In a Malaysian Pop-Up City, Echoes of China’s Housing Crash

It was an audacious real estate project undertaken a decade ago by a Chinese developer: a $100 billion city in Malaysia built on sand and shrubby mangroves and sold as a luxury “dream paradise” for China’s middle class.

Many of Forest City’s residents today are transient — the caretakers of the grounds who sweep the empty roads and pick up the garbage, trim the hedges and water the plants.

“I see so many new faces,” said Thana Selvi, who works at KK Supermart, a brightly lit convenience store that stands out among the mostly boarded-up, empty spaces on the street level. She rents a room in an apartment above the shop, month to month, for $118.

At a distance, Forest City’s rows of high-rises tower over the Johor Strait between Singapore and Malaysia like a monument to China’s economic triumphs. Up close, the streets are quiet, most apartments are dark and large stone slabs demarcate the lush forest from the “land to be developed.”

The giant Chinese property developer Country Garden dreamed up Forest City as a “green futuristic city” spanning 12 square miles and four man-made islands. There were supposed to be 700,000 apartments. Only one island, with 26,000 apartments in several dozen towers, was built.

Since Country Garden defaulted on its debt last year, it has become an emblem of the excesses of China’s housing boom, a corporate deadbeat unable to pay its bills or build the apartments it promised. Hundreds of thousands of home buyers and projects like Forest City are in limbo. Creditors that are suing Country Garden in Hong Kong could eventually seize Forest City.

With few residents and an uncertain future, Forest City now serves as a blank canvas. It has been used as a setting for the reality shows “The Mole” on Netflix and “Battle Trip” on South Korean television. A cryptocurrency investor, Balaji Srinivasan, recently started using a space in Forest City for a temporary tech school.

But Country Garden is holding on to its ambitions. “The blueprint for Forest City will not change,” Country Garden said in a statement to The New York Times. “Reasonable development and construction will be carried out according to demand.”

For years, Country Garden gorged on cheap money to sustain a build-and-they-will-come strategy that characterized China’s housing frenzy. When it tried to take that model overseas, chasing money that was leaving China, it ran into trouble.

In 2014, almost as soon as trucks began to dump sand on sea grass to build land, the project was thrown off track. Construction was halted for months to assess Forest City’s environmental impact after officials in Singapore — a few miles away across the strait — raised concerns to Malaysia. Two years later, China, fearing the collapse of its currency because money was streaming out of the country, stopped citizens from buying property in Malaysia and other nations.

Local Malaysian authorities, who have a 40 percent financial stake in Forest City, have tried to revive interest in the project. They promised to turn it into a special financial zone and last month dropped all taxes on the so-called family offices of ultrawealthy investors.

Yet all around there were signs that Country Garden had miscalculated demand.

On a trip to Forest City in early September, the office tower at the heart of the complex, where local officials now hope money managers will open offices, was locked with chains and watched over by guards. At night, the building was barely visible except for a broken green LED sign, blinking on occasion, perched on top. In the blocks of apartments nearby, entire floors were dark.

Stores in the mall, once earmarked for luxury retail and duty-free shopping, were chained up — some were filled with rotting wood and construction materials. The only patrons one evening were three women riding around on plastic motorized dinosaurs that lit up to “Last Friday Night” by Katy Perry.

“Country Garden was riding the wave rather than thinking about the opportunity to create a city,” said Michael Grove, a landscape architect at the design firm Sasaki who was brought in, together with consultants from McKinsey, to help make the developer’s plans more economically and environmentally viable in late 2014.

“They were doing construction on the fly,” said Mr. Grove.

If any company could have pulled off Forest City, it would have been Country Garden. Once one of China’s most prolific developers, it boasted of its “fast development and sales.” For Forest City, it plastered advertisements in Beijing, Shanghai, Guangzhou and other cities. It flew in interested Chinese buyers to see model apartments. Real estate agents played up the possibility of getting special visas and a pathway to Malaysian citizenship.

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