Country Garden says some buyers of Malaysia project want to cancel deals

SHANGHAI/HONG KONG, April 6 (Reuters) - Chinese property

developer Country Garden said on Thursday a small

number of apartment buyers at its $100 billion Malaysia project

want to cancel their purchases, after Beijing's recent moves to

tighten capital controls on overseas property investments.

China's third-largest builder said in a statement it has

received cancellation requests from fewer than 60 buyers. It

said the buyers would be charged a penalty of 10 percent to 30

percent of deposits if they cancelled the purchase or defaulted

on payments.

Chinese buyers of overseas homes are in a quandary as

Beijing imposed curbs on funds moving out of the country after

the yuan plummeted to more than eight-year lows in December.

That has squeezed their ability to pay property instalments in

foreign currencies, forcing some homebuyers to forfeit their

overseas purchases.

Developers are also being hurt. Country Garden has halted

selling the development - a mixed-use project called Forest City

in Iskandar - inside China and said that it no longer will

accept Chinese yuan as payment for the project.

And after selling over 15,000 residential units last year,

the developer has said it now aims to have more diversified

revenue from the project through sales and rental of offices,

shopping malls, a hotel and a golf course.

On Thursday, the developer said in a statement it has ceased

all travel-related support services for mainland Chinese

travelling to Forest City.

Visits by Reuters to sales offices in Shanghai, including

those of Country Garden and state-backed Greenland Holdings

, showed the developers have more broadly stopped

actively selling overseas projects to customers, instead

referring potential buyers to travel agencies or to visit their

own local offices overseas.

"We don't do much marketing for overseas projects anymore,

and we're very careful with our advertisements; we don't

encourage consumers (to buy them)," said a sales person at the

Greenland overseas showroom for projects in Australia, Britain,

the United States, South Korea and Malaysia.

Overseas projects account for around 3 percent of

Greenland's sales, so the overall impact of capital controls on

its revenues is limited, but it's creating uncertainty over

their longer-term business plans, industry executives said.

A source from a subsidiary of Greenland who saw a 2017 work

plan said the group has no plans for new property projects

overseas this year.

A second source said the group will focus on building

existing developments this year and shift its marketing focus

away from China to regions such as the Middle East and Japan.

The developer entered new markets including Tokyo and San

Francisco last year.

Greenland was not immediately available for comment.

On cancellations, the property firms face other headaches.

Country Garden's stance on penalties for cancellations has led

to the formation of at least two online groups consisting of

around 80 buyers in total, who are demanding refunds without

paying penalties.

(Reporting by Shanghai newsroom and Clare Jim in Hong Kong;

Additional reporting by Engen Tham in Shanghai, Raffaele Huang

in Hong Kong and Aradhana Aravindan in Singapore; Editing by

Muralikumar Anantharaman)