Developer Country Garden to expand its reach in Malaysia, Indonesia
China’s third-largest home builder teams up with Credo Group to invest 4 billion yuan in a 14-hectare hotel, villa and apartment on Nusa Dua beach on Bali
Country Garden, China’s third-largest home builder by sales, is speeding up its expansion in Malaysia and Indonesia within its core strategy of building mega projects across Southeast Asia, to reduce domestic risk.
The developer has signed another new project in Malaysia and its first on the Indonesian island of Bali, according to company statements.
In October, it formed a joint venture with Damansara Realty to build a 21-hectare integrated township known as Central Park in Tampoi, a suburb near downtown Johor Bahru on the southern tip of Malaysia.
“Central Park will target local Singaporean and Malaysian buyers and provide affordable quality housing,” the statement said.
The venture, 30 per cent owned by local partner Damansara, and 70 per cent by Country Garden, will pay 130.3 million ringgit for the 53 acres site, and the project will be developed over six to eight years, starting in the fourth quarter of 2016, Damansara said.
Central Park becomes Country Garden’s fourth project in Malaysia, after Danga Bay and Forest City in Johor, and Diamond City in the capital, Kuala Lumpur.
In Bali, meanwhile, it has teamed up with Indonesia’s Credo Group to jointly invest 4 billion yuan in a 14-hectare plot on Nusa Dua beach, which the partners plan to turn it into a hotel, villa and apartment complex.
In its statement, Country Garden said the expansion into Southeast Asia was in response to China’s “one belt, one road” initiative and that it would be looking for more opportunities, certainly in Indonesia.
Chinese developers have been increased their efforts at diversifying their overseas portfolios amid the domestic slowing down and yuan’s devaluation.
John So, a property analyst at China Merchants Securities, said that while admiring Country Garden’s ambition, he questioned whether “the expansion is a bit too aggressive”, given the sheer size of the projects.
So said the company’s projects in Malaysia are still at an early stage of development, and without any kind of strong track record yet in the country, it’s difficult to fully gauge the company’s business model.
So also said there are concerns over oversupply in the Malaysian market.
Country Garden restarted the construction of its huge Forest City project in Johor Bahru late last year, which comprises four man-made islands, including apartments, schools and hospitals.
The developer said it planned to invest a total 250 billion yuan in building the city over 20 years.
While its debt has also risen fast, its net gearing ratio exceeded 100 per cent by the end of June.