(Yicai Global) March 17 -- Despite the Chinese government's capital controls preventing sales in China for Country Garden Holding Co.'s [HKG:2007] Forest City real estate project in Malaysia's Iskandar Development Region, the firm's other plans in Johor state will go ahead as planned, said Dato' Mohamed Khaled Bin Nordin the state's chief minister.
China's recent policies to curb capital outflow, which have affected domestic developers with overseas projects, are not targeted at Country Garden, Singapore United Morning Post quoted Nordin as saying. Such policies aim at cutting outflows, he said, adding that they directly affect Chinese residents' purchases of overseas properties as well as Country Garden. However, the Forest City project targets the global market, not just Chinese buyers, he added.
The Forest City estate in Johor has halted sales in China due to the government's crackdown on capital outflow. It is a temporary arrangement rather than a response to government policies, the firm said.
The development is a flagship project for the company which began last March, some CNY18 billion (USD2.6 billion) worth of apartments had already been sold by the end of last year, 70 percent of them to Chinese buyers.
China's foreign exchange regulator said in January that individuals are required to specify how they plan to use funds when purchasing foreign currency, and agree that they will not use it to buy overseas properties. Insiders believe this will make it more difficult for people to transfer funds out of China and will affect domestic investors' appetites for real estate assets abroad.
Country Garden plans to invest up to USD100 billion in Malaysia over the next 20 years, according to data from the country's Ministry of International Trade and Industry.