Forest City, Malaysia — The $100 Billion Island That Stayed Quiet

Summary

Forest City is a vast, Chinese-developed urban project built on four artificial islands of reclaimed land in the Johor Strait, in Malaysia's southern state of Johor, just across the water from Singapore. Launched in 2015 by the Chinese developer Country Garden in partnership with a Johor state-linked entity, it was marketed as a futuristic 'smart' and 'green' city — vertical gardens climbing residential towers, cars routed underground, and a planned population of roughly 700,000 people. Headline figures described a total planned investment on the order of $100 billion over decades, making it one of the most ambitious private city-building ventures in the world.

The project's fatal vulnerability was hidden in its sales model: it was aimed overwhelmingly at mainland Chinese buyers looking for property near Singapore, rather than at the local Malaysian market. In 2017 Beijing tightened capital controls on overseas property purchases, abruptly choking off the flow of the very buyers Forest City had been built for. The COVID-19 pandemic then sealed borders just as the project needed momentum, and Country Garden's own deepening debt crisis — part of the broader Chinese property downturn — left the developer fighting for survival rather than completing a city.

The result was a striking emptiness. Glossy towers, shopping arcades, and a beach promenade stood largely unused, with only a small fraction of the intended population in residence — around 9,000 people were reported living there around 2023, roughly a tenth of even the first-phase target, with later estimates rising toward 15,000-20,000 by 2025-2026. International coverage dubbed it a 'ghost city,' its manicured but quiet streets a monument to a single-market bet that went wrong.

Malaysia has since tried to repurpose the project rather than let it stagnate. In 2024 the government announced plans to turn Forest City into a Special Financial Zone, dangling tax incentives — including a notably low corporate tax rate for qualifying firms and breaks for skilled workers — to attract businesses and give the half-empty city an economic reason to exist beyond foreign residential speculation. Whether that pivot succeeds remains open, but Forest City already stands as a leading modern example of how dependence on one country's buyers and one policy regime can strand an entire city.

Timeline

The Vision

Forest City was pitched as a model city of the future, rising from reclaimed islands in the Johor Strait. Country Garden, partnered with a Johor state-linked entity, promised a green, high-tech enclave: residential towers wrapped in vertical gardens, traffic and parking pushed beneath an elevated pedestrian deck, and integrated 'smart city' systems — all within sight of Singapore, one of Asia's premier financial and lifestyle hubs.

The commercial logic rested on cross-border appeal. The development was aimed largely at mainland Chinese investors seeking relatively affordable property next door to expensive Singapore, marketed aggressively in China as a prestigious overseas address. The plan envisaged roughly 700,000 residents over the long term, built out in phases — an entire privately developed city conjured on land that did not exist a few years earlier, sold on the promise of proximity to Singapore and the cachet of a brand-new smart metropolis.

Why It's Empty

Forest City stalled primarily because it was built for a buyer pool that a policy change removed. The project depended on mainland Chinese purchasers, and when Beijing tightened capital controls on overseas property in 2017, the flow of those buyers was choked off almost immediately. A city designed around one country's outbound investors lost most of its market in a single regulatory stroke.

Two further shocks deepened the slump. The COVID-19 pandemic closed borders from 2020, cutting off prospective buyers and visitors precisely when the project needed to build momentum and a sense of life. Then Country Garden, once one of China's largest developers, slid into a severe debt crisis amid the broader Chinese property downturn, leaving the company struggling to survive rather than able to complete and animate a new city. Local Malaysian demand was never strong enough to fill the gap left by the missing Chinese buyers.

The combined effect was a near-finished showcase that almost nobody lived in. With its single dominant market gone, its developer distressed, and local demand thin, Forest City has held only a tiny fraction of its intended population, prompting Malaysia to seek a new economic purpose for it through the Special Financial Zone initiative.

Contributing Factors

What's There Now

As of the mid-2020s Forest City holds only on the order of 15,000-20,000 residents amid extensive vacant space — far short of its roughly 700,000-person target — with manicured but quiet streets and towers that remain largely unoccupied. Malaysia is actively trying to give the project a second life: the 2024 Special Financial Zone designation offers tax incentives, including a low corporate tax rate for qualifying companies and breaks for skilled workers, in an effort to attract businesses and create local economic activity rather than rely on foreign residential speculation. The repositioning is a bet that Forest City can be reborn as a financial and business hub, but for now it remains one of the most visible modern examples of a city stranded by its dependence on a single foreign market and the policy that closed it.

Lessons

References

• Forest City, Johor Wikipedia
• Inside Malaysia's Chinese-built ghost city BBC News
• Forest City: Malaysia's $100bn 'ghost town' near Singapore The Guardian