China has always been a major investor and key player in Malaysia’s property market. Such involvements have burgeoning in states like Penang, Johor and Kuala Lumpur.
After being lured into buying a property in the Forest City project in Johor, many Chinese buyers are now unable to make the necessary payments for their units after the central government restricted capital outflows, reported the South China Morning Post.
One of them is Laura Zhang from Hefei, who was enticed to buy a home in the mega development as someone told her it would make a good investment. She was also attracted by the tropical garden city lifestyle it offers, its proximity to reputable schools and the opportunity to apply for the Malaysia My Second Home Programme, which allows foreigners to live in the country on long-stay visas for up to 10 years.
Following a free tour of Forest City in September 2016, she paid RM63,500 with her China UnionPay bank card as a 10 percent down payment on a 59 sq m flat. Back then, she considered it as a good deal as a home there only costs 20,000 yuan (RM12,814) per sq m, which is 75 percent cheaper than a house in downtown Beijing.
But after the central government imposed capital controls, Zhang found out that no banks in mainland China would assist her in paying for her property purchase.
When she tried to transfer money to the developer’s bank account in Hong Kong last January, her local bank informed her that the account was wrong, even though she had deposited the down payment on the same account in October 2016.
While Zhang is unsure of what to do, she still attempting to get a refund, just like many other Chinese who bought a unit in Forest City, but are now prohibited from transferring money out of China.
“Now we understand all further instalments need to be paid abroad. But this is not allowed due to the foreign exchange controls from the Chinese government,” said another buyer, Vicky Wu from Guangzhou. “If we do so, we will be put on the government’s black list.”
Consequently, Wu and Zhang joined WeChat group “to quit Forest City and get refunds” that was created by Leo Wang from Hunan two weeks ago, with the aim of getting back their down payments in Forest City. It has at least 40 members.
“We thought it was a good and affordable deal to invest in overseas property, without thinking of the possible risks, and even signing the agreements in English even though we don’t know the language,” shared Wang.
Forest City by Chinese developer Country Garden is a modern global metropolis under construction on four artificial islands off Johor with a total area of 1,385.6 hectares. Expected to be completed within 20 years, the RM100 billion project will consist of residential blocks, office towers and shopping malls.
Among other China’s developments in Malaysia:
2. 3. R and F Princess Cove Phase 1 Residence, Johor Bahru
Image sourced from Twitter
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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