaping public perception is important.

“It's now up to Country Garden to communicate its position publicly,” he was quoted as saying.

At present, CGPV has two main developments in south Johor – the US$100 billion (RM465 billion) Forest City flagship mega development and the popular Country Garden Danga Bay on reclaimed land that has a gross development value of US$18 billion (RM83.7 billion).

The developer also has a third project in Johor Baru called Central Park, which is still under development. The project is scheduled to be completed by next year and is valued at US$990 million (RM4.6 billion).