Forest City Presses The Red Dot Hard

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I refer to a recent post on the left-leaning portal The Malaysian Insight where Ng Kheng Khoon, a researcher from the National University of Singapore, wrote that Forest City has disrupted the local housing market and appeared to be exempt from compliance with Johor’s housing policies.

Keng Khoon who along with Nanyang Technical University’s Guanie Lim said that there is no data to show that the Forest City development has directly contributed to the provision of affordable and low-cost homes in Johor Baru, and nor is there a provision of the Bumiputra quota in this project as it falls under the category of ‘newly established international zone’.

Keng Khoon added that was not in line with the Johor Housing Policy for Johoreans in Iskandar Malaysia (DPRJ) introduced in 2014.

The policy was actually introduced in 2012, not 2014.

The Malaysian Insight wrote that according to data compiled at the National Property Information Centre, homes in the RM250,000-RM500,000 range were most launched in Johor Baru, making up about 40% of total launches.

The price range is the yardstick for affordability for the majority of Johoreans.

It is no secret that Singaporeans have been buying properties in Johor, and all thanks to the comparitively low prices making everything affordable to the people of Singapore.  In 2016, five thousand Singaporean families have bought homes in Johor.

At a PropertyGuru Malaysia Property Show (MPS) in Singapore, over 2,155 Singaporean buyers flocked to hunt for properties. At the end of the event, over 30 units worth RM30.1 million were sold.  Two weeks later, 20 units worth RM18.3 million were also sold at the MPS in Johor Bahru.
Wealthier foreigners, majority of whom are Singaporeans have also snapped high-value properties in Johor, causing land price to shoot up.  Some Johor-based property valuers said the land price in Ledang Heights, located in the Iskandar region had increased fivefold since 2007 to between RM150 and RM250 per square foot (psf) in 2017.

Both Ng Kheng Khoon and Guanie Lim have answered most of the issues they have raised themselves.  Firstly,  Forest City is a development that has been designated as an ‘International Zone’.

In an interview by this blog writer in September 2017, Country Garden Pacificview  (CGPV) executive director Datuk Md Othman Yusof said that Forest City is aimed at foreign buyers, not Malaysians. This is to ensure that foreigners take up only what is being sold at Forest City, leaving the development on mainland Johor up for grabs by the locals.

This is how Johor ensures that the local market is not spoilt,” he added.

Therefore, it is evident that by designating Forest City as an International Zone, the Johor state government as well as CGPV are doing the locals a favour.  If Forest City has to build  affordable or low-cost housing in that development area, it would contradict the international zone status.

For the same purpose, Dubai designates similar zones for foreigners to own properties in.  Article 4 of the Property Ownership Law. Article 4 of the Property Ownership Law allows non-UAE or GCC nationals and companies to own freehold title in the areas in Dubai that have been designated for foreign ownership under regulations issued by the Ruler of Dubai (‘Designated Areas’).

Imagine if Forest City has to build low-cost homes, local contractors would have to fold up.  How are local contractors to compete with Forest City’s Industrialised Building System (IBS) which can pre-frabicate house components in far shorter time than local contractors could?

“One of the project’s major selling points is its connectivity to neighbouring Singapore. This means that a new Customs, Immigration, and Quarantine Complex (CIQ) dedicated to Forest City will have to be established.  But who will pay for the upkeep of this third CIQ that only serves private interests?” said Keng Khoon to The Malaysian Insight.

If this is the best that a researcher from the University that is 15th in the world according to the 2018 Quacquarelli Symonds World University Rankings could put forth as an argument, that raises a question on how the NUS could get that ranking.

If Forest City could afford an IBS plant, surely it can build and maintain a CIQ for its purpose, operated by the various related government agencies.  Having a CIQ there is a matter of government policy.  Imagine the number of Singaporeans being able to go to Tuas on a busy weekend, and travel by boat to Forest City to shop at its Duty Free Zone, and stay at their apartment there.

Or even live there and work in Singapore.

Or even live and conduct their business from Forest City.

Is that why until now Mediacorp has not allowed any form of advertisement involving properties in Johor to be aired on any of their channels?

Secondly, the Johor Housing Policy for Johoreans affect only the properties built on mainland Johor.  Forest City is NOT built on a part of mainland Johor.  Nor is Forest City built for locals (unless they have money to spare to purchase properties there).

However, the locals can go there to shop, enjoy the facilities, and even work there!  As of January 2018, 1100 out of 1500 workers in Forest City are locals.  That accounts for 73 percent of the workforce there, debunking the myth created by the Opposition that Forest City does not provide employment opportunities for locals.

To summarise, Forest City is an initiative to provide properties to wealthier foreigners to own so that the local market is not spoilt and remain affordable for locals to own.  Therefore, its creation does not go against the Johor Housing Policy for Johoreans.  Far from not being beneficial for the locals, it gives employment to the locals and is expected to create more jobs for locals as its development progresses.

You can read more about Forest City:

The Living Forest

Sustaining The Future

Forest City Continues to Benefit its Surrounding Communities

Drama Kera La

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