On an island in the Singapore Strait, a thicket of apartment blocks peers mournfully over the sea. A corps of green-shirted gardeners dutifully tends the lawns and herbaceous borders along the roadside. A few cars slip along smooth roads to a commercial center with gleaming marble floors. Amidst the hundreds of closed shopfronts three restaurants are open—a fried chicken chain, a small café, and a gleaming and empty hot pot restaurant. Five duty-free shops are doing better business; some young men are stocking up on beer and Copper Dog whiskey at 11 a.m.
On an island in the Singapore Strait, a thicket of apartment blocks peers mournfully over the sea. A corps of green-shirted gardeners dutifully tends the lawns and herbaceous borders along the roadside. A few cars slip along smooth roads to a commercial center with gleaming marble floors. Amidst the hundreds of closed shopfronts three restaurants are open—a fried chicken chain, a small café, and a gleaming and empty hot pot restaurant. Five duty-free shops are doing better business; some young men are stocking up on beer and Copper Dog whiskey at 11 a.m.
Welcome to Forest City: planned residents, 700,000; current residents, roughly 9,000. Launched in 2014 as part of China’s Belt and Road Initiative, the mega-project is headed by once-real estate giant Country Garden, a behemoth that now sits on the edge of bankruptcy.
At first glance, the project seems yet another tale of a ghost-city built on the back of a Chinese real estate bubble—and then doomed by the COVID-19 pandemic and economic slowdown. Yet Forest City’s story is also a deeply Malaysian tale, involving property-speculating sultans, nationalist politicians, and the country’s complex relationship with Beijing and its own ethnically Chinese minority.
Building a new city to lodge hundreds of thousands of residents on four new artificial islands in the Singapore Strait was always an ambitious venture. But the main market was not locals, but rather speculative buyers from the People’s Republic of China. When sales opened in December 2015, buyers flooded in, many of them buying “pre-sales” of uncompleted apartments. “You’d have buses coming over from Singapore every day filled with people who just landed,” said Tan Wee Tiam, head of research at KGV International Property Consultants. “There were over 1,000 agents in the sales hall, and it still wasn’t enough. … You felt like you were in China.”
Buyers were often looking for not a permanent residence but an investment that could also be a potential holiday home, or accommodation for children who were headed to study in Singapore. Some were reportedly even offered the opportunity to buy a flat in China and get one free in Forest City, said Christine Li, head of research in the Asia-Pacific for Knight Frank.
Yet this reliance on the Chinese buyers also left the project brutally exposed to changes in Chinese policy. The first blow came in 2017, when the Chinese government suddenly imposed capital controls preventing individuals from moving more than $50,000 out of the country annually. The minimum price of a Forest City apartment sits at around $75,000 and can be as much as $3.5 million. Then came the pandemic years which froze international travel—and stamped hard on Chinese real estate and growth.
Yet, Forest City’s staff seem to be holding out hope. Shane Lim, a hire from Singapore, showed me around and assured me that the place is working to attract buyers from across the world, including the Middle East, Indonesia, and Thailand. Still, he estimated that about 70 percent of his colleagues in the sales team are from China.
Halfway through my tour, a Malaysian man calling himself Ozzy introduced himself and his two wives. Now living in the United States, he’s searching for a place to buy in Malaysia that he can use to visit his daughter in Singapore and rent out when he’s away. Looking around, though, he’s unconvinced.
“Look at how empty this place is,” he said. “I’d only be able to rent it out for one or two months a year. … When I visited in 2018 this place was packed. Now there’s no one here. It’s like it’s haunted.” Lim stared at his shoes until Ozzy moved off. He then firmly assured me that the sales hall is busier on weekends.
A wet Wednesday afternoon might not be a peak sales period, but it is hard to escape the reality that the putative new city is barely lived in. Surveying one of the towers I descend from the 34th floor to the first, looking for signs of occupancy—a pair of shoes at the door, furniture seen through the windows that face the corridor, or even just curtains drawn over said windows. The place is eerily well maintained but empty. Just 25 of the 390 flats show any signs of current occupancy.
I met a single resident, a Malaysian Indian woman who said she lived in Forest City with her husband. Declining to give her name, she informed me a neighboring tower is busier. That would not be hard to believe. Some floors in this tower were completely empty with flats whose doors open to the touch, revealing light-filled marble interiors into which dead leaves have blown. Others had notices of a residents’ meeting dated October 2022 still taped to the door.
According to Li, there are signs that buyers may be slowly coming back. But she also suggested that Country Garden might have aimed too high, used to China’s experience of breakneck speed urbanization, supported by strong government support for infrastructure development. That policy created plenty of “ghost cities” in China itself—but until the recent real estate crisis, also huge profits.
Forest City has also suffered from being a political football since its launch, something Country Garden may well not have anticipated. “I did notice Chinese developers tend not to focus on the political climate,” Li said. “They are not used to the idea of general elections, change of government, and change of policies overnight.”
Despite its vast scale, the first time locals heard about Forest City was in 2014, when fisherman woke up one day to find barges dumping sand off the coast. Newspapers dug into the story, revealing that Country Garden’s main partner was none other than the sultan of Johor state, Ibrahim Ismail.
The tie made sense. Many businesses take on Johor royals as partners, benefiting from the influence they wield in the state. The Malaysian government is also bent on transforming southern Johor into a new economic hub, the Shenzhen to Singapore’s Hong Kong. The city was made a duty-free zone. When further investigations also revealed rushed environmental reviews, it took diplomatic protests from Singapore for the central government to intervene and ensure the proper process was followed.
However, things began to shift when the Malaysian government’s grip on power loosened. Rocked by the world’s largest corruption scandal, the China-linked 1Malaysia Development Berhad, voters turned against it. And at 93 years old, former Malaysian Prime Minister Mahathir Mohamad exited retirement to lead an opposition filled with former opponents, previously imprisoned under his watch, against a government coalition he once led for 22 years.
Forest City became one of Mahathir’s favorite targets. Inveighing against government corruption and waste, he accused the government of planning to sell out Malaysia to foreigners. Most provocatively, he claimed that the thousands of mainly Chinese buyers of Forest City apartments would be allowed to settle, become Malaysian citizens, and vote in its elections. In a country where ethnically Chinese make up 23 percent of the citizenry—and are often stereotyped as wielding undue political influence due to their wealth—the claim was explosive.
After his shock triumph in the 2018 elections, then-Prime Minister Mahathir followed through on his threats declaring that foreigners would not be allowed to buy property in Forest City. Despite legal challenges, the announcement apparently hit Forest City sales hard.
Five years and a series of dizzyingly complex political maneuvers later, the current Malaysian government is led by Prime Minister Anwar Ibrahim. His support is mainly built by ethnic minority-backed parties that triumphed in 2018. To secure his grip on power he needs two things. The first is economic growth. The second is increased support from Malay voters, to which end he has courted the sultans who act as power brokers in their states and take turns acting as Malaysia’s head of state. Perhaps none is more influential than the sultan of Johor, who started his five-year tenure in February this year.
In this context, Anwar seems to have rediscovered the charm of Chinese investment, and Forest City. He has repeatedly praised the Belt and Road Initiative, and in August last year he announced Forest City would be designated a special financial zone with residents offered multiple-entry visas, fast-track entry for those working in Singapore, and a flat income tax rate of 15 percent.
The sultan of Johor has also suggested reviving a proposed high-speed rail link between Malaysia’s capital of Kuala Lumpur and Singapore, with an extra stop at Forest City. And who knows what will happen. After, all the $10.5 billion Melaka Gateway project—launched under the Belt and Road Initiative and apparently scrapped in 2020—is also back underway, after finding new support from the state and federal governments. The developer behind the project recently acquired a major new shareholder, the sultan of Johor.
But the heyday of Chinese investment in Malaysia may well not be coming back. Ten years since China launched the Belt and Road Initiative, it has begun to pull back sharply on its overseas investments. China’s own economic slowdown and business wariness about the increasingly capricious regulatory environment is part of the story. But, the large number of projects gone sour also appears to have made Chinese investors more wary.
Meanwhile, Malaysia is struggling not to get left holding the bag. Should Country Garden go bankrupt, it’s uncertain what will happen to Forest City. At that point the Malaysian government could face the unpalatable option of a potential bailout by the Chinese government, leaving a chunk of Malaysian land in Beijing’s hands. Alternatively, it could step in itself—becoming the proud proprietor of what the developers still proclaim to be “A Prime Model for Future Cities.”
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