Criticism of Forest City stays, says Dr M

Prime Minister Dr Mahathir Mohamad said his administration's decision to lower the floor price for foreign ownership of high rise properties do not invalidate his past criticisms of the Forest City project.

"Forest City is quite different. It is a very luxurious development (aimed at foreigners) which Malaysians cannot afford. That is different (from the rest of Malaysia).

"Here (outside of Forest City), Malaysians can buy (high rise properties). (Foreigners) can reduce the overhang since not enough Malaysians are buying.

"There is a property overhang and we have to (ensure they are sold), otherwise, developers will get into trouble," Mahathir said at the Malaysian International Trade and Exhibition Centre in Kuala Lumpur today.

He said that having too many unsold new properties might cause a national crisis, citing Hong Kong and Tokyo as examples.

He also maintained that he was still critical of the Forest City project because it was freehold and aimed only at wealthy foreigners.

Cabinet has decided to lower the price floor for new foreign ownership of residential high rises to RM600,000, down from RM1 million previously, to address the problem. This campaign will last till the end of 2020.

Rating agencies have warned that a sustained property market glut could have dire consequences on the banking sector.

To another question, Mahathir said the federal government cannot offer a better price for the acquisition of Kampung Baru in Kuala Lumpur because it would drive up property prices.

He said higher property prices would deter Malay buyers.

"Yes, we can buy at a higher price. Our concern is that once the houses, flats and apartments are built on the land, the price will be higher as well.

"This will again stop us from selling (property there) and Kampung Baru is for the Malays. Malays don't have a lot of money," he said.

He said the land can cost as much as RM7,000 (an acre) outside Kampung Baru's borders.

"If we (follow that price), Malays can't afford it. Therefore, we came up with a 'special price'. If they sell to us at an affordable price, we can build properties that are cheaper and affordable for the Malays," he said.

Kampung Baru sits on Malay reserve land, which means that the title for properties on such land can only be transferred among Malays. - Mkini