Tanjung Piai is a cape at the tip of the Malay Peninsula, the southernmost point of Eurasia and a destination for wealthy Chinese “shoppers.”

At least it was until the affluent mainlanders all but stopped showing up about six years ago.

The big draw had been a massive artificial island, the result of Chinese-funded land reclamation work, and the posh condos going on the market. Some of the mainlanders even splurged on spacious single-family resort homes priced at more than $2 million.

They mostly paid in cash.

The real estate bubble in their home country was still inflating. It is said that the properties they bought on the artificial island off the state of Johor were “cheap like Chinese cabbage” compared with upscale condos in major Chinese cities, whose prices were soaring at the time. Housing prices in Beijing had doubled during the previous several years.

A road links the island and Johor Bahru, the state capital. Singapore can be seen from a beach on the island, which sits off the eastern tip of the Malacca Strait, an important sea lane connecting the Middle East and East Asia via the South China Sea.

The $100 billion mega-development on the island was named Forest City. Its main developer is the struggling Chinese contractor Country Garden, which is based in Foshan, Guangdong Province.

A massive dome-shaped sales facility houses a model home, a day-care center for prospective customers’ children, a restaurant and a duty-free shop that sells alcohol and cigarettes.

The showroom of Country Garden’s Forest City development is deserted in Johor Bahru, Malaysia, on May 9. (Photo by Katsuji Nakazawa) 

At its height, the facility employed 100 salespeople to take care of throngs of Chinese customers. A common sales tactic was to tell prospective buyers that all the properties would soon sell out.

Looking back at those go-go days, a person familiar with the island property market’s boom and bust said that despite belonging to Malaysia, a Muslim country, the island was “a different world where only Chinese could be heard.”

It turns out that the Chinese customers visiting the island were participating in tours organized by Country Garden. Chinese customers stayed at a hotel within the sales facility and were provided with meals. Tours for high-class Chinese customers included golf outings. Many felt like “they could not go home until they bought one,” the person said.

Though Country Garden was doing business in Malaysia, it might as well have been worlds away for most Malaysians. Homebuyers were mostly mainland Chinese and Hongkongers, with a minority of ethnic Chinese from Singapore and Malaysia.

Locals considered it “a Chinese carnival put on by a Chinese company for a Chinese audience.”

But why was the show being staged in Malaysia?

The answer can be found behind the scenes, and it was deeply related to contemporary Chinese politics.

To get to it, we have to look into Forest City’s long history. The project was ignited by the China-led Belt and Road Initiative, the massive infrastructure-building spree meant to create modern-day “silk roads” to carry Chinese exports to much of the rest of the world.

Chinese President Xi Jinping unveiled it in 2013.

Forest City’s development accelerated quickly after the project was designated a collaborative undertaking between China and Malaysia. Although led by a private Chinese company, the Malaysian side perceived it as having the top Chinese leader’s full backing.

This perception was not dissimilar to all the Chinese homebuyers believing their investments were risk-free.

The southernmost point of Eurasia — the planet’s largest continental area — holds significant meaning for Beijing and its aspirations to wield influence in every nook of the vast stretch of land.

About six years on, Forest City’s development has ground to a halt, and Country Garden finds itself buried in debt.

Only about 30% of the project to build four artificial islands — then an entire metropolis — has been completed. Not even a large-scale supermarket, essential for any big city, exists.

The well-to-do Chinese who invested in luxury condos and other properties on the reclaimed island expected values to keep rising just like they always did back home. Only a tiny percentage of homebuyers settled on the island.

The massive dome has lost its buzz, with few prospective customers stopping by. The staff of 100 salespeople has dwindled to, at most, one representative. The day care center is child-free, and the large restaurant is closed.

“I don’t deny that [Forest City] has become a world-famous ghost town,” a local property developer said.

Values of Forest City properties, both used units and “new” inventory that never sold, have plummeted.

Prices for average two-bedroom residential units have declined by 30% to nearly 40%, according to local industry officials — an unbearable deficit for the investors who bought them.

Some Malaysians who felt they were worlds away from the development when it started going up, however, are now renting condos on the island. What is unbearable for the Chinese owners translates into tolerable rents for them. Many of these tenants drive across a bridge to their jobs in Singapore every day.

In February, a creditor filed a liquidation petition with the Hong Kong High Court against debt-laden Country Garden. The court has repeatedly adjourned hearings, with the next now scheduled for the end of July.

The embattled developer in October was declared in default by an international financial organization after missing an interest payment on a dollar-denominated bond issue. The company did, however, manage to pay interest on yuan-denominated bonds after missing the initial deadline in May.

Locals say Forest City’s development has also been affected by Malaysian politics.

In fact, after Mahathir Mohamad returned to power as Malaysia’s prime minister several years ago, the project was, in effect, temporarily halted to study whether it would benefit Malaysians.

After Country Garden’s financial woes derailed Forest City’s development, a move took shape to attract a casino. The hope was that the lure of gambling would catalyze the stalled project’s revival.

A view of Forest City, Malaysia, on May 10. Malaysians are now renting condominiums in the development that were out of their price range when built. (Photo by Katsuji Nakazawa) 

While the implosion of China’s property bubble left a trail of damage to the southern edge of Eurasia, China’s government has only recently begun to grapple with the deepening crisis.

Beijing recently unveiled new measures that include local governments’ purchases of unsold homes and restrictions on these localities from selling land usage rights to developers.

Country Garden is a private company and not likely to receive direct support from the Chinese Communist Party or government, as shown by the case of another major private developer, China Evergrande Group.

Private property developers’ huge debts, however, make it difficult for Chinese authorities to push these behemoths into bankruptcy proceedings. Forcing all major developers to take that route would deal a calamitous blow to an economy already in dire straits.

As a result, the problem keeps getting kicked down the road.

At this point, it is too early to assess the effects of new measures taken by the Xi administration to address the property crisis. An upcoming party meeting, however, could drop some hints.

It has already been announced that the long-delayed third plenary session of the 20th Central Committee will be held in July. A third plenary session of the committee customarily sets China’s major medium- and long-term economic policies.

The upcoming third plenary session will also affect the future of the Chinese-built “ghost town” at the southernmost tip of the Eurasian continent.