The Forest City project in Johor could face difficulties in the collection of maintenance fees due to its massive scale and given the fact that most of its buyers are foreigners, reported The Edge.
This is because it’s hard to enforce Malaysia’s strata laws in regards to the collection of maintenance charges and assessment tax if the owners are often out of the country, said experts.
According to Forest City’s developer, they are now wooing international buyers from Vietnam, Thailand, Taiwan, Japan and the Middle East. Buyers from China currently account for most of the buyers in the development, but this group ran into trouble after Beijing clamped down on capital outflows.
When queried about this potential problem, the company reiterated its long-term commitment to Forest City project and the support of Johor’s Sultan.
“Country Garden Pacificview has both in-house and external planning consultants, architects and legal advisers to provide advice on the strata management as well as the building planning,” it said.
Notably, Country Garden Pacificview is the Malaysian unit of the China-based developer. It is 66 percent owned by Country Garden, while the remaining 34 percent is held by Sultan Ibrahim Sultan Iskandar, Kumpulan Parasarana Rakyat Johor and Daing A Malek Daing A Rahaman.
However, funding the upkeep of the strata areas in Forest City could be problematic if not all buyers regularly pay the maintenance fees, even if there are various penalties against defaulters under Malaysia’s Strata Management Act. These include imposing interest on unpaid amounts, a fine of up to RM5,000 and a jail term of not more than three years.
Furthermore, the Johor Bahru Tengah Municipal Council (MPJBT) could struggle in collecting the quit-rent and assessment tax from residents in Forest City. This could pose a serious problem as these are used for maintaining the facilities situated outside the individual strata schemes in the project.
Last February, Johor Chief Minister Datuk Mohamed Khaled Nordin said that MPJBT is expected to collect RM50 million in quit-rent and assessment tax once Forest City is completed. But an expert underscored the difficulty of sending tax notices to persons who are often not in the country. If not enough funds are collected, facilities in Forest City could fall into disrepair in the future.
“If you look at the project now, it is all very beautiful. The infrastructure is massive. But in 10 to 15 years’ time, who knows what we will be looking at,” reckons one senior property management expert.
Sited on four man-made islands with a combined area of 3,425 acres, Forest City is touted as Southeast Asia’s biggest integrated project with a gross development value of more than RM100 billion over 20 years. It’s envisaged as a modern metropolis capable of housing approximate 700,000 people when completed.
Among new properties in Johor are:
The Enclave, Pulai Springs Resort, Johor
Sunway Lenang Heights, Taman Molek, JB
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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