https://www.bloomberg.com/news/videos/2018-08-28/malaysia-bans-foreigners-from-project-video
https://youtu.be/Xqnq7QFJpiI
https://youtu.be/8FJw3z0J340
- Mahathir’s planned crackdown taps into nationalist rhetoric
- Housing affordability has driven restrictions around the world
Hanging a ‘foreigners not welcome’ sign on a giant real estate development, Malaysia’s prime minister this week appeared to add to housing curbs around the world fueled by soaring home prices and populist politics.
Describing the Chinese-backed $100 billion Forest City as “built for foreigners” and beyond the reach of ordinary Malaysians, Mahathir Mohamad tapped into the nationalist rhetoric that helped secure him an election victory -- and global angst over housing affordability. Around the world, post-financial crisis property booms driven by low interest rates have left locals struggling to buy homes.
“The tension around foreign investment is always going to be much more acute when affordability is getting worse,” said Brendan Coates, a researcher in Melbourne at the Grattan Institute think tank. When locals get “priced out of the market,” foreign buyers may be blamed even when their effect is small, he said, commenting on the global picture.
Hanging a ‘foreigners not welcome’ sign on a giant real estate development, Malaysia’s prime minister this week appeared to add to housing curbs around the world fueled by soaring home prices and populist politics.
Describing the Chinese-backed $100 billion Forest City as “built for foreigners” and beyond the reach of ordinary Malaysians, Mahathir Mohamad tapped into the nationalist rhetoric that helped secure him an election victory -- and global angst over housing affordability. Around the world, post-financial crisis property booms driven by low interest rates have left locals struggling to buy homes.
“The tension around foreign investment is always going to be much more acute when affordability is getting worse,” said Brendan Coates, a researcher in Melbourne at the Grattan Institute think tank. When locals get “priced out of the market,” foreign buyers may be blamed even when their effect is small, he said, commenting on the global picture.
A wave of restrictions or taxes on foreign purchases already stretches from Sydney to Hong Kong to Vancouver. Measures targeting foreign home buyers have included stamp duties, restrictions on property pre-sales to non-residents and limits on the types of homes that can be purchased.
‘New Colonialism’
New Zealand is banning foreigners from buying existing residential properties after Prime Minister Jacinda Ardern campaigned in last year’s election on pledges including affordable housing. Canada and Australia have rolled out one restriction after another, and Singapore just ramped up a tax on overseas buyers. Denmark and Switzerland have restrictions, a Grattan report shows.
The 93-year-old Mahathir’s comments came at a late stage of the game. Globally, property shows signs of cooling from the post-crisis boom. His concern seems to be sparked not by property market overheating but, rather, foreign investments that don’t benefit Malaysia and what he terms the risk of “a new version of colonialism.”
Late Tuesday, a statement from Mahathir’s office said the nation welcomes all tourists, including from China, as well as foreign direct investment that “contributes to the transfer of technology, provides employment for locals and the setting up of industries.” It didn’t refer to Forest City.
“Mahathir has never liked the idea of Forest City or the idea of many foreigners buying up property in Malaysia,” said Ryan Khoo, co-founder of Alpha Marketing Pte Ltd., a Singapore-based real estate consultancy.
Foreigners will be blocked from buying units at the project, on artificial islands in Johor, and refused visas to live there, Mahathir said at a press briefing on Monday. That left analysts and local officials parsing his words to guess at how bans might work. The Chinese developer, Country Garden Holdings Co., said his comments clashed with past assurances. The project’s targeted buyers have included people in mainland China.
With a wall of Chinese money blamed for pushing up prices around the world, local lawmakers, media and the public can struggle to disentangle xenophobia from legitimate efforts to constrain inflows of capital. In Australia, “populist reporting” exaggerated the role of Chinese investors, according to Hans Hendrischke, a professor of Chinese business and management at the University of Sydney.
Read more on global property: |
Foreign buyers get blamed for soaring home costs even when the evidence is minimal. More than 60 percent of Sydney residents cite foreign investment for price increases, according to a survey from University of Sydney academic Dallas Rogers. That’s despite research by Australia’s Treasury showing only a marginal impact. Likewise, data suggest foreign buyers play only a small role in New Zealand’s housing market.
(Updates with Mahathir statement in seventh paragraph, chart on global restrictions.)
No Chinese belt, road or bedrooms for Malaysia
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Construction works going on normally at the mammoth Forest City project in Gelang Patah in Johor |
One thing is clear, though: The prime minister is not acting impulsively. The project claims to be a “new global cluster of commerce and culture,” and a “dream paradise for all mankind.” However, in Malaysian political discourse, Forest City is just a gigantic Chinatown of 700,000 residents.
Taking on the developer is part of Mahathir’s broader plan to redefine Malaysia’s relationship with Beijing, pulling Kuala Lumpur away from the client-state mindset introduced by his predecessor.
Already, the 93-year-old leader has cancelled the Chinese-funded East Coast Rail Link, dealing a blow to China Communications Construction Co, which was building the US$20bil belt-and-road route. Datuk Seri Najib Tun Razak, ousted in May, claimed the link would bring prosperity to eastern Malaysia.
But Dr Mahathir, who spoke bluntly in Beijing this month against “a new version of colonialism,” took a very different view of the railway, which would have connected areas near the Thai border along the South China Sea to busy port cities on Malaysia’s western coast, near the Strait of Malacca.
He also shelved a natural-gas pipeline in Sabah, a Malaysian state on the island of Borneo. Dr Mahathir justified the cancellations on the grounds that they were too expensive.
However, the abrupt message to Country Garden, which is neither linked to the Chinese state nor would add a dollar to Malaysia’s national debt, shows that sovereignty – and Malaysia’s racial politics – are Mahathir’s real concerns.
Two-thirds of the homebuyers in Forest City are from China. Last year, as a trenchant critic of Najib’s policies, Dr Mahathir flagged the risk that anybody living in Malaysia for 12 years would be able to vote.
Country Garden should have seen the political risk in marketing the flats to mainland Chinese, who were separately lapping up long-stay visas under Najib’s Malaysia My Second Home programme. Najib’s generosity toward the mainland wasn’t the natural state of affairs. In 1965, the country expelled Singapore from the Malaysian federation out of fear that the peninsula’s majority Muslim Malays could lose their political dominance to the island’s ethnic Chinese.
If Country Garden misread the political tea leaves, it’s also wrong to bark up the legal tree after Dr Mahathir’s outburst. So what if Malaysia’s national land code permits foreign ownership? Approval of global investors may not matter all that much to a politician who has, in his previous innings, trapped their money at the height of a financial crisis.
The new prime minister isn’t as reliant on Beijing as his predecessor. If anything, he has to reward local businessmen and contractors for switching their allegiance from Barisan Nasional, the erstwhile ruling coalition that suffered its first loss of power in six decades.
It’s a given then that Malaysia under Dr Mahathir will have little appetite either for One Belt, One Road – or, for that matter, three- and four-bedroom apartments that could create a new political constituency.
Forest City could still be salvaged, but as a predominantly local project. If Donald Trump can unilaterally change the rules of game for China and Chinese businesses, so can, in his limited sphere, Dr Mahathir. As far as Country Garden is concerned, he just has.
Credit Aandy Mukherjee— Bloomberg
Related:
MB: Forest City beneficial to all - Nation | The Star Online
Confusion over property policy - Nation
Setback for foreign property buyers in Malaysia - Business News
Hey, it's normal for Dr M to be abnormal!
