Cloudy future for RM40b Melaka Gateway

By FARA AISYAH / Pic by BERNAMA

The uncertainties over policies for foreigners to purchase local properties are casting a dark cloud over the RM40 billion Melaka Gateway project.

The new federal government recently announced that foreigners are not allowed to purchase units at the Forest City development in Johor, a project that involves the creation of four artificial islands targeting buyers from mainland China.

(The US$100 billion [RM415.09 billion] project off the coast of Johor is spearheaded by China’s Country Garden Holdings Co and the Johor state government. Chinese from mainland China already accounts for two-thirds of the purchasers of the project, which is estimated to have a population of 700,000 people with 160,000 units built across 14 sq km of land on the artificial islands.)

Melaka Gateway is a joint-venture project between KAJ Development Sdn Bhd and China’s energy company PowerChina International Group Ltd. Nerves are rising as the government is looking to increase local buyers for projects such as Forest City.

Laurelcap Sdn Bhd property valuer Kit Au Yong said the local property sector will need clearer guidelines from policymakers on mega developments as domestic buyers will not be able to fulfil the take-up rate of such mega projects.

“The Melaka project has been quiet for some time and the current sudden change of direction certainly has a dark cloud effect on this similar mega-scale project. Certainly, the local market would not be able to absorb the take-up easily.

“The market will need more certainty from policymakers. In addition, the current subdued real estate market condition is definitely not helping large-scale developers,” he told The Malaysian Reserve.

Recently, Prime Minister (PM) Tun Dr Mahathir Mohamad said foreigners can buy properties in Malaysia, but such purchases will not come with automatic “visas” to stay in the country.

Dr Mahathir said the project by China-based Country Garden is catering to foreigners and not locals.

Melaka Gateway, launched four years ago, comprises a private marina and residential, commercial, cultural, entertainment and lifestyle components, covering an area of 1,504.9ha.

The private initiative also involves the creation of four artificial islands off the coast of Melaka, one of the country’s major tourism city. The grand plan also includes an international cruise passenger terminal, a commercial city, a liquid bulk terminal container terminal and a maritime industrial park.

The new state government has not announced the direction of the project. There are concerns over whether there will be demand for a port in the state as Port Klang is only about 130km to the north and is the key shipping hub for the country.

Kit said the government and industry players could come to a compromise including allowing the project to proceed, but Putrajaya will impose some form of foreign-ownership controls.

“I think the government is trying to do both; controlling foreign ownership while wanting to see some sort of mega developments in the country,” he added.