Reclaimed City Off Singapore Triggers Ecology Fears

A planned multi-billion-dollar new city near Singapore is attracting interest from investors with promises of luxury living but there are questions over its future owing to China's economic woes and warnings of environmental catastrophe.

Forest City, a $42 billion futuristic "eco-city" of high-rises and waterfront villas, will sit on four man-made islands on the Malaysian side of the Johor Strait just an hour from Singapore.

Offering 700,000 residential units as well as shopping malls, international schools, hotels, convention venues and medical facilities on 3,425 acres (1,370 hectares), the city will even have its own immigration center.

The venture is being developed by Hong Kong-listed real estate giant Country Garden and a firm partly owned by Johor's powerful Sultan Ibrahim Iskandar with an eye on cashed-up Chinese buyers.

"It is by far one of the most enthusiastic private land reclamation projects I have heard of around the Southeast Asia region," said Chua Yang Liang, head of research for Southeast Asia at property services and investment group Jones Lang Lasalle.

Officials say they have shifted 500 units in pre-selling already, despite the development not due to be completed until 2035. During a visit by AFP, sales executive Alex Lee said he had sold 10 properties in one sitting with a Chinese businessman, who paid cash.

Investors can pay anything from $200,000 for a two-bedroom unit, up to $1.6 million for a seaside villa.

By comparison, a mass market condominium in Singapore costs around $740,000 -- which in Forest City would buy a four-room seaside villa with a function hall, two parking lots and a large garden.

But some analysts question the project's long-term sales targets as China's economy struggles to break out of a growth slowdown that has seen expansion fall to 25-year lows, while authorities clamp down on a flight of cash from the country.

- 'Somewhat ambitious' -

At the same time Standard & Poor's said it was "cautious" about Forest City after it downgraded Country Garden's long-term corporate rating in March to "BB" from "BB+", citing risks from its aggressive land acquisitions.

It called sales targets "somewhat ambitious given this is a new large-scale project and targets primarily mainland (Chinese) overseas buyers."

And even if the project is a success, campaigners say it could prove to be a disaster for the local ecology and fishermen who complain of dwindling catches.

While its website describes it as a "liveable eco-city", environmentalists say the dumping of sand to build the new city -- an estimated 162 million cubic meters (5.7 billion cubic feet) -- could alter tides and destroy marine life.

"It has the potential to change the ecology of the whole area in profound ways," Greenpeace scientist Paul Johnston told AFP.

"It might change the things that are living there, it might change the vegetation that can grow there."

Local activists say at most risk of destruction is Malaysia's largest intertidal seagrass meadow on Merambong shoal off Johor.

The reclamation has also ruffled feathers in Singapore, with the city-state's environment ministry saying it is "carefully" studying an impact assessment report provided by Malaysia and is seeking further clarifications.

- Confident -

An environmental study commissioned by the Forest City joint venture firm, Country Garden Pacificview Sdn Bhd, acknowledged a "permanent loss of traditional fishing ground" and damage to seagrass meadows and mangroves due to the development.

But it added that this would be balanced by the project's economic benefits, including the creation of an estimated 62,200 jobs.

Country Garden Pacificview executive director Mohamad Othman Yusof said developers were strictly following guidelines laid down by the Malaysian government to minimize the environmental impact.

He said at least 20 simulation studies were carried out before the reclamation was approved, while the project's original size of 5,000 acres was cut by 30 percent and "double silt curtains" installed to prevent silt and sediment from spreading and polluting the waterway.

"No damage, no pollution has been exported to Singapore," Othman said. "We don't want to create any problems with anybody and we're going to abide by the rules and regulations."

Water quality is monitored closely following complaints by Malaysian fishermen, he said.

"We are very confident about the success of the islands," said Othman.