JOHOR BARU (THE STAR/ASIA NEWS NETWORK, REUTERS) - The Malaysian Prime Minister's comments on Monday (Aug 27) that property in the mammoth Forest City development cannot be sold to foreigners came as a shock for the Johor state government, a member of the state executive council said.

Johor Housing and Rural Development Committee chairman Dzulkefly Ahmad said matters related to land, water and forest were within the purview of the state government, but there had been no discussion between the federal and state governments on the issue.

"We are still trying to make sense of this new move, as we have yet to be informed," he said on Monday, adding that they would seek clarification from the Prime Minister's Department.

"We already have in place a requirement that foreigners can only purchase properties worth RM1 million (S$333,000) and above. The previous government also introduced policies to include international zones within the project and other parts of Johor," he said, referring to zones where foreigners are allowed to purchase units.

Meanwhile in Putrajaya, federal Housing and Local Government Minister Zuraida Kamaruddin said the remarks by PM Mahathir about foreigners being barred from buying at Forest City has yet to be formalised in policy.

Malay Mail online news quoted her as saying on Tuesday (Aug 28) that the developer Country Garden Pacificview should contact her ministry via writing to clarify what was said by Tun Mahathir,

"For the time being, it is still undecided if they can sell property to foreigners," Madam Zuraida told reporters after attending an event. "We must assess and then provide the prime minister with a report."

She said PM Mahathir has asked her ministry to form a committee to scrutinise and reassess agreements and deals concerning the sale of residential units in Forest City.

The committee would consist of her ministry, the Finance Ministry, the Johor state government and developers, she said.

The 13.86 sq km property project spanning four man-made islands off the Johor coast is developed by China's Country Garden Pacificview.

The US$100 billion (S$136 billion) city comprising apartment blocks, houses, office towers, hotels and shopping centres is meant to eventually house 700,000 residents.

Mr Dzulkefly said the federal government's move would have huge implications on the real estate sector in the state and hoped that all parties would not jump to conclusions over Tun Mahathir's comments.