The largest of no less than 60 development projects in the Iskandar Malaysia free-trade zone around Johor Bahru, Forest City is built on reclaimed land across four man-made islands. Developer Country Garden Holdings hopes that the area will eventually house a total of 700,000 people. We take a look at the development and list out certain factors that property-buyers should be aware of before putting pen to paper.
For Residential Purposes
We spoke in a previous article on the attraction of Malaysia as a destination for acquiring real estate, one of which is the Malaysia My Second Home visa granted by the Malaysian government. This on its own poses as an advantage for overseas investors who often have to overcome multiple hurdles before they can purchase property in other countries.
When it comes to purchasing property in Forest City for residential purposes, the development has much to offer its occupants. The area houses parks, hotels, shopping malls, and an international school – all covered in greenery. These are amenities that one cannot take for granted in Singapore – unless one is willing to pay a premium price.
Its close proximity to Singapore also contributes to its appeal. There are many locals who would commute daily (Forest City is ten minutes from the causeway) and benefit from having the best of both worlds. This is further sweetened by the promise that it will feature its own passport control to avoid the hour-long queues on the main link from Singapore.
Security is said to be of utmost importance to the developer, with surveillance drones hovering in the air and Nepali Gurkha soldiers patrolling the grounds. Apart from the bungalows and spacious apartments, the area will also incorporate numerous skyscrapers for banks and offices – not a bad proposition for potential residents on the islands.
For Investment Purposes
There is no denying that Forest City was marketed throughout its primary stages as being a development targeted at Chinese investors – who have been facing increasing pressure by being priced out of their own markets in major cities at home. That being said, Singaporeans have faced similar issues, with Malaysia’s property prices remaining highly attractive especially after the Ringgit has weakened considerably over the last few years.
Another attraction of the enclave from an investor’s viewpoint is the fact that the Malaysian government has created a range of incentives attached to the development, hoping to increase interest and ensure its success. Apart from being a duty-free zone (where Singaporeans can shop and bring their purchases home), there are corporate tax incentives for qualified companies in the selected areas of tourism, education, and healthcare with no foreign equity ownership restrictions.
Concerns with the Development
One of the main hurdles that the development has been trying to overcome is the Chinese government clamping down on its citizen’s parking their money in overseas real estate. This has forced the development’s respective offices to reconsider their overall strategy and target markets. There have been concerns that Chinese developers are flooding Johor’s housing market, and that there is insufficient demand to meet the apartment glut – especially after the above regulations have been set up.
Another issue that has arisen is that the sheer size of the development will require both extensive as well as costly maintenance. The project spans 3,425 acres, and after the properties have been handed over to their owners, there will be comprehensive upkeep to be carried out on a regular basis. As most of the buyers appear to be investors and non-residents, it will be difficult to enforce local strata laws, maintenance charges, and assessment tax if these owners are absent and cannot be located.
Time will tell whether Forest City stands up to the test in becoming the next smart city within itself. It will take ongoing planning as well as targeting to ensure that vacancy levels remain low, and those that have already invested get their dues delivered in a timely and efficient manner.