A rendering of Country Garden’s planned Forest City project
The quantity of new homes being built in Malaysia’s Johor state, just across the border from Singapore, now exceeds the entire stock of privately owned housing in the entire city-state, according to a statement last week from a Singaporean government minister.
Authorities in the city state appear concerned over the pipeline of more than 336,000 homes being built along its border, with many of the biggest projects being developed by mainland Chinese real estate developers who are new to the region and to international markets.
The objections out of Singapore come just two months after work restarted on a $121 billion joint venture project between Chinese developer Country Garden Holdings and the Johor government which had earlier been put on hold due to environmental issues raised by local residents in Malaysia, as well as officials from Singapore.
Minister Points to Bulging Pipeline
Minister for Culture, Community and Youth Lawrence Wong, who also sits on the board of the Monetary Authority of Singapore, told the nation’s Parliament last week that the 336,000 new residential units currently planned for Johor already outnumber the 327,811 private homes in the republic. In Singapore, more than 80 percent of citizens live in housing built by the country’s Housing Development Board.
Forest City would be built on reclaimed land in the channel between Singapore and Malaysia.
Areas of Johor bordering Singapore have become popular sites for residential development as home prices in the island nation of soared in recent years. At the end of 2014, the entire state of Johor Bahru had an existing housing stock of just under 720,000 homes, according to Malaysian government figures.
Wong also pointed out that the supply of new homes along the Singaporean border did not include the supply from Country Garden’s Forest City project.
“There is indeed a real concern about future oversupply in the property market there and hence the potential decline in value of homes,” Mr Wong told Singapore’s Parliament, according to an account in the Straits Times.
The Forest City project is being built on 1346 hectares (3425 acres) of reclaimed land to be made up of four separate islands in the channel between Singapore and Malaysia. In a comment to the Straits Times a Malaysian official predicted that the project would add housing for 700,000 people by the time it is fully constructed. The development is planned to be implemented over a 45 year period, with the first phased to be completed in 2020.
Chinese Developers Betting Big on Johor
In addition to Forest City, Country Garden has another project in Johor’s Danga Bay, and at least six other mainland developers, including China Vanke, Greenland Group and Guangzhou R&F are building new real estate projects in the fast developing border area.
China Vanke paid $1.12 billion for a sixty hectare seafront site in Johor earlier this year, Greenland Group – China’s largest develoer by sales – announced a $666 million project in the same area in January, and Guangzhou R&F paid $1.4 billion for six sites in the border region during 2013.
The rush to put up new homes in districts close to Singapore recently led market researchers at Malaysia’s Maybank to predict that “Oversupply of apartments/retail spaces in hotspots such as the Nusajaya-Medini and Danga Bay areas may cause a decline in property values over the medium term.”
Country Garden, however, appears confident that its projects will not be affected by the local market. Company representative Datuk Md Othman Yusof told the local media that Forest City is “a migration city” which will serve as a destination for buyers not only from Malaysia and Singapore, but also from other countries.
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