Andaman Island Malaysia: Building a $14 Billion Reclaimed Luxury Waterfront and the Forest City Lessons

Overview

In this video from The B1M, the Andaman Island project off Penang, Malaysia is explored as a $14 billion land reclamation venture designed to support luxury housing and offices. The segment contrasts Andaman with Forest City, examining how engineering, pricing and market demand shape the prospect of a successful coastal development rather than another ghost city.

The report delves into the technical process of reclaiming land from the sea, the economics of luxury property, and the regional planning decisions that could determine whether Andaman becomes a vibrant urban center or a stalled project.

Overview

The B1M investigates Andaman Island, a new 760 acre reclamation project off Penang Island in Malaysia. Valued at about 14 billion USD, it aims to deliver shopping malls, offices and thousands of luxury homes connected to Penang via two road bridges. The video frames this development against Forest City in Johor, illustrating how scale, financing and policy can make or break a mega project in Southeast Asia.

Background: Growth, UNESCO and the Ghost City Syndrome

Malaysia has expanded its land area through reclamation since 1991, with significant activity around Penang. Georgetown on Penang Island was inscribed as a UNESCO World Heritage Site, recognizing its unique architecture and townscape. This designation has spurred global attention and rapid gentrification along the island’s coastline, raising concerns about space constraints and sustainable development in a mountainous, forested area where new construction would otherwise be problematic. Andaman emerges as a response to demand for high end developments near Penang, offering a new island that can host luxury housing and commercial facilities without disturbing intact urban cores.

Engineering Behind Andaman

The video explains the core reclamation workflow used to create Andaman, including the following steps. The sand is harvested near source locations by a trailer suction hopper dredger, a ship that sucks up sand through an underwater pipe and deposits it on the site via steel pipes and conveyors. Next comes a prefabricated vertical drain (PVD) crawler rig that inserts vertical drains through the sand into underlying clay. The drains allow water to escape as a thick surcharge layer is placed on top of the sand to compress it, expelling water to the surface. To prevent the sand from sliding away, a rock bund forms a perimeter around the site and acts as coastal defence, gradually transforming into a sloped revetment that dissipates wave energy. The 2004 tsunami tested this approach, illustrating coastal engineering principles under extreme conditions. Buildings on Andaman are anchored with spun piles through sand and clay to ensure stable foundations, and the island is linked to Penang Island by two bridges to Straits Quay and Gurney Bay. These structural decisions reflect a strategy focused on market-driven demand for luxury housing rather than a mass migration model.

Economics, Demand and Outlook

Andaman is designed to attract affluent buyers, with coastside units priced at a premium relative to other Malaysian markets. The development faces a mix of affordable and luxury units, with the expectation that the majority will be luxury offerings. As of the summer of the previous year, several condo towers were reportedly sold out, signaling strong early demand. The project’s 760 acres will host approximately 16,000 residents in around 5,000 homes, aligning with a high end, smaller scale development rather than a mega metropolis. The contrast with Forest City is stark: Forest City planned to accommodate up to 700,000 people across multiple islands with a broad array of amenities, but was hit hard by China’s property sector tightening, visa policies restricting foreign residency, the pandemic and other market shocks. Andaman, led by a Malaysian company EO Burhat, targets local demand and avoids heavy reliance on foreign buyers. While the project is still under construction, its lower scale and domestic leadership offer a different risk profile and a more realistic path to completion by around 2030.

Forest City: Lessons and Differences

The video contrasts Andaman with Forest City, a 100 billion USD project in southern Johor that sought to create four man made islands with a mix of hotels, golf resorts, shops and thousands of residences. Forest City faced headwinds from a debt crisis at Country Garden, strict Chinese capital controls, and visa policies that discouraged foreign residency. As a result, occupancy of Forest City’s apartments lagged behind expectations, with reports suggesting minimal occupancy after years of development. Andaman, by comparison, is positioned as a smaller scale project that leverages existing demand in Penang and Malaysian investment to reduce exposure to foreign buyer risk. The video suggests that Andaman could be a case study in learning from Forest City’s overreach, by aligning project scope, financing and regulatory context with actual market demand.

Technical and Regulatory Context

The development relies on established coastal engineering practices, including rock revetments and storm defence considerations, water management and geotechnical monitoring of the soft clay and sand foundation. The two new road connections to Penang Island are central to integrating Andaman into the regional economy, enabling access to the existing urban and commercial ecosystem around Penang Island. The project’s emphasis on luxury housing aligns with demand signals in the region, while a more modest 16,000 person target helps manage risk and create a sustainable, attractive living environment rather than a sprawling, underutilised metropolis.

Conclusion: Time Will Tell

Andaman stands as a measured response to Penang’s growth pressures, offering a more contained, financeable, and market-driven approach to coastal development in Malaysia. The project’s success will hinge on continued domestic investment, completion pace, and the ability to translate early sales into a vibrant community that can sustain a high-end, waterfront urban environment over the long term.