Property Market Property Market

MAINLAND CHINAMAINLAND CHINA

Beijing and ShanghaiBeijing and Shanghai

No Single MarketNo Single Market

A series of markets within a market – A series of markets within a market – primary, secondary and tertiary citiesprimary, secondary and tertiary cities

Limited quality productLimited quality product

Absence of a secondary marketAbsence of a secondary market

Lack of transparency and consistencyLack of transparency and consistency

Real efforts being made to wipe out Real efforts being made to wipe out corruption and speculation at official levelcorruption and speculation at official level

Still an emerging marketStill an emerging market

No Single Market No Single Market (continued)(continued)

Government tightening controls over land Government tightening controls over land market – vast amounts of agricultural land market – vast amounts of agricultural land already lost illegally to developmentalready lost illegally to development

Growing foreign investor influenceGrowing foreign investor influence

Mainland China looks very much to Hong Mainland China looks very much to Hong Kong and other international centres as Kong and other international centres as examples for future policiesexamples for future policies

Housing ProvisionHousing Provision

Over 40% of population live in urban areas – Over 40% of population live in urban areas – some 550 million peoplesome 550 million peopleAverage living space increased from 4 sq.m. in Average living space increased from 4 sq.m. in early 1980’s to 22 sq. m. todayearly 1980’s to 22 sq. m. todayHousing reform in 1998 – move away from Housing reform in 1998 – move away from traditional allocation as part of employment to traditional allocation as part of employment to open market as main channel of provisionopen market as main channel of provisionCommercial housing growth since 1998 Commercial housing growth since 1998 averaged 35% per annumaveraged 35% per annumEstimated 82% of allocated public housing has Estimated 82% of allocated public housing has already been sold to workers/employeesalready been sold to workers/employees

Structure of the Housing MarketStructure of the Housing Market

Each city operates as a separate marketEach city operates as a separate market

Commercial commodity housing – merged Commercial commodity housing – merged foreign and local marketsforeign and local markets

Issue of affordabilityIssue of affordability

Price to household income ratio 10-15 timesPrice to household income ratio 10-15 times

Subsidised affordable housing – flagrant Subsidised affordable housing – flagrant breaches of terms of salebreaches of terms of sale

Public rental housing – rents controlled, 400:1 Public rental housing – rents controlled, 400:1 price to rent ratioprice to rent ratio

A. $4,000

F. $2,400

D. $2,800

E. $2,600

C. $2,800B. $3,500

P. $300J. $1,000

H. $2,000

G. $2,200

I. $2,400

M. $400

N. $400

L. $500

Q. $600

R. $700

O. $800

* Unit rate expressed in HK$ per square foot (gross floor area)

A Hong Kong Island

B Kowloon

C Tseung Kwan O

D Sha Tin

E Ma On Shan

F Tai Po

GTuen Mun, Yuen Long, Tin Shui Wai

H North

I Tung Chung

J Shenzhen

K Zhangmutou

L Dongguan

M Panyu

N Shunde

O Guangzhou

P Zhongshan

Q Zhuhai

R Macau

K. $500

Mainland China – Private Housing

Mainland China – Government Housing

Office MarketOffice Market

Major centres are Beijing and Shanghai Major centres are Beijing and Shanghai but Guangzhou and other secondary cities but Guangzhou and other secondary cities (Tianjin, Suzhou, Hangzhou) also provide (Tianjin, Suzhou, Hangzhou) also provide Grade A office accommodationGrade A office accommodation

Available for lease or strata title purchaseAvailable for lease or strata title purchase

Rents range from US$35 psm per month Rents range from US$35 psm per month in Shanghai to US$7 psm per month in in Shanghai to US$7 psm per month in lesser citieslesser cities

LG Tower, BeijingLG Tower, Beijing

Retail MarketRetail Market

Very active market currentlyVery active market currentlySeveral projects underway of 1m sq. Several projects underway of 1m sq. metres GFA and abovemetres GFA and aboveFrequently sold on strata title basis but Frequently sold on strata title basis but market learning that this is not satisfactory market learning that this is not satisfactory in the longer termin the longer termInternational brand tenants in major International brand tenants in major centres in Beijing, Shanghai, Guangzhou, centres in Beijing, Shanghai, Guangzhou, Shenzhen, etc.Shenzhen, etc.

Fortune Plaza, BeijingFortune Plaza, Beijing

Market Prices and YieldsMarket Prices and Yields

ResidentialResidential

1.1. Luxury Luxury US$1,500 per sq.m.US$1,500 per sq.m.

2.2. MassMass US$750 per sq.m. US$750 per sq.m.

YieldYield 8-9% 8-9%

Office (Grade A)Office (Grade A) US$2,500 per sq.m.US$2,500 per sq.m.

YieldYield 8-9% 8-9%

Professional Professional Property Services Property Services

LimitedLimited

PPPPSS Thank You!Thank You!