KUALA LUMPUR, Nov 24 — Amid concerns that the Forest City residential project in Johor will become a "ghost town” as its China-based principal Country Garden struggles with a debt crisis, developers and residents see a glimmer of hope as several new incentives were recently announced.

Forest City‘s latest designation as a Special Financial Zone (SFZ) and the Johor-Singapore Special Economic Zone (J-S SEZ) are being seen as catalysts to reverse the fortunes of the 2,833-hectare luxury residential mega project, reported Al Jazeera.

In its report published yesterday, Country Garden is said to be trying to revitalise the development where only about 9,000 people live.

Forest City’s regional vice president, Syarul Izam Sarifudin, said the city’s development was still "on track”, but admitted interest in the 5,000 unsold units was lacklustre.

"To us, it is still manageable. We are still selling two or three houses per month." he was quoted as saying in the report.

Country Garden faced total liabilities of US$194 billion (RM909 billion) at the end of 2022, with concerns raised on the outlook for Forest City and its other Malaysian projects.

Its projects in Johor include the US$100 billion Forest City mega project, Country Garden Danga Bay and Central Park. In the Klang Valley, Country Garden also has projects in Lake City @ KL North and Diamond City.

Earlier in August, it was widely reported that Country Garden missed two coupon payments totalling US$22.5 million.

However, later in the same month, Prime Minister Datuk Seri Anwar Ibrahim announced a STZ in Forest City with incentives including multiple entry visas, and special income tax rates.

Following that in October, Anwar and his Singapore counterpart Lee Hsien Loong jointly announced a Johor-Singapore SEZ, with a memorandum of understanding to be signed by the two countries in January next year.

With the recent announcements of the planned economic zones, Syarul Izam said he remained hopeful for Forest City as there was good support from Malaysia and China.

He was reported to have side stepped addressing the issues that plagued Forest City, adding that the mega project cannot afford to fall back as RM20 billion had been spent on the project so far.

On the planned incentives, Syarul Izam explained that details on the zones have not been specified yet.

However, he said in the report that Forest City’s management would be looking into fields like banking and technology rather than real estate.

Despite the initiatives, Al Jazeera reported that Forest City still faces an uncertain future as property developers in China grapple with mounting debt amid a national housing crisis.