* Temporarily shuts project showrooms in China
* Malaysia project sales hurt by China FX controls - exec
* Will expand marketing to other overseas market
(Recasts, adds Singapore showroom details)
HONG KONG/SINGAPORE, March 10 (Reuters) - Chinese property
developer Country Garden Holdings Co Ltd has shut some
mainland sales centres promoting its $40 billion Forest City
project in Malaysia, in response to Beijing's moves to stop
capital flight into offshore investments.
China's tighter grip on funds moving out of the country
after the yuan plummeted to more than eight-year lows has hurt
the overseas sales of Chinese developers, and created extra
challenges for firms or deals reliant on mainland investment.
Country Garden, the nation's third largest homebuilder by
sales, said in a Chinese-language statement on Friday it was
closing and refurbishing mainland sales centres that promote its
Forest City development "to better fit with current foreign
exchange policies and regulations" and as the firm looked to
diversify its development strategy.
It said the group "resolutely abides" by foreign exchange
rules and adapts its overseas development strategy to "a
constantly changing national and international policy and legal
In a separate statement issued later on Friday, the Forest
City project said the closures were in line with an earlier
shift in marketing efforts and "not a knee-jerk reaction" to
"We have always planned to sell beyond China and have
therefore chosen to bring those plans forward this year," it
said in an English-language statement.
The developer last year sold around 18 billion yuan ($2.61
billion) worth of apartments at the Forest City site in the
ambitious Iskandar special economic zone in Malaysia's Johor
state, with Chinese nationals accounting for 70 percent of the
Sales from the project accounted for 6 percent of the
group's 309 billion yuan in contracted sales last year.
Country Garden said it will expand its reach to other
countries and set up new Forest City showrooms in other markets
such as the Middle East, India, Vietnam, Thailand and Japan.
The group's showroom in Shanghai was closed when Reuters
visited on Friday and a sign on the showroom door said it was
temporarily closed due to internal renovations and upgrading
A shopkeeper working in the premises next door said the
centre had been closed for more than 10 days.
A Country Garden executive, who spoke on the condition of
anonymity, told Reuters the company would integrate some Chinese
projects into its Shanghai showroom to boost domestic sales and
offset the impact of Chinese capital controls on Forest City
In Singapore's financial district, a Forest City showroom,
mainly for buyers living in the city-state, was open and
Mainlanders have been arriving in Iskandar in droves every
week on tour buses and direct flights from China to buy homes in
Forest City, lured by the greenery, beaches and access to
Country Garden plans to invest $40 billion into Forest City
over the next 20 years to build an eco-friendly development
covering 14 square kilometres. The project expects to create
220,000 new jobs by 2035.
In June last year, the company's net gearing ratio was 62.6
percent, up from 60 percent six months earlier.
While Forest City only accounts for a small portion of
Country Garden's sales and debt, analysts said China's capital
controls could nonetheless cause problems downstream.
"This could hamper the sale of the next phases of the
project in Malaysia and hence the cash flow as it has only
completed one phase out of several to our understanding," said
Christopher Yip of S&P Global.
Among stricter measures in China, banks now require
customers purchasing foreign currency to specify how they will
use the funds and have reminded individuals about overseas
property investment restrictions.
Economists expect forceful policing of capital controls this
year, though China's financial system is notoriously porous,
with speculators often able to find new ways to get money out.
Other developers have flagged similar problems with overseas
"(Chinese) customers can't take their money out now, of
course there's an impact on our overseas sales," said an
executive of state-backed Greenland Holdings, which
has developments in Malaysia, the U.S. and U.K. The executive,
who spoke on the condition of anonymity, did not provide details
of sales on specific projects.
($1 = 6.9083 Chinese yuan)
($1 = 4.4550 ringgit)
(Additional reporting by Adam Jourdan in Shanghai, SHANGHAI
newsroom and Umesh Desai; Editing by Sam Holmes)