Country Garden’s big sell

By Michael Lim

/ The Edge Property |

February 16, 2016 12:00 PM SGT

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The Hong Kong-listed Chinese developer undertakes the global launch of Forest City, a $150 billion urban city that is three times the size of Sentosa Island and located just across from Singapore’s shores.

At a global press conference in Singapore on Jan 22, leading Chinese developer Country Garden Holdings unveiled plans for its latest and most ambitious project yet, the RM450 billion ($150 billion) Forest City. Composed of four man-made islands occupying a total land area of 1,380ha, most of it reclaimed, Forest City is almost three times the size of Sentosa Island. It is located within a bay off the coast of southern Johor and will have a direct bridge to the Second Link to Singapore’s Tuas immigration checkpoint.

Country Garden announced that it will hold a global launch of Forest City in March. Some 700 residential units, predominantly high rise condominiums, and hotel-branded luxury apartments will be released in the first phase. The sizes of the units are said to range from 818 sq ft for a two-bedroom unit to 1,915 sq ft for a four-bedroom unit. The units are said to be priced from RM900,000, or RM1,200 psf.

The two- to four-bedroom units ranging from 818 to 1,915 sq ft will be sold at about RM1,200 psf

The project was unveiled in China at end- December. “The response from the Chinese market was quite positive,” says Country Garden group president and executive director Mo Bin in an interview with The Edge Singapore. “The new concept of building and the innovative model for the future city is really attractive to Chinese homebuyers.”

Pre-sales had begun in December 2015, according to CBRE, the appointed marketing agent for Forest City in Singapore. Over 60% of the units in four apartment blocks made available for sale have already received bookings, says Leong Boon Hoe, managing director of CBRE Realty Associates. Interest came from Malaysians, overseas buyers as well as owners of units at Country Garden’s flagship project in Iskandar Malaysia, Country Garden Danga Bay. Singaporeans have also expressed interest, as they are attracted to the freehold tenure of the development, its proximity to the Tuas Second Link and the well-thoughtout development plan, he adds.

Forest City will be targeted at a global audience, adds Mo. The project will be launched in Asean countries, Hong Kong, China, the US and the Middle East. The total investment by Country Garden in Forest City is projected to be $58.3 billion.

The first phase of Forest City will also include a hotel

Big and bigger The master developer of Forest City is Country Garden Pacificview. It is a joint venture between Country Garden, which has a 60% stake, and Esplanade Danga 88, which holds the remaining 40%. The parties behind Esplanade Danga 88 are Johor’s Sultan Ibrahim Sultan Iskandar with a 64.4% stake, Johor state government investment arm Kumpulan Prasarana Rakyat Johor (20%) and member of the Johor Council Royal Court Daing A Malek Daing A Rahman (15.6%). Daing is also the executive director of Country Garden Pacificview.

A mixed-use scheme with 9,400 high-rise apartments and commercial space on a 57-acre freehold site, Country Garden Danga Bay was first launched in 2013. To date, about 7,000 units (74.5%) have been sold. The commercial shops with a mix of restaurants and retail offerings opened last year, while the owners of the residential towers are expected to receive their keys by 1H2017.

The Danga Bay development is similar to the residential and township projects that Country Garden has been developing in China over the past two decades. The company was founded in 1997 by Yang Guoqiang, a former rice farmer and part-time bricklayer turned property tycoon who started his business by buying and developing vacant lots of land in Shunde, a city near Foshan in Guangdong Province.

Country Garden was listed on the Hong Kong Stock Exchange in 2007. Just before the listing, Yang transferred 70% of his shares in the company to his daughter, Yang Huiyan, instantly propelling her into the league of the world’s richest Chinese under 40. Huiyan, vice-chairwoman of Country Garden, is still its biggest shareholder with a stake of over 50%, even after the sale of a 9.9% stake last year to Ping An Insurance Group Co, one of China’s biggest insurers.

As at end-June 2015, Country Garden had a global portfolio of 278 projects with gross floor area totalling 1.03 billion sq ft. Of that number, 274 are in China; 101 of them are in Guangdong Province. The group also owns 45 hotels with over 12,500 rooms. There are another 13 hotels under construction. To date, it has three projects in Malaysia — besides Forest City and Danga Bay, Country Garden is also the developer of Diamond City, a 415-unit landed housing development in the Semenyih/ Kajang district in Kuala Lumpur, comprising mainly terraced and linked houses. It is also involved in a villa township development in Rawang, Kuala Lumpur, in a joint venture with Malaysian developer Mayland Group. Meanwhile, in Sydney, Country Garden has Ryde Garden, an 830-unit project that is more than 90% sold. While Ryde Garden is considered its smallest project worldwide, Forest City is certainly its biggest.

Country Garden is investing $58 billion over 20 years to develop Forest City, which spans over 1,380ha on four man made islands

Master-planned city Besides residential and commercial space, the giant mixed-use scheme at Forest City will have “eight economic pillars”, including education, healthcare and tourism. The development will incorporate schools, hospitals, an exhibition centre and a special administrative region to achieve “city-industry integration”.

Mo says the developer’s intention is to create a “multilayer eco city” with pedestrian boulevards, parks and other recreational facilities as well as gated residences on the topmost level. Public transport network such as light rail transit system and electric shuttle as well as retail and F&B outlets will be on the second level. Meanwhile, roads and carpark facilities will be on the bottom-most level.

Designed as an urban city, Country Garden is also in discussions with the Malaysian government to set up dedicated entry points to Forest City via the light rail transit system linking to Singapore’s MRT network and the planned high-speed rail line as well as an extensive ferry network.

The developer engaged the Massachusetts based Sasaki Associates to conceptualise the master plan for Forest City, with McKinsey and Deloitte as consultants on strategic positioning and financial advisory respectively.

Forest City may have had a troubled start two years ago, when its reclamation works were halted for several months in 2014 after the Singapore government expressed concern over the environmental impact of the project. According to Country Garden officials, the project has since obtained “all the necessary approvals to proceed” and there have been no further objections from the Singapore government.

However, the size of Forest City has been pared down by about 30%, from 1,978ha to 1,380ha, following a detailed environmental impact assessment and hydraulic study on the area. The reduction was to ensure the seagrass is preserved, and the flora and fauna of the surrounding area are maintained. Hence, the gross development value has also been reduced from RM600 billion to RM450 billion.

The number of housing units that the developer could potentially build on the site has been affected as well. “Of course, there will be a reduction and we will adjust it,” concedes Mo. “Compliance to the local rules and regulations has always been our number one criterion. Protection of the local ecological and environmental surroundings is also something that is close to our hearts.”

Many have questioned the need to reclaim land given the ample undeveloped land within Iskandar Malaysia, which, at 2,217 sq km, is three times the size of Singapore. “For the size of the development, of course you could acquire land from the public,” says Md Othman Haji Yusof, executive director of Country Garden Pacific view. “That particular site, however, has the potential to become a unique waterfront urban city, which is something inland sites will not be able to offer.” According to him, when the parties at Esplanade Danga 88 first showed Yang the site, he immediately expressed interest in it. And a deal was struck between the parties in 2013.

Mo: We firmly believe that regardless of market conditions, there is a need for a better product for consumers, and we strive to build such a product for our homebuyers

‘Truly global’ As Forest City is considered an “international zone”, foreign buyers will be exempted from purchasing properties with a minimum price of RM1 million. “We have received state waiver for that requirement, which means foreigners can buy units at lower prices in Forest City,” says Country Garden’s Mo.

He emphasises that Forest City is a long term project with a 20-year time frame and therefore, he is unfazed by oversupply concerns. “Forest City’s target market is truly global and it caters for a different market beyond Malaysia and Singapore,” he says. “We firmly believe that regardless of market conditions, there is a need for a better product for consumers, and we strive to build such a product for our homebuyers. The impact [of the oversupply] on the sales of Forest City is therefore limited.”

Residents will have access to a range of amenities, including retail and F&B outlets, hotels and recreational facilities

This article appeared in the City & Country of Issue 713 (Feb 1, 2016) of The Edge Singapore.

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