How a R$570 billion Chinese megaproject became a “ghost town” in Malaysia

It was an audacious real estate project undertaken a decade ago by a Chinese developer: a $100 billion city in Malaysia, built on sand and mangrove bushes, sold as a luxury “dream paradise” for China’s middle class.

Today, many of Forest City’s residents are transients—the local caretakers who sweep the empty roads and pick up trash, trim the fences and water the plants.

“I see so many new faces,” said Thana Selvi, who works at KK Supermart, a bright convenience store that stands out among the usually closed and empty spaces at street level. She rents a room in an apartment above the store, month to month, for $118.

In the distance, Forest City’s rows of skyscrapers tower over the Strait of Johor between Singapore and Malaysia, like a monument to China’s economic triumphs. Up close, the streets are quiet, most apartments are dark, and large stone slabs demarcate the dense forest of “developable land.”

Giant Chinese real estate developer Country Garden dreamed up Forest City as a “green, futuristic city” stretching across 12 square miles and four artificial islands. There were supposed to be 700,000 apartments. Only one island, with 26,000 apartments in several dozen towers, was built.

Since Country Garden defaulted on its debt last year, it has become an emblem of the excesses of China’s housing boom, a company unable to pay its bills or build promised apartments. Hundreds of thousands of home buyers and projects like Forest City are in limbo. Creditors suing Country Garden in Hong Kong could eventually seize Forest City.

With few residents and an uncertain future, Forest City now serves as a blank canvas. It was used as a setting for the reality shows “The Saboteur” on Netflix and “Battle Trip” on South Korean television. A cryptocurrency investor, Balaji Srinivasan, recently started using a space in Forest City for a temporary technology school.

But Country Garden still maintains its ambitions. “The plan for Forest City will not change,” Country Garden said in a statement to . “Reasonable developments and constructions will be carried out according to demand.”

For years, Country Garden fed off cheap money to support a build-and-wait-for-people-to-come strategy that has characterized China’s housing frenzy. When he tried to take this model abroad, in search of money that was leaving China, he encountered problems.

In 2014, almost as soon as trucks began dumping sand over the seagrass to build land, the project was sidetracked. Construction was halted for months to assess Forest City’s environmental impact after authorities in Singapore — just a few kilometers away across the strait — raised concerns to Malaysia. Two years later, China, fearing the collapse of its currency due to the flow of money out of the country, blocked citizens from buying property in Malaysia and other nations.

Malaysian local authorities, who have a 40% financial stake in Forest City, have tried to revive interest in the project. They promised to turn it into a special financial zone, and last month they eliminated all taxes on the so-called family offices of ultra-wealthy investors.

However, there were signs everywhere that Country Garden had underestimated demand.

On a trip to Forest City in early September, the office tower at the heart of the complex, where local officials now expect money managers to open offices, was padlocked and guarded by security guards. At night, the building was barely visible except for a broken, occasionally flashing green LED sign positioned at the top. In nearby apartment blocks, entire floors were dark.

Stores in the mall, once dedicated to luxury retail and duty-free shopping, were closed — some were filled with rotting wood and construction materials. The only patrons one night were three women riding around in motorized plastic dinosaurs that lit up to the tune of Katy Perry’s “Last Friday Night.”

“Country Garden was riding the wave rather than thinking about the opportunity to create a city,” said Michael Grove, a landscape architect at the Sasaki design firm who was called in, along with consultants from McKinsey, to help make the country’s plans. developer more economically and environmentally viable at the end of 2014.

“They were doing the construction on an improvised basis,” Grove said.

If any company could have realized Forest City, it would have been Country Garden. Once one of China’s most prolific developers, it boasted of its “rapid development and sales.” For Forest City, he placed advertisements in Beijing, Shanghai, Guangzhou and other cities. He brought interested Chinese buyers to see model apartments. Real estate agents highlighted the possibility of obtaining special visas and a path to Malaysian citizenship.

In China, where there are few places to invest savings other than real estate, Forest City was presented as an unmissable opportunity.

Su Mu was living in Shanghai in 2016 when Country Garden offered him a free trip to Forest City. He found the air clean and the scenery pleasant. He had invested in property in China, so he bought a place in Forest City for about $151,000.

“The prices here were not expensive compared to China,” said Mu, who recently decided to move to Forest City full time. “Now I’m 40 years old and I want to move to a new environment and have a fresh start.” He acknowledged that there aren’t many people in his building. “It wasn’t very good at first, it felt distant and remote.”

As the sun set on Forest City’s white sand beach, several families from nearby communities brought their children to play at Forest City’s modest water park.

A Chinese couple took photographs at a long sculpture called “Stairway to Heaven” that stretched toward the sky. They said they bought an apartment in 2016 and traveled from a coastal city in Zhejiang to Forest City once a year for vacation.

Most of the owners in Forest City seem to rent their apartments and live in China. Across China, so many developers have gone bankrupt that large numbers of homebuyers have been left without the apartments they paid for. Some people who own units in Forest City, speaking in a private group on Chinese social media, recently expressed relief that their apartments had been built.

Country Garden said 80% of its apartments were sold to buyers from more than 20 countries. The developer declined to say how many people are currently living in Forest City.

But on a trip last month, Forest City seemed abandoned. Most of the people there were Chinese tourists, restaurant and shop owners, and a team of gardeners, cleaners and security guards from Indonesia, Nepal, Pakistan and Bangladesh who worked tirelessly to keep things running. Early in the morning, before the hot sun, some of the workers lounged on the balconies of Forest City apartments, their cleaning cloths and sarongs hung to dry.

At street level, two Chinese businessmen, using a translation app on their phones, were trying to recruit Bangladeshi workers to do some work.

Nearby, a group of Nepali security guards stood in a perfect line to greet their Forest City manager.

Outside the city, along a highway built by Country Garden that leads to the bridge connecting it to Singapore, gardeners in green shirts and the occasional sun hat leaned over fences or blew leaves from the street.