Forest City

[shctaw]

Why take the risk with China developers; when there are so many nice project all over JB done by Malaysia developer?

Johor Sultan words already throw them under the bus. What other hints do one need to understand the difficulty this project will face in the future.

China buyers backing off.
Developer have fund transfer problem.
Banks whom loan them may sue first to cut losses.
All bad publicity. (Mahathir)
Chance of project been abandon.
Sultan's bad impression.

Time will tell what will happen; but why take risk with China developer?

Still too early to see what will happen later..

 

[winners]

I've already said many times, the Chinks are the scums in this world. They created the attractions and now their government created the shit for them and their buyers. Does their government gives a hoot? No.

 

[rotikok]

I warn everyone few years ago, that when one buy property in a country; one should just stick to that country developers.

So one will not get affected by factors affected by another country policies.

When I buy in Singapore; I only choose CDL, Keppeland, Capitaland.

When I buy in Malaysia; I choose MB, SP Setia and Astaka.

Now I start buying in Vietnam and my only 2 developer will only be Vinhomes or Vinaland.
Keppel and Capitaland are both available in Vietnam but I will never choose them.

Great suggestion and good point drawn. Underlying explanation would be: local developers target on local and know what local wants...meaning, the demand for their project would more likely to be solid （钢需), while foreign developer will bring in foreigner fryer that want to flip or want to rent.... careless about those who really want to stay.

If really much of the some 10,000 Chinese buyers decide to quit from the sales, you think the development of this project can still proceed as scheduled?
Although the mega buyers/seller tussle may take some time to settle and if this really happen, I'm very sure local banks would not be too keen to offer anyone a loan for the unsold units of this project.

1. I believe it will continue 2. 14k units sold, i believe quite a number of them starting to regret...but will not be too many. 3.Local banks as in malaysia banks? haha nope, they dont involve with loan to PRC chinese. 4. Malaysian want to buy, local banks will unwilling to give out loan unless with more assurance like collateral or higher lending margin.

In terms of capital control, I hear rumours something will happen on July 1st. It's the foreign reserve that the Chinese government is worried about.

What rumours? I only know Trump's gov by April will decide whether China is a currency manipulator country. So China gov is eagerly stopping the fall of yuan further, to avoid further agitate trump, at the same time control capital outflow and using reserve to buy in yuan. China always quite lax on capital control, recent capital control seem like more of a political move.

I gut feeling tell me, after April derisk-ed, yuan will fall further to 7+ to 1 usd. Capital outflow is good to their export sector.

China buyers cannot pay their instalment is small problem.

The biggest problem is the China developer cannot bring in the fund to complete the project.

R&F and Forrest City is "so call" buy 1 get 1 free project. They can give out condos in Malaysia FOC; you don't think they will just leave without completing their "over promise".

1. Buy 1 free 1, remain unproven. 2. Country Garden current corp bond rating is Bb1....possible solution (one of the many, but this practise seem quite commonly used): 1. collect money in yuan in china from buyers and 2. sent out money from china using corporate name, as a way to repay bond debt.
China capital control do not ban company to use the money as debt repayment. Good example is Apple issuing bond to pay dividend to shareholders because bringing money back to US subject to high taxes.

So whole project might just collapse?

I hope it collapse, should be a good thing for Johorean. Property bubble burst mean economy inefficiency happen as the money being used in unproductive purposes. That is what being taught, but if you think deeper, actually still depend on situation.
Anyway, will be a big slap on sultan, and state gov face....and they have to put HSR iskandar puteri station closer to FC, afterall, not that bad too.

It's like treason to believe Forest City 'lies', Sultan tells Johoreans


Johor's Sultan Ibrahim Iskandar has likened Johoreans who believe "lies" peddled on the Forest City development in Pasir Gudang, to individuals who committed treason.

"For Johoreans who are influenced, it is like they have committed treason.

The Pasir Gudang development on four reclaimed land islands is fodder for political debate, with the opposition questioning the sale of freehold land to foreigners.

Malaysiakini reporting standard..... since when FC is in Pasir Gudang?

Leasehold - You own the property and its land for the length of your lease agreement.
Freehold - You own the property outright, including the land it’s built on.

So, here you have a situation where the buyer actually bought a 99 years lease property but was advertised as freehold!
And you have the property owner on leasehold of 99 years but with strata title with freehold status!
However upon expiry of the lease, if the land reverts back to the state, then the land lease is actually leasehold and never freehold.
So, who is the real freehold owner of the land in FC?
Very confusing!

No need to be confused la, the more you read from malaysia sotong ministers, the more blur you will be. Like you quoted malaysia second trading minister about Petronas do not beg Aramco to stay. It is funny to see you quoting on malaysian minister to make your point...they dont even know what they say.

Truth: Najib told the wrong thing about leasehold land. The land is freehold. Then Mahathir went to FC, point at the banner about freehold writing. Then another malaysia sotong minister from Johor stand out to defend his master, saying the land is leasehold, but strata title is freehold....which make no legal sense.

Freehold land or not has nothing to do with sovereignty rights, this is what mahathir trying to fools ppl that do not know anything about law, he is doctor by the way. Malaysia can convert leasehold to freehold, legally, I did that before with on one of my house, not that hard, just time consuming.

In malaysia, my understanding is that, they do not take back your ppty easily after your leasehold expire, you can extend your 99 lease again with some payment....unless you are foreigner, then situation can be diff. Our group (not company group, just a group of 4) did take advantage on a singapore company (one of the sg bank's parent company, i wont disclose the name, but start with O end with C) after acresss of land lease expire (99 years). Blocked the renew application and we buy on cheap. Old time singaporean allowed to own agri land in malaysia, and if they are on leasehold, very danger, no jalan to find ppl help you, after 99 years, will all kena makan. Delicious!

Still too early to see what will happen later.
Many are already forming chat groups to discuss course of action.
What actions the buyers will take and how the developer reacts and actions they take in the coming weeks will determine the fate of this project.
So, we will not seeing any more busloads of Mainlanders coming to the FC showroom for a long while.
The all the retail outlets in FC will not be get customers and will probably also "closed for renovations".
The group of local buyers should watch out vigilantly on the coming events unfolding.
The local banks which gave out loans to the buyers in FC should be now having something to worry about now.

Local banks in malaysia dont give out loan to china buyers. A lot of them pay by cash. And if banks kena, then more likely it is from china.
No more busloads of mainlanders? When i got time, i will check again. Dont use malaysian or singaporean common sense to understand them. The more you block, the more bueh tahan want to buy feeling will come out. Hunger marketing will make those with money more rushing to buy.
Some of the retails already open back...but seem like no more focusing on FC liao, should have change strategy, make it like "you not rich enough, we wont layan you", hunger them a few weeks before tell them to join FC trip after some difficulty in finding some extra units remain unsold.

Sometimes, the early bird catches the poisonous worms.

Greenfield project certainly must danger. Those might not be early bird.....they are early worms. 早起的虫儿被鸟吃。

Why take the risk with China developers; when there are so many nice project all over JB done by Malaysia developer?

Johor Sultan words already throw them under the bus. What other hints do one need to understand the difficulty this project will face in the future.

China buyers backing off.
Developer have fund transfer problem.
Banks whom loan them may sue first to cut losses.
All bad publicity. (Mahathir)
Chance of project been abandon.
Sultan's bad impression.

Time will tell what will happen; but why take risk with China developer?

Errr... dont talk like FC failure has nothing to do with sultan. You know the shares arrangement for FC? FC failure, sultan will lose face and lose money... then they will have to do more to save this project, whatever it takes, closer HSR station, foreigner only casino, special custom to enter malaysia CIQ, harbour. Im bad, i do hope it fail, and see how they are going to save this project.

I think dont oversimplify the issue between foreign or local developers. Local developers also not quite solid guarantee de, some small scale even runaway. If china developer target on malaysian, then malaysian would rather give more trust to china developers...for their quality and efficiency. Their oversea project quality always much better than the one in their home country.
Country garden central park, just opposite Hatten capital 21, will be 100% targets on local, building much sensible apartment price ~RM500 psf.
https://theedgeproperty.wordpress.c...ntral-park-begins-soft-launch-of-first-phase/

Why they build there? Because larkin bus station and future public transport hub will be just located at the opposite of CG central garden. <<my intel. Many ppl looking down on capital 21...but actually it might locate at the gold pot area.

I've already said many times, the Chinks are the scums in this world. They created the attractions and now their government created the shit for them and their buyers. Does their government gives a hoot? No.

Exactly bcoz of china gov, they want to park their money to safer place. First, they have no place to invest, china sharemarket eat ppl de. Second, invest in ppty, china residential only 60 years lease, no such thing as "freehold" in china.

 

[rotikok]

http://zzhz.zjol.com.cn/system/2017/03/23/021473882.shtml
碧桂园杨国强：“森林城市”销售微不足道
2017年03月23日 16:03:02　浙江在线-住在杭州网
【摘要】碧桂园主席兼董事杨国强表示，马来西亚“森林城市”项目销售贡献占公司总量“微不足道”，有能力完成项目。

　　碧桂园控股有限公司(2007.HK，下称碧桂园)主席兼执行董事杨国强3月23日在香港业绩会上表示，马来西亚“森林城市”项目销售贡献占公司总量“微不足道”，公司有能力完成项目，并一直守规守法。

　　针对近日有关“森林城市”项目因涉外汇管制暂停国内销售的传闻，杨国强在业绩会上表示，“森林城市”的定位为未来世界城市榜样，将有几十万人居住，项目面向全世界销售，采取以销定产的策略，且项目销售贡献占公司整体总量“微不足道”，相信碧桂园有足够能力做好该项目。

　　对于如何处理已经支付部分款项的内地购房者的问题，杨国强表示，这属于个案，不方便评论，需要再作了解。他强调，公司一直守规守法。

　　碧桂园目前在马来西亚有4个项目，在澳大利亚及印度尼西亚各有1个项目。杨国强指，碧桂园今后的海外项目都将针对当地市场。

　　2017年1月起，个人购汇时除了需要遵守5万美元的额度，还需要填写《个人购汇申请书》，明确提供有关证明材料解释购买外汇的用途。申请书明令禁止购买外汇用于“境外买房”。

　　杨国强表示，碧桂园暂时没有赴港投地的计划，也没有回归A股上市的计划。他说，近期内地房地产调控政策将维护市场稳定，对碧桂园的短期影响较小，长期看有积极影响。

　　碧桂园2017年的销售目标为4000亿元。碧桂园2016年合同销售金额按年上升120%至3088亿元，合同销售面积按年上升74%至3.7亿平方米。股东应占溢利为115.2亿元，同比增长24.2%。

FC project is the most revenue generating project last year in China, ranked 1 (i dont know why they compare it with other project in china). Among many projects launched by CG, this single project is most profitable. China ppty market actually heavily control and monitor by china gov. China do not lack of land, but they heavily control the land supply, esp top tier cities like the top 4. And their profit margin (CG, greenland, wanda, evergrande, vanke etc etc) heavily squeezed by land price (china gov take away).

This is what i think. FC project, units that they sold, due to high profit margin, already can cover their cost, further land reclamation to use as golf course and able to handle excesses units built. Failure in the form of ghost town ie units sold but low occupany remain highly likely....sibeh confirm it will be ghost town. But abandon project very unlikely. FC shareholders, the sultan, will not let it happen.

 

[sgtsk]

The China capital control will also hit real estate markets where China buyers are significant.

 

[snowbird]

http://zzhz.zjol.com.cn/system/2017/03/23/021473882.shtml
碧桂园杨国强：“森林城市”销售微不足道
2017年03月23日 16:03:02　浙江在线-住在杭州网
【摘要】碧桂园主席兼董事杨国强表示，马来西亚“森林城市”项目销售贡献占公司总量“微不足道”，有能力完成项目。

　　碧桂园控股有限公司(2007.HK，下称碧桂园)主席兼执行董事杨国强3月23日在香港业绩会上表示，马来西亚“森林城市”项目销售贡献占公司总量“微不足道”，公司有能力完成项目，并一直守规守法。

　　针对近日有关“森林城市”项目因涉外汇管制暂停国内销售的传闻，杨国强在业绩会上表示，“森林城市”的定位为未来世界城市榜样，将有几十万人居住，项目面向全世界销售，采取以销定产的策略，且项目销售贡献占公司整体总量“微不足道”，相信碧桂园有足够能力做好该项目。

　　对于如何处理已经支付部分款项的内地购房者的问题，杨国强表示，这属于个案，不方便评论，需要再作了解。他强调，公司一直守规守法。

　　碧桂园目前在马来西亚有4个项目，在澳大利亚及印度尼西亚各有1个项目。杨国强指，碧桂园今后的海外项目都将针对当地市场。

　　2017年1月起，个人购汇时除了需要遵守5万美元的额度，还需要填写《个人购汇申请书》，明确提供有关证明材料解释购买外汇的用途。申请书明令禁止购买外汇用于“境外买房”。

　　杨国强表示，碧桂园暂时没有赴港投地的计划，也没有回归A股上市的计划。他说，近期内地房地产调控政策将维护市场稳定，对碧桂园的短期影响较小，长期看有积极影响。

　　碧桂园2017年的销售目标为4000亿元。碧桂园2016年合同销售金额按年上升120%至3088亿元，合同销售面积按年上升74%至3.7亿平方米。股东应占溢利为115.2亿元，同比增长24.2%。

FC project is the most revenue generating project last year in China, ranked 1 (i dont know why they compare it with other project in china). Among many projects launched by CG, this single project is most profitable. China ppty market actually heavily control and monitor by china gov. China do not lack of land, but they heavily control the land supply, esp top tier cities like the top 4. And their profit margin (CG, greenland, wanda, evergrande, vanke etc etc) heavily squeezed by land price (china gov take away).

This is what i think. FC project, units that they sold, due to high profit margin, already can cover their cost, further land reclamation to use as golf course and able to handle excesses units built. Failure in the form of ghost town ie units sold but low occupany remain highly likely....sibeh confirm it will be ghost town. But abandon project very unlikely. FC shareholders, the sultan, will not let it happen.

Whatever profits FC claimed to have made from the sales are all UNREALIZED profits, its only in the books and only on papers!!
Profits in real terms comes only after the full completion of the project and handed over and all monies, including the retention money are fully collected.
What they are talking about now is only a projected profit for FC.

The problem now is not localized one but due to a policy in China.
How much the Royal partner or even the state govt. can do to savage the situation and whether anything can be done, we don't know.
The main problem in FC is simply because of the high percentage of Chinese buyers, which is about 90% of the total sales, who are unable to make future payment due to the capital control.
We don't know how much this group of buyers had paid up.
If the initial payment is not much, many of these Chinese buyer would rather lose this money and quit to avoid trouble, with many fearing being blacklisted.
So, the outcome of this episode depends very much on the numbers of quitters.

If the numbers of quitters is high, then this project is as good as gone.
FC needs to find an equivalent number of buyers (20,000) outside China for "replacement" immediately to get the project going.
Otherwise, FC will have problems to continue with just only about 1,000 non Chinese buyers.
FC had already put in lots of money to purchase the land and doing the reclamation works and showrooms plus extensive nation wide marketing in China.
If they are using borrowed money, any delay in construction of current and future phases will result in high holding cost, with interest running into tens of millions.
If they are using own cash, then any delays will unduly locked up the money and its the future opportunity cost they are losing.

To date, the total construction work for the committed sold units is still very little.
Should FC decides to stop now, the damage is still not so high.
As for the CG project in Danga Bay which is almost 80 to 85% completed, they should quickly complete it and handover and collect all their dues and realize their profits, provided the percentage of Chinese buyers is not too high.

 

[shctaw]

My point is to new buyer of JB property. Probably same as yours.

If you intend to buy a JB home; avoid FC.

Our message is not to those that already bought into FC as they are already vested and hard to withdraw.

FC will take 20 - 30 years to realise developer "imagination". Before that day comes, I just buy somewhere else. And if FC succeed, I don't mind paying extra 20 to 30 years later..... if I am still alive.

FC is not cheap; why bother.

Whatever profits FC claimed to have made from the sales are all UNREALIZED profits, its only in the books and only on papers!!
.

 

[enjoylife77]

Whatever profits FC claimed to have made from the sales are all UNREALIZED profits, its only in the books and only on papers!!
Profits in real terms comes only after the full completion of the project and handed over and all monies, including the retention money are fully collected.
What they are talking about now is only a projected profit for FC.

The problem now is not localized one but due to a policy in China.
How much the Royal partner or even the state govt. can do to savage the situation and whether anything can be done, we don't know.
The main problem in FC is simply because of the high percentage of Chinese buyers, which is about 90% of the total sales, who are unable to make future payment due to the capital control.
We don't know how much this group of buyers had paid up.
If the initial payment is not much, many of these Chinese buyer would rather lose this money and quit to avoid trouble, with many fearing being blacklisted.
So, the outcome of this episode depends very much on the numbers of quitters.

If the numbers of quitters is high, then this project is as good as gone.
FC needs to find an equivalent number of buyers (20,000) outside China for "replacement" immediately to get the project going.
Otherwise, FC will have problems to continue with just only about 1,000 non Chinese buyers.
FC had already put in lots of money to purchase the land and doing the reclamation works and showrooms plus extensive nation wide marketing in China.
If they are using borrowed money, any delay in construction of current and future phases will result in high holding cost, with interest running into tens of millions.
If they are using own cash, then any delays will unduly locked up the money and its the future opportunity cost they are losing.

To date, the total construction work for the committed sold units is still very little.
Should FC decides to stop now, the damage is still not so high.
As for the CG project in Danga Bay which is almost 80 to 85% completed, they should quickly complete it and handover and collect all their dues and realize their profits, provided the percentage of Chinese buyers is not too high.

Country Garden Holdings Company Limited is a public listed entity in HKSE with a market capitalisation of HK$152B and since the land cost has been paid what are the chances of them suspending the project? It's usual for a public listed entity, once cash-strapped, to approach shareholder for cash injection. CGHC should be resourceful enough to market their projects to other part of the world now that the Chinese authority are slowing them down. Any products will move with the correct packaging and price.

 

[rotikok]

Whatever profits FC claimed to have made from the sales are all UNREALIZED profits, its only in the books and only on papers!!
Profits in real terms comes only after the full completion of the project and handed over and all monies, including the retention money are fully collected.
What they are talking about now is only a projected profit for FC.

The problem now is not localized one but due to a policy in China.
How much the Royal partner or even the state govt. can do to savage the situation and whether anything can be done, we don't know.
The main problem in FC is simply because of the high percentage of Chinese buyers, which is about 90% of the total sales, who are unable to make future payment due to the capital control.
We don't know how much this group of buyers had paid up.
If the initial payment is not much, many of these Chinese buyer would rather lose this money and quit to avoid trouble, with many fearing being blacklisted.
So, the outcome of this episode depends very much on the numbers of quitters.

If the numbers of quitters is high, then this project is as good as gone.
FC needs to find an equivalent number of buyers (20,000) outside China for "replacement" immediately to get the project going.
Otherwise, FC will have problems to continue with just only about 1,000 non Chinese buyers.
FC had already put in lots of money to purchase the land and doing the reclamation works and showrooms plus extensive nation wide marketing in China.
If they are using borrowed money, any delay in construction of current and future phases will result in high holding cost, with interest running into tens of millions.
If they are using own cash, then any delays will unduly locked up the money and its the future opportunity cost they are losing.

To date, the total construction work for the committed sold units is still very little.
Should FC decides to stop now, the damage is still not so high.
As for the CG project in Danga Bay which is almost 80 to 85% completed, they should quickly complete it and handover and collect all their dues and realize their profits, provided the percentage of Chinese buyers is not too high.

Erm.... 5 key questions, and if able to get the answers, we will know the situation will tilts toward your way or my way.

1. % of quitters? How high is consider high? 50% gives up? That will still almost be the size of CG danga bay.
2. After so much of effort to bring ppl in, will they easily let ppl off? Will extend grace period until loosening on capital control? Or makan away the downpayment and find new ppl?

Doesnt seem like CG want to makan away the tiny downpayment. Tiny, but if initial downpayment is 10%, easily RM 60-100k, buyers willing to give up?

3. How long the duration of tight capital control will stay? My understanding is political motivated, ideal reserve should be around 2.6 trillion, china do not want to stockpile usd reserve. They are willing to have lower exchange rate...but not now anf until coming april.

4. Will they downsized the project? To date, they have not sold 20k units, units coming out will depend on demand sides. What you said is like totally gone case.

5. Can CG tahan to spend money while the income sides remain unknown when can cpme in? If cannot tahan, why still want to build 3 golf courses in their 2nd FC agreement?

So the simple 1 question is, the impact is big until they want to stop it?

As for the bond arrangement, it is actually one of the way to circumvent capital control restriction. Money channel through bond repayment is legal while money coming out directly from PRC chinese for ppty purchase is restricted. And why delay? Chinese ppl can pay at their local CG office in yuan, and is CG company will pay their debt (channel money out) oversea. Interest rate is not much a concern, at least for me, i never see a company using this way to overcome the regulations being bother by interest rate, banks will willingly offer low rate.

 

[rotikok]

Country Garden Holdings Company Limited is a public listed entity in HKSE with a market capitalisation of HK$152B and since the land cost has been paid what are the chances of them suspending the project? It's usual for a public listed entity, once cash-strapped, to approach shareholder for cash injection. CGHC should be resourceful enough to market their projects to other part of the world now that the Chinese authority are slowing them down. Any products will move with the correct packaging and price.

Resourceful is the key. I want to add in 1 more point, FC project, besides those china top tier developers, no others, including Malaysia developers capable of doing it.

Call the project off, is quite unreasonable now judging by thousands of PRC wanted to buy. Capital control is not much a bother for them to halt the project....only big thing happen will, eg china ppty bubble burst. Then we will have to reassess the situation.

 

[snowbird]

Erm.... 5 key questions, and if able to get the answers, we will know the situation will tilts toward your way or my way.

1. % of quitters? How high is consider high? 50% gives up? That will still almost be the size of CG danga bay.
2. After so much of effort to bring ppl in, will they easily let ppl off? Will extend grace period until loosening on capital control? Or makan away the downpayment and find new ppl?

How many will quit is unknown now and still too early now to see impact.
But most of this buyers are small time investors and the last thing they want is problems seeking approval each time you want to send out money and worse, they will be afraid being tacked by the authorities.
The point I'm saying if the quitter proportion is high then it'll be a problem for the developer to continue and again, high is relative.
So, how high? We already know that 20,000 buyers are Chinese, so if as much as 50% decides to quit, then big problem.

Doesnt seem like CG want to makan away the tiny downpayment. Tiny, but if initial downpayment is 10%, easily RM 60-100k, buyers willing to give up?

How long will this capital control last, we don't know.
It depends on how effective and the achievement so far. But when a policy is being implemented, it'll usually takes at least a year or 2 to see any tangible results.

3. How long the duration of tight capital control will stay? My understanding is political motivated, ideal reserve should be around 2.6 trillion, china do not want to stockpile usd reserve. They are willing to have lower exchange rate...but not now anf until coming april.

4. Will they downsized the project? To date, they have not sold 20k units, units coming out will depend on demand sides. What you said is like totally gone case.

5. Can CG tahan to spend money while the income sides remain unknown when can cpme in? If cannot tahan, why still want to build 3 golf courses in their 2nd FC agreement?

Can CG tahan to spend more money or not depends also on the local partners.
Don't forget that this FC thingy is a joint venture between a CG China subsidiary and some local partner, so if new funds is needed, both the subsidiary and local partner has to contribute base on their equity.
So the simple 1 question is, the impact is big until they want to stop it?

Yes, if the impact is really too big, they will not exactly stop but slow down or shelf other phases.
Which also means all the other supporting retail and hospitality facilities will also be affected.
Sometimes in big businesses, when you have to cut lost, you just cut lost immediately, 咬紧牙关，长痛不如短痛。

As for the bond arrangement, it is actually one of the way to circumvent capital control restriction. Money channel through bond repayment is legal while money coming out directly from PRC chinese for ppty purchase is restricted. And why delay? Chinese ppl can pay at their local CG office in yuan, and is CG company will pay their debt (channel money out) oversea. Interest rate is not much a concern, at least for me, i never see a company using this way to overcome the regulations being bother by interest rate, banks will willingly offer low rate.

For FC and others like Greenland with a high percentage of Chinese buyers, the main problem is this capital control thing whereby the buyers cannot send their money out.
It is different from banning the people from buy property outside China.
FC perhaps can arrange to have the payment all made in China, after all, the company is a Chinese company and all payment are actually due to them!
But here, you are dealing with 20,000 individuals all over China and not a company to company business, so your suggestion is not workable.
But this will be a major legal question where you buy a Malaysian product but pay in China and whether MY agrees to this arrangement because this way, no money will come into MY!!

However, another point is this FC is part of the One Belt One Road initiation which the developer is doing in support of the idea.
China would really want to have a high population of Chinese living, as much as 700,000 perhaps (the projected population of FC).
With so many mega projects in MY by Chinese companies, many Chinese may have to live in MY for a very long time and perhaps they will eventually be to tenants here.
So, finally, how much this factors will affect the development of this FC saga is yet to be seen.

 

[FHBH12]

FOREST CITY: $100 Billion City Made From Scratch in Johor, Malaysia

[video=youtube;GaEOjt0e1bw]https://www.youtube.com/watch?v=GaEOjt0e1bw[/video]

 

[FHBH12]

China is the biggest source of foreigners under Malaysia’s international residency scheme

http://mothership.sg/2017/03/china-...der-malaysias-international-residency-scheme/

 

[rotikok]

1.How long will this capital control last, we don't know.
It depends on how effective and the achievement so far. But when a policy is being implemented, it'll usually takes at least a year or 2 to see any tangible results.

2 So, how high? We already know that 20,000 buyers are Chinese, so if as much as 50% decides to quit, then big problem.
3Can CG tahan to spend more money or not depends also on the local partners.
4 Yes, if the impact is really too big, they will not exactly stop but slow down or shelf other phases.
Which also means all the other supporting retail and hospitality facilities will also be affected.
Sometimes in big businesses, when you have to cut lost, you just cut lost immediately, 咬紧牙关，长痛不如短痛。

5For FC and others like Greenland with a high percentage of Chinese buyers, the main problem is this capital control thing whereby the buyers cannot send their money out.
It is different from banning the people from buy property outside China.
FC perhaps can arrange to have the payment all made in China, after all, the company is a Chinese company and all payment are actually due to them!
But here, you are dealing with 20,000 individuals all over China and not a company to company business, so your suggestion is not workable.
But this will be a major legal question where you buy a Malaysian product but pay in China and whether MY agrees to this arrangement because this way, no money will come into MY!!

However, another point is this FC is part of the One Belt One Road initiation which the developer is doing in support of the idea.
China would really want to have a high population of Chinese living, as much as 700,000 perhaps (the projected population of FC).
With so many mega projects in MY by Chinese companies, many Chinese may have to live in MY for a very long time and perhaps they will eventually be to tenants here.
So, finally, how much this factors will affect the development of this FC saga is yet to be seen.

1. Wait，let me get this thing right. China do not newly putting out a new law banning capital outflow. All the while is there, as RMB still not a fully convertible currency, it is only they lax or strict on implement it. My Q is, when will they lax again? Is it beneficial for China to lax the rule, if RMB is within their control range, do they want further lower yuan valuation?
What a year or two seeing tangible result....so many years liao, what result you see?

2. First, i do not think 20K units sold. OK, use 20K, 50% gone, 10K want to stay on with money. Big problem?
I tried to put a calculation, simplify situation a bit. Let say each units RM 800K, unrealised profit margin set at 50% （CG central park in Tampoi, psf is ~RM500 psf, so FC with psf of RM 800-1000, expecting 50% margin reasonable right）
Which means, they will have net RM 4B, and the money will not appear until they have finish building.
So, RM 4B enough to reclaim land, pay back advertisement etc etc? Yes. So why big problem if 50% quit? Still big enough to go on right?
Perhaps come out with your calculation and suggest otherwise.

3. Short answer for your Q is, YES. CG have many ways to get the fundings, be it from expanding CG shares offering or issuing more debts.

4. Thank for making my points by saying "they will not exactly stop". Scale down is still reasonable option but to date, has no such intention yet. It is a 30 years projects and i dont think they got lay out the project plan in terms of what years finish what phase. The land reclaim will continue on and will be hoarding as golf courses.
What 长痛不如短痛, when the fact is, no pain at all. Finish building phase 1, still earning and able to cover the cost of land reclamation.
Stop building hospitality facilities....so bad ah you, this will totally destroy the purpose of those buying into the project. International school is the attraction reason why part of the buyers buying into it, it will be a success, take my words.
Other like a med check up from Taiwan, already have good customers based, and those in Johor need to travel up to KL for body check up. This will also be a success.
No hospital planned.
Retail, still hard to tell.
The points is, my reasonable good outcome for FC to success, is around 20-30% occupancy rate (so low right)...that will means 2000-4000 units being occupy by PRC chinese that wanted to use the facilities on the island. Not agree?

5. You doesnt seem quite get my point, or misunderstood the whole procedure. What "not company to company, money still stuck in china not coming into malaysia", seem like you dont understand how it works at all to give out such funny feedback. Let me explain in kindergarten way.
-you are dealing with 20,000 individuals all over China and not a company to company business.
Yes, those 20K individuals all over china pay to CG office in china with yuan. So now who got the money? CG company in China right? Get it?
Ok, then you got debt denominated in RM from oversea office which you need to pay since oversea office have no money.
How to pay? Remit money out from China. Do china ban debt payment? Errr....no, get it?
But those are yuan, one toddler asked.
Well, have to sell those yuan and buy ringgit in open market baru remit out for debt payment right....get it?
no money will come into MY!!
Ohh... this toddler ask this Q, Yes, money will come in.
Why issuing bond, luckily all toddlers are smart enough to not ask such question, but the teacher roti explain further, the bond issued is collaborate with banks, can be a local malaysia bank on periodic basis (they can also do in one go). So let say quarter one got 500m yuan want to come in, CG will arrange with let say Maybank, say hey maybank, i will want to issue short term debt of 1 week to get 500m yuan equaivalent of ringgit and willing to pay 0.01% pw. Maybank then say ok! Chop, 250m ringgit (assuming 1:2), and CG give maybank an IOU. Then CG instantly got 250M ringgit to do their work in FC.

At the same time, CG china office will tell China, that their company in malaysia owe maybank 500m yuan of ringgit, they have to pay back them. Is debt repayment, not illegal oversea property purchase. So China bo bian, knowing eveeything but the rules do not ban such activities.
CG china office will get 500m yuan convert to 250M ringgit...then travel overseas to maybank office, pay maybank 250m ringgit and take back the IOU contract. Whole procedure done.

Of course there are others more complicated financial way to do things la, this is already the simplest....simple enough to explain in a sentence or two...above explanation greatly explain simple concept, hope you can understand. If still cant understand... i dont know how to even simplify it liao....but trust me and take my word, financial world is very versatile, very very hard to dry out (like you said petronas cant get loan as the funding channel all drys out haha). It is only after the company capable of taking on the project or not.... not so much of, able to get fundings. CG is not doing a project that few times its size, they are capable of doing it on their own if the demand side (buyers) do not dry out.

 

[snowbird]

Fact 1 - Forest City had closed all showrooms in China "for renovation".
So as long as the showrooms stay closed, they will not be having new buyers for whatever is balance in the current phase.
So, busloads of Chinese property buyers sponsored by the developers to the FC showroom in JB will not happen for a long time.

Fact 2 - China never had an open economy and the RMB is not openly traded. Capital control is always there, just the implementation had been somewhat lax.
Just like the custom Green and Red Lanes, usually you just go to Green Lane if nothing to declare but now, even nothing to declare, you need to go to Red Lane and open all luggage to be check.
This caught all developers and buyers by surprise and the tightening of this capital control was only implemented early this year.

Fact 3. - FC had publicly announced a total sales of RM20 billions and averaging RM1 million/unit is about 20,000 units.
This is only part of Phase 1 and is not a totally sold out phase.
FC consist of 4 man-made islands and the current phase is on a 980 acres (approx. 4 km sq.) island so, whether they are building 100 unit or 50,000 units, they need to complete all reclamation and earthworks on this island.
FC is also responsible to construct all other supporting infrastructure like road network, street lighting, public parking, sewerage treatment, etc. for the whole island, so it is not just building the housing units.
Now we know sales had stopped and a good chance many Chinese buyers are quitting, so, all infrastructure works has to continue despite building for 2,000 or 20,000 units.
There is this thing known as economy of scale and leverage - like you build a road to serve a whole village of thousands of people or build a similar road just to serve few families.
Here, FC has to sink in lots of money for all the preliminary works plus all the extensive marketing expenses and if the land reclaimed is left to idle, then all the investment monies is locked up for nothing.
Apparent, Mr Rotikok did not take into consideration of this important factor.

Fact 4. - China is not an open economy and did not just implement the capital control, its just that they "strengthen the control" and the main thing is to control massive capital flight especially on properties.
Again, how long will this control last, no one knows because many even suspect that this is also to protect and boost the local property market.
The Chinese buyers are also not exactly dumb people with many already looking for loopholes to send money out and all this will go on until the authorities crackdown.
http://www.caixinglobal.com/2017-03-13/101065535.html

Got time, also read this article la, it says all the things with illustrations for me.

http://www.thestar.com.my/news/nati...se-investments-in-malaysia-however-are-still/

 

[rotikok]

Fact 1 - Forest City had closed all showrooms in China "for renovation".
So as long as the showrooms stay closed, they will not be having new buyers for whatever is balance in the current phase.
So, busloads of Chinese property buyers sponsored by the developers to the FC showroom in JB will not happen for a long time.

Fact 2 - China never had an open economy and the RMB is not openly traded. Capital control is always there, just the implementation had been somewhat lax.
Just like the custom Green and Red Lanes, usually you just go to Green Lane if nothing to declare but now, even nothing to declare, you need to go to Red Lane and open all luggage to be check.
This caught all developers and buyers by surprise and the tightening of this capital control was only implemented early this year.

Fact 3. - FC had publicly announced a total sales of RM20 billions and averaging RM1 million/unit is about 20,000 units.
This is only part of Phase 1 and is not a totally sold out phase.
FC consist of 4 man-made islands and the current phase is on a 980 acres (approx. 4 km sq.) island so, whether they are building 100 unit or 50,000 units, they need to complete all reclamation and earthworks on this island.
FC is also responsible to construct all other supporting infrastructure like road network, street lighting, public parking, sewerage treatment, etc. for the whole island, so it is not just building the housing units.
Now we know sales had stopped and a good chance many Chinese buyers are quitting, so, all infrastructure works has to continue despite building for 2,000 or 20,000 units.
There is this thing known as economy of scale and leverage - like you build a road to serve a whole village of thousands of people or build a similar road just to serve few families.
Here, FC has to sink in lots of money for all the preliminary works plus all the extensive marketing expenses and if the land reclaimed is left to idle, then all the investment monies is locked up for nothing.
Apparent, Mr Rotikok did not take into consideration of this important factor.

Fact 4. - China is not an open economy and did not just implement the capital control, its just that they "strengthen the control" and the main thing is to control massive capital flight especially on properties.
Again, how long will this control last, no one knows because many even suspect that this is also to protect and boost the local property market.
The Chinese buyers are also not exactly dumb people with many already looking for loopholes to send money out and all this will go on until the authorities crackdown.
http://www.caixinglobal.com/2017-03-13/101065535.html

Got time, also read this article la, it says all the things with illustrations for me.

http://www.thestar.com.my/news/nati...se-investments-in-malaysia-however-are-still/

Fact 1 - Please! Check latest fact again. Sometimes will feel too lazy to reply when your fact not up to date or giving wrong facts.

Fact 2 - Are you suggesting the authority do not know the lubang until recently baru realise got a big loop holes? Please stop thinking the authority is a fool. For years big company buying foreign assets, a lot are allowed. Like the Waldorf Astoria hotel in New York, media news in China even reporting it big big....FC even has their advertisement on 春晚。 So are you telling me, all the while the authority thought that no one were buying foreign ppty when every now and then keep on got foreign ppty purchase news coming out? If they knew it long long time ago (even idiot will know it long ago) then why only now that they restricting harder? Bcoz authority accidentally spot check on red lane (when they knew the green lane all got problem)? You need to know, they know their things much better than you do. So my question is, when they will lax again?

Fact 3 - "Now we know sales had stopped" -->again, wrong fact.
What economy of scale and leverage. Phase 1 is all in the first island. But their next contract that they recently signed will complete with 3 golf courses on others havent reclaimed islands. If you think CG will fail FC, what for claim others islands? Just one is enough for 20K units and build economy of scale on just 1 island is enough. IF they are not financial capable, why bother to reclaim islands when those islands 10-30 years may remain as golf courses? Perhaps they should save those money no matter how good the economy of scale is.

Fact 4 - "also to protect and boost the local property market." This is your guess. First, they do not need to boost the ppty market, nor even in their mind would want to do so. Protect, yes, but not capital control, capital outflow all these while do not cause ppty market in first tier cities to drop, even rise at the same time capital outflow happen. All these years they have been coming out ruling to control ppty market price (打房）. It is funny to even think that, capital outflow will cause China ppty to shiver. Bear in mind, if a chinese got money, they will first buy local, got extra, buy local again, and finally remaining wash out to buy foreign ppty. Capital control is good to see on exchange rate impact...china ppty market is quite irrelavantly keep rising whether they lax or strict on cap control, this is what past years history all these while telling.

And thank you for sending me a link that I already dig in much deeper weeks ago when zhou xiao chuan open his central bank meetings. Now I send you back a link to let you understand what central bank is actually trying to convey when they say "不乏非理性的投资行为和转移资产的异常行为"
http://sports.sohu.com/20170321/n484010141.shtml

FC belongs to one road one belt initiative category, collaborate with many china companies and malaysia companies, further tightening both countries cooperation. "这些投资快速增长的宏观背景是我国综合国力的提升，对外开放的程度提高，“一带一路”的倡议和对外产能合作战略的实施。"--from the article

And this is the bad example that they are restricting: 潘功胜同时指出，在日常的监管中也发现了一些非理性和异常的投资行为。比如，一个钢铁厂收购海外影视公司，中国的餐饮企业在海外收购一家网游公司，特别是去年一年中国企业在海外收购了很多足球俱乐部。

　　“如果说这些收购促进了中国的足球水平和世界的足球水平，我觉得是件好事情。但是是这样的吗？有很多企业，在中国的负债率已经很高了，再借一大笔钱去海外收购。有一些则在直接投资的包装下转移资产。”潘功胜直言。
"央行行长周小川在两会记者会上表示，中国对外投资有一部分实际上跟我国对外投资的产业政策要求不符合，“比如投一些体育、娱乐、俱乐部，对中国没有太大的好处，同时在外面还引起了一些抱怨。”他认为，有必要进行一定程度的政策指导。"

And this is what I think: recent tightening on capital control, is to control exchange rate downward pressure. That's all. When time is right, China will weakening yuan again if USD getting too strong (depend on US economy situation). FC, as well as others, all kena bcoz of this simple reason and will be short term. Ongoing prolong capital control on unreasonable investment, although FC will be a ghost town, do not belongs to unreasonable investment category...and no way i can dig out such information based on central bank authority statement, to be honest.

 

[snowbird]

Fact 1 - Please! Check latest fact again. Sometimes will feel too lazy to reply when your fact not up to date or giving wrong facts.
Oh, the showrooms had completed "renovations" are all opened now in China??
Otherwise what?
Fact 2 - Are you suggesting the authority do not know the lubang until recently baru realise got a big loop holes? Please stop thinking the authority is a fool. For years big company buying foreign assets, a lot are allowed. Like the Waldorf Astoria hotel in New York, media news in China even reporting it big big....FC even has their advertisement on 春晚。 So are you telling me, all the while the authority thought that no one were buying foreign ppty when every now and then keep on got foreign ppty purchase news coming out? If they knew it long long time ago (even idiot will know it long ago) then why only now that they restricting harder? Bcoz authority accidentally spot check on red lane (when they knew the green lane all got problem)? You need to know, they know their things much better than you do. So my question is, when they will lax again?

Fact 3 - "Now we know sales had stopped" -->again, wrong fact.
What economy of scale and leverage. Phase 1 is all in the first island. But their next contract that they recently signed will complete with 3 golf courses on others havent reclaimed islands. If you think CG will fail FC, what for claim others islands? Just one is enough for 20K units and build economy of scale on just 1 island is enough. IF they are not financial capable, why bother to reclaim islands when those islands 10-30 years may remain as golf courses? Perhaps they should save those money no matter how good the economy of scale is.

Fact 4 - "also to protect and boost the local property market." This is your guess. First, they do not need to boost the ppty market, nor even in their mind would want to do so. Protect, yes, but not capital control, capital outflow all these while do not cause ppty market in first tier cities to drop, even rise at the same time capital outflow happen. All these years they have been coming out ruling to control ppty market price (打房）. It is funny to even think that, capital outflow will cause China ppty to shiver. Bear in mind, if a chinese got money, they will first buy local, got extra, buy local again, and finally remaining wash out to buy foreign ppty. Capital control is good to see on exchange rate impact...china ppty market is quite irrelavantly keep rising whether they lax or strict on cap control, this is what past years history all these while telling.

And thank you for sending me a link that I already dig in much deeper weeks ago when zhou xiao chuan open his central bank meetings. Now I send you back a link to let you understand what central bank is actually trying to convey when they say "不乏非理性的投资行为和转移资产的异常行为"
http://sports.sohu.com/20170321/n484010141.shtml

FC belongs to one road one belt initiative category, collaborate with many china companies and malaysia companies, further tightening both countries cooperation. "这些投资快速增长的宏观背景是我国综合国力的提升，对外开放的程度提高，“一带一路”的倡议和对外产能合作战略的实施。"--from the article

And this is the bad example that they are restricting: 潘功胜同时指出，在日常的监管中也发现了一些非理性和异常的投资行为。比如，一个钢铁厂收购海外影视公司，中国的餐饮企业在海外收购一家网游公司，特别是去年一年中国企业在海外收购了很多足球俱乐部。

　　“如果说这些收购促进了中国的足球水平和世界的足球水平，我觉得是件好事情。但是是这样的吗？有很多企业，在中国的负债率已经很高了，再借一大笔钱去海外收购。有一些则在直接投资的包装下转移资产。”潘功胜直言。
"央行行长周小川在两会记者会上表示，中国对外投资有一部分实际上跟我国对外投资的产业政策要求不符合，“比如投一些体育、娱乐、俱乐部，对中国没有太大的好处，同时在外面还引起了一些抱怨。”他认为，有必要进行一定程度的政策指导。"

And this is what I think: recent tightening on capital control, is to control exchange rate downward pressure. That's all. When time is right, China will weakening yuan again if USD getting too strong (depend on US economy situation). FC, as well as others, all kena bcoz of this simple reason and will be short term. Ongoing prolong capital control on unreasonable investment, although FC will be a ghost town, do not belongs to unreasonable investment category...and no way i can dig out such information based on central bank authority statement, to be honest.

Actually, a lot of things you said is repeat after what I had said much earlier.
See my post : https://www.sammyboy.com/showthread.php?206916-Forest-City&p=2585280#post2585280
I said capital control is to curb the rapid and massive outflow of the RMB causing sharp fall in the exchange rate and the decline in the forex reserve which stood at about US$3.1 trillion.
An equivalent of US$309.4 billion left China via RMB payments in 2016, the biggest annual amount and it was this that triggered the authorities to decided to "strengthen" the control.
I have also said that this capital control is NOT BANNING money from leaving but the authorities wanted to screen every remittance going out, what's the reason or purpose.
What that Chinese officer said is correct, the authorities has to prioritize and allow 理性的投资行为 and forbid 对中国没有太大的好处, 政策要求不符合的对外投资!!!
Apparently individual overseas property purchase is on the lowest priority, only cash outflow with zero economic contribution to the nation.

I seriously think that you know nothing about business when you said :
This is what i think. FC project, units that they sold, due to high profit margin, already can cover their cost, further land reclamation to use as golf course and able to handle excesses units built.
Failure in the form of ghost town ie units sold but low occupany remain highly likely....sibeh confirm it will be ghost town. But abandon project very unlikely. FC shareholders, the sultan, will not let it happen.

Units sold so far can cover their cost!
100% wrong.
Do you know that FC is supposed to consist of 4 man-made islands?
The one that is housing the current sales is the one nearest to mainland and is about 980 acres in size.
Do you know how much it cost just to reclaim this island?
There is a similar reclamation project in Penang for residential development and almost similar in size, it cost RM1.07 billions.
So, just assume FC had spent also this amount on the reclamation and you adds in the other major infrastructure cost like roads, showrooms and model apartments, landscaping, plus marketing cost etc. the total could reach RM1.5 billions.

And if they only sold 20,000 units and unable to proceed to sell more units, they cannot even break even, there is no economy of scale and insufficient leverage!!!!
So, FC needs to sell maybe 4 or 5 times more units to leverage that RM1.07 billion reclamation and infrastructure cost.
Also, the more units you build on the same site, the more cost effective it'll be, resulting in cheaper cost per unit, that's why I mentioned economy of scale.
Can you understand now?
As for the new golf course, what better way to make use of the idling land with minimal construction work input and can also collect some green fees.

I had said this before and I'm saying it again.
That 20,000 buyers if they hold on and continue to finance their loan plus FC can proceed to sell the remaining Phase 1, at least there's is lesser danger of abandon project.
But if that most of the 20,000 buyers decides to quit, BIG PROBLEM!
Looking at the site plan, the current Phase is only about 20% 0f the whole island.
FC needs to sell perhaps another 30,000 to 40,000 units in order to earn a surplus to finance the reclamation works of the other 3 islands!



The effect of tightening of capital control on FC is will definite cause some negative effect, how much is still too early to tell.
But I had also mention about the One Road One Belt Initiative with FC fitting into the overall jigsaw puzzle and may get some special treatment from the Chinese authorities, who knows.
For all we know, FC will be filled with families of the Chinese working on mega project in MY like the ECRL railroad and maybe HSR, Bandar KL, the TRX.

 

[rotikok]

Actually, a lot of things you said is repeat after what I had said much earlier.
See my post : https://www.sammyboy.com/showthread.php?206916-Forest-City&p=2585280#post2585280
I said capital control is to curb the rapid and massive outflow of the RMB causing sharp fall in the exchange rate and the decline in the forex reserve which stood at about US$3.1 trillion.
An equivalent of US$309.4 billion left China via RMB payments in 2016, the biggest annual amount and it was this that triggered the authorities to decided to "strengthen" the control.
I have also said that this capital control is NOT BANNING money from leaving but the authorities wanted to screen every remittance going out, what's the reason or purpose.
What that Chinese officer said is correct, the authorities has to prioritize and allow 理性的投资行为 and forbid 对中国没有太大的好处, 政策要求不符合的对外投资!!!
Apparently individual overseas property purchase is on the lowest priority, only cash outflow with zero economic contribution to the nation.

I seriously think that you know nothing about business when you said :
This is what i think. FC project, units that they sold, due to high profit margin, already can cover their cost, further land reclamation to use as golf course and able to handle excesses units built.
Failure in the form of ghost town ie units sold but low occupany remain highly likely....sibeh confirm it will be ghost town. But abandon project very unlikely. FC shareholders, the sultan, will not let it happen.

Units sold so far can cover their cost!
100% wrong.
Do you know that FC is supposed to consist of 4 man-made islands?
The one that is housing the current sales is the one nearest to mainland and is about 980 acres in size.
Do you know how much it cost just to reclaim this island?
There is a similar reclamation project in Penang for residential development and almost similar in size, it cost RM1.07 billions.
So, just assume FC had spent also this amount on the reclamation and you adds in the other major infrastructure cost like roads, showrooms and model apartments, landscaping, plus marketing cost etc. the total could reach RM1.5 billions.

And if they only sold 20,000 units and unable to proceed to sell more units, they cannot even break even, there is no economy of scale and insufficient leverage!!!!
So, FC needs to sell maybe 4 or 5 times more units to leverage that RM1.07 billion reclamation and infrastructure cost.
Also, the more units you build on the same site, the more cost effective it'll be, resulting in cheaper cost per unit, that's why I mentioned economy of scale.
Can you understand now?
As for the new golf course, what better way to make use of the idling land with minimal construction work input and can also collect some green fees.

I had said this before and I'm saying it again.
That 20,000 buyers if they hold on and continue to finance their loan plus FC can proceed to sell the remaining Phase 1, at least there's is lesser danger of abandon project.
But if that most of the 20,000 buyers decides to quit, BIG PROBLEM!
Looking at the site plan, the current Phase is only about 20% 0f the whole island.
FC needs to sell perhaps another 30,000 to 40,000 units in order to earn a surplus to finance the reclamation works of the other 3 islands!

View attachment 30104

The effect of tightening of capital control on FC is will definite cause some negative effect, how much is still too early to tell.
But I had also mention about the One Road One Belt Initiative with FC fitting into the overall jigsaw puzzle and may get some special treatment from the Chinese authorities, who knows.
For all we know, FC will be filled with families of the Chinese working on mega project in MY like the ECRL railroad and maybe HSR, Bandar KL, the TRX.

This is what you wrote previously: "Forest City had closed all showrooms in China "for renovation""
^^Not a wrong fact? Your statement only need 1 showroom to open to prove it wrong ....now there is more than one. All open or not doesnt make much diff, do you think if a cash rich PRC coming to the gallery in China, say want to buy, they will block them? If still blocking, then open all showroom in china also no use. >>whether CG has blocked their people from buying? is the key question.

As for the "zero economic contribution to the nation." You really made a good point. For what I think, the answer depend on short or long term. For short term, priority is quite obvious.

Just think about what RMB long term trend will be....will it be more liberal? less constraint? more convertible? more freely? This is what I think, and guessing based on why CG able to gather political support for their foreign countries venture. When China economy becoming more open, they will want their currency to be like USD...and in future constraining their people, want can be used, what cant, is unlikely. There is a urge for their people to buy overseas ppty...this, no matter what you do, you cant ban it. This is a bit like Mainland Chinese going to Taiwan to improve Taiwan tourism.... you thought Taiwan people benefit greatly...but look deeper, the tour that China travel agency organised, from Hotel, to souvenir stores, to attraction places, to restaurants, all got China shareholders at behind. So touring to Taiwan, a lot of money interest still back to China. Rather than let their people find their money way out to unknown ppty developers or unknown sellers in US, canada, australia or singapore....building a top class city (also for crowd gathering impact to increase chinese willingness to move into that place) with own China developer, at the same time fulfilled China ambition to migrant some of their ppl (local opposition against it) is actually quite smart. Zero economic contribution is true for short term...long term still hard to say...but can be potentially increasing china long term influences in malaysia.

Key point is, if you cant stop people from buying oversea ppty and let unknown people benefited, perhaps you can channel to area that the authority willing to see, and make a great long term plan.....long term plan is what China always been doing.

Units sold so far can cover their cost!
100% wrong.
Do you know that FC is supposed to consist of 4 man-made islands?
The one that is housing the current sales is the one nearest to mainland and is about 980 acres in size.
Do you know how much it cost just to reclaim this island?
There is a similar reclamation project in Penang for residential development and almost similar in size, it cost RM1.07 billions.
So, just assume FC had spent also this amount on the reclamation and you adds in the other major infrastructure cost like roads, showrooms and model apartments, landscaping, plus marketing cost etc. the total could reach RM1.5 billions.

And if they only sold 20,000 units and unable to proceed to sell more units, they cannot even break even, there is no economy of scale and insufficient leverage!!!!
So, FC needs to sell maybe 4 or 5 times more units to leverage that RM1.07 billion reclamation and infrastructure cost.
Also, the more units you build on the same site, the more cost effective it'll be, resulting in cheaper cost per unit, that's why I mentioned economy of scale.
Can you understand now?
As for the new golf course, what better way to make use of the idling land with minimal construction work input and can also collect some green fees.


Now I see where we differ. After seeing condo that sell at RM 300psf and developer still earn a nice margin, typical singaporean will feel that such low price sure rugi. Rmb my earlier post? "2. First, i do not think 20K units sold. OK, use 20K, 50% gone, 10K want to stay on with money. Big problem?
I tried to put a calculation, simplify situation a bit. Let say each units RM 800K, unrealised profit margin set at 50% （CG central park in Tampoi, psf is ~RM500 psf, so FC with psf of RM 800-1000, expecting 50% margin reasonable right）
Which means, they will have net RM 4B, and the money will not appear until they have finish building.
So, RM 4B enough to reclaim land, pay back advertisement etc etc? Yes. So why big problem if 50% quit? Still big enough to go on right?
Perhaps come out with your calculation and suggest otherwise."

So please come out with your own agak agak calculation. What is the margin, what is the unit cost, % of getting in the payment etc...
So, FC needs to sell maybe 4 or 5 times more units to leverage that RM1.07 billion reclamation and infrastructure cost? Try divide RM 1.07 B with RM 800K per condo price... 1400 units earning in full can cover that cost liao. Ok assuming 40K units to cover RM1.07B cost, each unit cost RM800K, which means 32B revenue only can cover 1.07B reclaim cost...i.e. 3.3% margin. So you smart smart put out a big number to make your point seem valid, and each unit sold, 3.3% will be used to pay for the cost? So do you want to say the profit margin is small, like 5%, and 3.3% used to pay for all sort of things and 2.3% they pocketed? Genius! Why CG even come to such a low earning project? Put in china bank actually earns more leh.

ANd you are contradicting yourself again
"As for the new golf course, what better way to make use of the idling land with minimal construction work input and can also collect some green fees."--->still reclaim
" FC needs to sell perhaps another 30,000 to 40,000 units in order to earn a surplus to finance the reclamation works of the other 3 islands!"--->so expensive to reclaim

Fact: despite not selling 30k-40k units, they are still going to proceed to reclaim remaining islands on their recently signed contract.

Lastly, Economy of scale and insufficient leverage is easy to say. At least dumb dumb make up some number to fool me, to prove your point that insufficient economy of scale and insufficient leverage is actually happening, i will be more appreciated. And that way, can at least make me believe that CG sold ~15K units and still on their way to reclaim more lands, are outright stupid action.

 

[snowbird]

This is what you wrote previously: "Forest City had closed all showrooms in China "for renovation""
^^Not a wrong fact? Your statement only need 1 showroom to open to prove it wrong ....now there is more than one. All open or not doesnt make much diff, do you think if a cash rich PRC coming to the gallery in China, say want to buy, they will block them? If still blocking, then open all showroom in china also no use. >>whether CG has blocked their people from buying? is the key question.

The key question here is NOT ABOUT BLOCKING by the authorities or anyone!
The showrooms in China were not forced to close but rather closed by the developer themselves.
The developer had spend so much money building the showrooms all over China and employing so many sales staff is to make as many sales as possible in the shortest time!
Closing the showrooms means sales will be stop. Why are they doing this?
It is because the developer realized that they are unable to take in any more sales due to the recently strengthening of capital control so why waste more money to run the showrooms!!!!!
Could you think of another more valid reason??


As for the "zero economic contribution to the nation." You really made a good point. For what I think, the answer depend on short or long term. For short term, priority is quite obvious.
Just think about what RMB long term trend will be....will it be more liberal? less constraint? more convertible? more freely? This is what I think, and guessing based on why CG able to gather political support for their foreign countries venture. When China economy becoming more open, they will want their currency to be like USD...and in future constraining their people, want can be used, what cant, is unlikely. There is a urge for their people to buy overseas ppty...this, no matter what you do, you cant ban it. This is a bit like Mainland Chinese going to Taiwan to improve Taiwan tourism.... you thought Taiwan people benefit greatly...but look deeper, the tour that China travel agency organised, from Hotel, to souvenir stores, to attraction places, to restaurants, all got China shareholders at behind. So touring to Taiwan, a lot of money interest still back to China. Rather than let their people find their money way out to unknown ppty developers or unknown sellers in US, canada, australia or singapore....building a top class city (also for crowd gathering impact to increase chinese willingness to move into that place) with own China developer, at the same time fulfilled China ambition to migrant some of their ppl (local opposition against it) is actually quite smart. Zero economic contribution is true for short term...long term still hard to say...but can be potentially increasing china long term influences in malaysia.

Key point is, if you cant stop people from buying oversea ppty and let unknown people benefited, perhaps you can channel to area that the authority willing to see, and make a great long term plan.....long term plan is what China always been doing.

Chinese monetary policy is not the discussion point here.
They can do anything they want, doesn't matter for long term or short term, implement any policy anytime, the US had already labelled them "currency manipulator".

Units sold so far can cover their cost!
100% wrong.
Do you know that FC is supposed to consist of 4 man-made islands?
The one that is housing the current sales is the one nearest to mainland and is about 980 acres in size.
Do you know how much it cost just to reclaim this island?
There is a similar reclamation project in Penang for residential development and almost similar in size, it cost RM1.07 billions.
So, just assume FC had spent also this amount on the reclamation and you adds in the other major infrastructure cost like roads, showrooms and model apartments, landscaping, plus marketing cost etc. the total could reach RM1.5 billions.

And if they only sold 20,000 units and unable to proceed to sell more units, they cannot even break even, there is no economy of scale and insufficient leverage!!!!
So, FC needs to sell maybe 4 or 5 times more units to leverage that RM1.07 billion reclamation and infrastructure cost.
Also, the more units you build on the same site, the more cost effective it'll be, resulting in cheaper cost per unit, that's why I mentioned economy of scale.
Can you understand now?
As for the new golf course, what better way to make use of the idling land with minimal construction work input and can also collect some green fees.


Now I see where we differ. After seeing condo that sell at RM 300psf and developer still earn a nice margin, typical singaporean will feel that such low price sure rugi. Rmb my earlier post? "2. First, i do not think 20K units sold. OK, use 20K, 50% gone, 10K want to stay on with money. Big problem?
I tried to put a calculation, simplify situation a bit. Let say each units RM 800K, unrealised profit margin set at 50% （CG central park in Tampoi, psf is ~RM500 psf, so FC with psf of RM 800-1000, expecting 50% margin reasonable right）
Which means, they will have net RM 4B, and the money will not appear until they have finish building.
So, RM 4B enough to reclaim land, pay back advertisement etc etc? Yes. So why big problem if 50% quit? Still big enough to go on right?
Perhaps come out with your calculation and suggest otherwise."

So please come out with your own agak agak calculation. What is the margin, what is the unit cost, % of getting in the payment etc...
So, FC needs to sell maybe 4 or 5 times more units to leverage that RM1.07 billion reclamation and infrastructure cost? Try divide RM 1.07 B with RM 800K per condo price... 1400 units earning in full can cover that cost liao. Ok assuming 40K units to cover RM1.07B cost, each unit cost RM800K, which means 32B revenue only can cover 1.07B reclaim cost...i.e. 3.3% margin. So you smart smart put out a big number to make your point seem valid, and each unit sold, 3.3% will be used to pay for the cost? So do you want to say the profit margin is small, like 5%, and 3.3% used to pay for all sort of things and 2.3% they pocketed? Genius! Why CG even come to such a low earning project? Put in china bank actually earns more leh.

ANd you are contradicting yourself again
"As for the new golf course, what better way to make use of the idling land with minimal construction work input and can also collect some green fees."--->still reclaim
" FC needs to sell perhaps another 30,000 to 40,000 units in order to earn a surplus to finance the reclamation works of the other 3 islands!"--->so expensive to reclaim

Since cannot continue to build more units soon, why not do something with it?

Fact: despite not selling 30k-40k units, they are still going to proceed to reclaim remaining islands on their recently signed contract. But when are they proceeding as intensively as the first island with the other 3 islands, soon or wait another few more years?

Lastly, Economy of scale and insufficient leverage is easy to say. At least dumb dumb make up some number to fool me, to prove your point that insufficient economy of scale and insufficient leverage is actually happening, i will be more appreciated. And that way, can at least make me believe that CG sold ~15K units and still on their way to reclaim more lands, are outright stupid action.

Sometimes I really find you 牛皮灯笼加黑漆 - 永运点不明。
You see, the Chinese developers come all the way here, literally 漂洋过海， 劳师动众 for what, obviously to make big money!
If coming here can only make a little money or worse just break even, why bother!
So, can they make big money just selling 20,000 units when their initial intention and calculation were many times higher?

The example you used to compare prices is totally flawed.
First, you use some development on the mainland to compare with some already near completed or near completion.
Secondly, you don't know the current construction prices.
According to most current study, high rise luxurious condos cost RM3,000 to 4,400/sq m to construct, note, just to construct only!
And based on this prices, the profit margin is only 12.5%!


See the footnote on all the items exclusive in the cost.

You also forgot that those development you mentioned are all build with the existing infrastructure in place - roads system with street lightings, sewerage system, drainage system, power grids, etc. and all the developer needs to do is to connect to the existing system.
For FC, which is an inclusive development, the developer is responsible to construct and maybe provide complete maintenance too, for most of the infrastructure works instead of just a connection like the others.
So, it is not just the construction cost per unit that you should be looking at, you need to add in other costs too and they are not cheap.
Also, if FC depends on the JKR to construct the roads leading to the island, they may have to wait at least 4 or 5 years later, if lucky enough.
Again, I emphasis on the "leverage and economy of scale" factor.
The developer really need to sell much more than that 20,000 units in order to off set the initial reclamation and infrastructure cost.

 

[shctaw]

Dear snowbird

You sound like someone whom already vested in this project and assume it will be a "happy ending".

Since you are vested; you will not be able to accept the picture what people not vested see.

With all this bad publicity; the developer will have problem selling their units in the future.

As I have said earlier; the warning go out to people whom are looking to buy into JB properties. For those already bought into the "developer dream". Other than praying it will succeed; nothing else they can do.

Investment do not have to be so complicated. I buy a property; as long I got my unit that is the end of the story. (I bought Astaka Padu and Sky 88)

In forest city case; if you lucky enough to get your unit; you may be living in a ghost town. Why go thru such trouble when you money can buy better located project in the heart of JB? This is the question only you will know.

Good luck.