Lynette Khoo The Business Times AsiaOne 17 Mar 15;
Speculation was rife about how Country Garden's vast Forest City project on a man-made island in the Johor Straits near Tanjung Pelepas will proceed after the Malaysian government gave the go-ahead for the Chinese developer to build - but with conditions attached.
But while Country Garden will not be launching the Forest City project anytime soon, it is accelerating its pace elsewhere, said Liu Zhenyu, Country Garden's group deputy general manager of marketing centre and general manager of overseas strategy. The Hong Kong-listed developer is gunning for its first residential project in Indonesia this year. It is exploring some land sites in Jakarta where "the market is flourishing, unlike Singapore".
"We are already bidding for a site and given the shorter time-to-market there, we could launch a residential project this year," said Mr Liu in Mandarin. The site it is eyeing can yield some 1,000 units targeting the local population.
Country Garden is also interested to acquire a site in Surabaya, in East Java, as well as in Thailand, where it has set up a representative office to scour for opportunities.
It was reported in the Malaysian media in January that Country Garden's application to the Department of Environment to reclaim land for the Forest City project had been approved - but only for 405 hectares first instead of the original 1,600 ha. But Mr Liu told the Singapore media last Thursday that the group is still working out its plans for Forest City and can only release the details in the second half of the year. Neither would he confirm if part of the plan involves setting up a new CIQ (Customs, Immigration and Quarantine) complex with direct connection to the Second Link to Singapore.
"There is no announced figure on the actual land size yet," he said. "It will all depend on the environmental requirements. I hope the market will be patient to wait for the official announcement rather than speculate."
But Mr Liu stressed that the key point is not the delay of the Forest City project but rather the group's fulfilment of strict requirements laid down by the government before launching the project.
CGPV, the master developer of Forest City, is a 60-40 joint venture between Country Garden Holdings and Esplanade Danga 88, an associate company of the Johor state investment arm, Kumpulan Prasarana Rakyat Johor.
The mixed-development project, to be built on reclaimed land near the Second Link off Tuas in Singapore, has drawn some flak from both sides of the border for its potential environmental impact.
On its website, however, CGPV said it is "studying the requirements of setting up the new CIQ" and disclosed that the Department of Environment on Jan 9 approved its Detailed Environmental Impact Assessment (DEIA) for the Forest City project of 1,386.05 ha. The original land title area, which is currently under development, measures 1,978 ha.
Country Garden caught the market by surprise when it launched 9,000 condo units at its Danga Bay project in one go in 2013 - a scale not seen there before. It sold over 6,000 units as at end-2014 and a further 400 units so far this year at an average price of RM800 (S$300) per square foot. Mr Liu noted that there will be a minor upward price adjustment and hopes to sell another 1,000 units this year.
"If you expect Johor to enjoy strong infrastructural enhancements, greater connectivity with Singapore and having its Iskandar special economic zone more deeply entrenched, it will enjoy growth multiplication," Mr Liu said. "If there is growth multiplication, there is no problem for Johor to absorb the upcoming supply of homes."
He felt that while the mega-scale of its projects is uncommon in this part of the world, the market will come to understand over time that "the company is one that has thrived on large scale and efficiency".
Some 20-30 per cent of its buyers for Country Garden Danga Bay are Singaporeans, another 20-30 per cent are Chinese nationals, with the rest being Malaysians and Indonesians. Noting that sales have slowed, Mr Liu said the group is planning to start chartering daily coach trips between its Singapore sales gallery at Cecil Street and Danga Bay in two months' time.
The group will continue to participate actively in land tenders in Johor, he added. It is also exploring Kuala Lumpur after launching a project in Selangor called Diamond City, a 100-acre township of semi-detached houses and terraces styled in contemporary Spanish design. Some 90 per cent of the sales at Diamond City were sold to locals in phase one when it released 415 units. It will soon launch phase two with around 100 units.
Country Garden is the third-largest developer in China by floor area sold, according to Bloomberg. It is controlled by China's richest woman, Yang Huiyan, 33, after her father Yang Guoqiang transferred 70 per cent of his holdings in Country Garden to her in 2007 just before taking his firm public in Hong Kong.
Last year, Country Garden achieved a 20.1 per cent rise in net profit to 10.2 billion yuan (S$2.27 billion) on the back of a 34.8 per cent jump in revenue to 84.6 billion yuan. It contracted property sales of 128.8 billion yuan, a 21.5 per cent jump from a year ago.
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