- When Mahathir Mohamad was elected Malaysia’s prime minister in May 2018, Chinese-backed developments were put in the political crosshairs.
- Forest City, a massive mixed-use development being built off the southern coast of Peninsular Malaysia, had already attracted controversy due to concerns about its impact on fisheries, seagrass beds, mangroves, and relations with neighboring Singapore.
- Although it’s been a bumpy political year for Forest City’s developers, construction continues on the project, as does debate over its environmental impacts.
In April 2018, a month before Malaysian voters elected Mahathir Mohamad to the prime minister’s office, Ng Zhu Hann couldn’t have been more open and enthusiastic about Forest City, the $100 billion island city rising from reclaimed seabed at the western entrance to the Johor Strait that marks the border with Singapore.
“Over 10 billion ringgit [$3 billion] has been invested so far and our first island is halfway reclaimed,” said Ng, Forest City’s strategic director. “We’re building green and smart. That’s what we’ve planned to do. That’s what our buyers want.”
The mix of residential towers and contemporary office and retail spaces, one of the largest real estate projects on the planet, was just starting to recover from a storm of bad publicity.
Fishermen had been worried about the dredged sand used in the reclamation destroying coastal seagrass beds. Competing developers said Forest City added to a housing surplus that was lowering apartment prices. Authorities in Singapore, just across the narrow strait, objected to construction having started before the needed permits were secured.
Ng countered that the project was responding with investments to fix environmental risks, and with a public relations strategy to invite more transparency about the contentious project’s progress.
Read Mongabay’s 2018 coverage of the Forest City development and the controversies surrounding it.
During an April 2018 visit by Mongabay, he showed off the exquisite, light-filled lobby of the five-star beachfront Forest City Phoenix Hotel, one of the 2-year-old development’s first buildings. Most of its rooms were full of buyers interested in touring model apartments. Some 16,000 residences, either built or under construction, had already been sold, Ng said. Hammers striking metal and groaning earthmovers served as background noise in the nearly completed residential towers nearby.
The U.S. over-the-counter stock price of Country Gardens Holding Company, the project’s Chinese master developer, listed in Hong Kong, was steadily rising to its record peak of $59.06 a share. Forest City’s master plan, developed by Sasaki, a U.S. global design firm, was winning awards for creativity and green values. Even the fishermen were growing less restive as Forest City launched environmental restoration projects. Seagrass beds inundated by sand drifting from the island reclamation were steadily recovering.
Changing fortunes
Fifteen months later, Ng and his Forest City colleagues are no longer so accessible. The reason: Mahathir Mohamad’s May 2018 election victory, won on a campaign that pointedly attacked Chinese investments in Malaysia and specifically named Forest City as a threat to national sovereignty. In late August 2018, Mahathir, the prime minister once again after a previous 22-year stint in the office, stepped up his attack when he said foreigners were banned from buying Forest City properties and would not be granted visas to live there.
Mahathir’s edicts were quickly refuted as unlawful by officials in Johor, the Malaysian state along the strait that had welcomed the development. The state and its sultan, Ibrahim Ismail, own a 34 percent stake in Forest City.
Malaysia’s housing minister, Zuraida Kamaruddin, said she would not put the prime minister’s order into effect, pending a formal review of its legality and consequences.
But the prime minister’s assault struck hard at Country Garden’s business strategy. The flood of Chinese investors slowed to a trickle, according to news reports. Country Garden’s sales office in Shanghai was empty. The company’s stock price tumbled to the equivalent of less than $26 in mid-October 2018. Analysts ranked Country Garden as one of the Hong Kong Exchange’s worst investments.
Ng reluctantly shared the distress in public. “It was not an easy month for us. We had to double our efforts to counter the many different allegations that were hurled at us,” he told the Malay Mail in October. He added: “The company believes Malaysia will be the gateway of the South-east Asian region, just like what London is to Europe and Dubai to the Middle East.”
To a large extent, Country Garden and its mammoth Malaysian project are accustomed to interventions by national governments. In 2017, Chinese authorities became so concerned about its citizens buying Forest City apartments and townhouses that they set a $50,000 limit on overseas housing purchases by Chinese buyers. Still, even with the spending cap, Ng said in April 2018 that Forest City had already sold more apartments than any previous year.
The stock price has recovered a bit, selling at the equivalent of around $33 a share in June 2019. That rebound has a lot to do with Country Garden’s persistence. Malaysian real estate analysts and fresh videos posted by Forest City indicate that construction is proceeding at characteristically Chinese warp speed.
Roughly 30 new towers are under construction on reclaimed land along the strait. The steel superstructure of a new office tower is rising close to the sea. A new international school was finished and is now open. On the mainland, linked to the island by a causeway, Forest City opened a new golf course and an accompanying hotel.
Though Chinese buyers appear to be lagging, interest from Malaysians, Indonesians and residents of Singapore is rising, according to government figures and news reports.
“Buyers are foreigners predominantly,” Ryan Khoo, founder and director of Alpha Marketing, a real estate consultancy in Singapore, said in an email message. “As a response to the prime minister’s comments last year, Forest City has mentioned they will look into constructing more affordable housing within or nearby Forest City.” The company is already involved in a mass-market project called Central Park, launched last year with apartments starting at about a third of Forest City’s prices, Khoo adds.
Ongoing debate over environmental impacts
Forest City is attractive to buyers for many of the same reasons it triggered early skepticism from ecologists. The new city, designed to house 700,000 residents and employ 250,000 workers, rests along a magnificent shoreline and offers a more affordable oceanfront housing option than other new developments in Johor Bahru or in Singapore, one of the wealthiest and costliest cities in the world. When it is finished in the mid-2030s, Forest City will consist of four artificial islands spanning about 14 square kilometers (5.4 square miles).
Reclaiming that much land from the sea has generated an intense and absorbing debate about environmental consequences. Along with the seagrass beds where fish spawn and thrive, a mainland mangrove forest has also been disrupted by Forest City construction projects.
“The project is a disaster for the nearby Merambong seagrass meadow with the ongoing land reclamation,” said Marcel Williams, a planner in Savannah, Georgia, who studied Forest City as a graduate student at the Massachusetts Institute of Technology. “From conversations with Malaysian environmentalists, Forest City construction has further reduced water quality by increasing suspended sediment and the shifting sands have proved hazardous to navigation.”
But company officials tout the long-term benefits of the energy-efficient design of building and transportation infrastructure, and environmental recovery projects that are restoring and protecting seagrass. And some observers say that much of the initial environmental damage is already being reversed.
“In relation to the main seagrass area in front of the Forest City complex, they have removed the sand bridge that was across the seagrass meadow and the habitat grew back within 2 weeks,” said Serina Abdul Rahman, a resident of the area and conservation scientist at the ISEAS–Yusof Ishak Institute, a Singapore-based think tank. She also co-founded Kelab Alami, an environmental education group supported by Country Garden. “Fauna also began repopulating very quickly and our last visits there showed that the grass was fresh and the local community was harvesting clams in the shallows. Because there is no more reclamation happening on that seagrass meadow front, the habitat is able to recuperate and recover.”
“We are hoping that as with the other meadows, once reclamation and dredging stops they will be able to recover,” she added in an email message. “These habitats are remarkably resilient. The sooner construction is done and the ecosystems are able to find a reprieve, the better it will be.”
Other analysts note that the project’s density puts the equivalent of Seattle’s population on 94 percent less land. No one was evicted to build Forest City. And 700,000 residents and 250,000 workers are more than enough people to justify a new ferry service to Singapore, and a perhaps a new station close to Forest City on the high-speed rail line that Malaysia plans to build from Singapore to Kuala Lumpur.
“Country Garden is moving forward on the first island in Forest City,” said Michael Grove, the chair of landscape architecture, civil engineering and ecology at Sasaki, who helped develop Forest City’s master plan. “There are a lot of aspects of the project that are working the right way. If the principles of the master plan are followed, especially as they relate to ecological restoration, we are optimistic about its future.”
Not all environmentalists are as sanguine. Forest City is one of a number of big sea reclamation projects under construction in Malaysia that have attracted close civic attention. In February 2019, Sahabat Alam Malaysia, an environmental group affiliated with Friends of the Earth International, published a comprehensive study of the ecological consequences of Forest City and other big reclamation projects around the country. The report found that building artificial islands puts coastal zones and human communities at risk of severe damage and disruption.
“Coastal development and land reclamation projects have robbed fishers and communities of use and access to coastal and marine resources,” the report found. “This phenomenon of ocean grabbing dispossesses marine resources and spaces that coastal communities depend on.”
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