The Story Behind “15 Trillion Yen Ghost Town” Built by China’s No. 1 Real Estate Company

“A tropical paradise.”

A cluster of 60 tower condominiums once called “Forest City” is located off the coast of the state of Johor in southern Malaysia. “Forest City” was built on a man-made island at the end of a bridge where a pleasant sea breeze blows. However, hardly a soul is to be seen on this “island of dreams”

 

“The “Forest City” is a huge project that has been underway since the first half of 2014 as the centerpiece of the “One Belt, One Road” initiative proposed by Chinese President Xi Jinping in September 2013 to recreate the Silk Road in the modern world. The project is a grand plan to build tower blocks on four man-made islands, each with around 30 floors, and approximately 700,000 people will live in over 200,000 apartments. The project is being undertaken by China’s number one real estate company, Heki Guiyuan, and the total investment is said to be $100 billion (about 15 trillion yen),” said a local reporter for a national newspaper.

Despite the prestige of the project, the number of residents is said to be less than 10,000, one-seventieth of the planned number. The project is progressing slowly and is still incomplete. The site is overgrown with weeds and has become a complete ghost town. What in the world has happened? Kota Takaguchi, a journalist and expert on the situation in China, explains.

“One of the goals of “One Belt, One Road” is to invest in real estate abroad, which has become excessive domestically. However, even if we expand outside of Japan, favorable land with good accessibility has already been developed. Like “Forest City,” they have no choice but to build in inconvenient offshore locations that can only be reached by car. Environmental assessments, which can be conveniently changed in their own countries, have to be adapted to the standards of the countries concerned, which makes it difficult for projects to proceed as expected. They claim to be a ‘city of fresh air and the sea,’ but it is no wonder that they are not very popular.”

“The average sales price of Forest City is about $165,000, which is not easy to afford for Malaysians, whose annual income per household is about $16,500. In 2018, the country’s then prime minister, Mahathir, criticized the city, saying that it was built for the Chinese.” Mr. Takaguchi continues.

 

It is becoming apparent that ‘One Belt, One Road’ is a China-first plan, and there is a widespread movement among countries to withdraw from the project. China, too, is tightening its grip on the region due to the prolonged economic stagnation, fearing an outflow of funds from abroad. The concept itself is in danger of collapsing.

In addition to the domestic real estate slump, China’s overseas projects are also coming to a halt. The world’s second largest economy is in dire straits.

From the November 24, 2023 issue of FRIDAY