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    China Residential Market WatchJUNE 2011

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    JUNE 2011

    market Highlights

    Chart 1Month-on-month change in the transacted area of primary residential property (May 2011)

    Month-on-month change

    -30%-40% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

    Chongqing

    Wuhan

    Shenyang

    Shanghai

    Chengdu

    Guangzhou

    Beijing

    Hangzhou

    Shenzhen

    Tianjin 59.8%

    51.5%

    42.5%

    38.5%

    36.1%

    32.5%

    30.1%

    12.5%

    7.6%

    -30.0%

    Primary home sales picked up while pricesremained stable

    In May 2011, the total transacted

    area of new homes in ten major

    Mainland cities rebounded

    signicantly month on month,

    but the total area remained at a

    relatively low level.

    In May 2011, the total transacted area of new homes in ten major Mainland cities rebounded from

    the previous month, but the total area remained at a relatively low level. Meanwhile, new home

    prices, adjusted by dierences in property type, location, ttings and whether they were presale

    or completed units, edged up a marginal 0.7% month on month.

    In May, total primary residential transacted area in the ten cities rebounded 22.5% from April.

    Aside from Chongqing (-30.0%), all of the ten major cities recorded growth, with Tianjin (59.8%)

    and Shenzhen (51.5%) witnessing the largest gains. Compared with a year ago, the total

    transacted area in the ten cities increased 27.4%. However, the sales gure was still relatively

    low. Most of the cities saw transacted areas drop in May 2011 compared with their average

    in 2010, with Chongqing (-43.6%), Tianjin (-26.1%), Chengdu (-24.4%) and Beijing (-23.8%)

    experiencing the biggest declines.

    Meanwhile, the rebound in new-home sales was due to increased supply and lower prices in

    some of the cities. Month-on-month price drops were the sharpest in Shenzhen (-7.1%) and

    Tianjin (-1.9%), while at the same time, transacted areas recorded the biggest month-on-month

    gains in these two cities, reecting the inuence of price reductions in promoting primary sales.

    However, in the short term, price cuts are not expected to gure prominently in developers

    marketing strategies. Given that developers nancial strength has not deteriorated markedly, we

    do not expect price discounts to be widely oered across the country.

    However, policy risks in the property market remain high: the central government twice raised

    RMB-deposit reserve rates of nancial institutions by 50 basis points, on 18 May and 20 June.

    Rates have been raised six times so far this year and have now reached a historical high of 21.5%

    in major nancial institutions. These increases have the eect of tightening developers credit

    and adding funding pressure. They also suppress home-buying demand, with commercial banks

    in some cities lifting mortgage rates and down-payment ratios for rst-home purchases.

    Looking ahead, the supply of new homes in the ten major cities will continue to increase. We

    expect sales volume to continue growing, but overall to remain relatively low, resulting in higher

    inventory levels. Currently, it would take about 11 months for the market to absorb all available

    inventory in the ten cities (assuming sales rate remains the same as the past three months

    average). We believe rising inventory and funding pressure will suppress home prices from the

    third quarter.

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    The average price of new homesin ten major Mainland cities

    taking into account diferences

    in property type, location,

    ttings and whether they were

    presale or completed units

    rose a marginal 0.7% in May,

    from the previous month.

    Some major Mainland cities

    registered month-on-month

    drops in adjusted new-home

    prices in May 2011, with

    Shenzhen experiencing the

    largest decline (-7.1%), followed

    by Tianjin (-1.9%).

    Chart 2Price trend of primary residential property (in ten major cities)

    2007 Jan = 100

    Note: The ten major cities include Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Chongqing, Chengdu, Hangzhou, Wuhan and

    Shenyang. The home prices of these cities have been adjusted to take into account differences in property type, location, fittings or

    whether they were presale or completed units.

    100

    120

    140

    160

    180

    200

    220

    240

    JulJan JanJulJanJulJanJulJan

    2007 2008 2009 2010 2011

    Month-on-month change

    Chart 3Month-on-month price change in primary residential property (May 2011)

    -8% -6% -4% -2% 0% 2% 4% 6% 8%

    Shenzhen

    Tianjin

    Guangzhou

    Chongqing

    Beijing

    Hangzhou

    Chengdu

    Wuhan

    Shanghai

    Shenyang 6.5%

    2.5%

    2.3%

    1.4%

    1.1%

    0.9%

    0.6%

    -1.0%

    -1.9%

    -7.1%

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    JUNE 2011

    Table 4

    Average per-sq-m prices of primary residential property (May 2011)

    CityUrban area

    (RMB per sq m)

    Suburban area

    (RMB per sq m)City-wide

    (RMB per sq m)Month-on-month

    change (%)

    Beijing 31,327 14,419 21,429 3.6%

    Shanghai 38,233 17,990 22,387 1.5%

    Guangzhou 24,091 9,718 11,254 6.6%

    Shenzhen 15,653 - 15,653 22.1%

    Tianjin 19,304 8,170 10,434 5.6%

    Chongqing 7,834 5,830 7,656 5.5%

    Chengdu 9,541 5,865 6,887 1.6%

    Hangzhou 25,904 13,575 17,573 9.4%

    Wuhan 9,595 6,226 7,497 5.6%

    Shenyang 6,711 5,785 6,215 9.8%

    Average 19,136 9,387 12,778 0.5%

    Note: The average prices are unadjusted by property attributes.

    Table 5

    Average unit prices of primary residential property (May 2011)

    CityUrban area

    (RMB million)Suburban area

    (RMB million)City-wide

    (RMB million)Month-on-month

    change (%)

    Beijing 3.45 1.24 2.03 0.5%

    Shanghai 4.83 1.98 2.53 2.9%

    Guangzhou 2.61 1.15 1.32 0.9%

    Shenzhen 1.34 - 1.34 28.6%

    Tianjin 1.71 0.82 1.02 1.3%

    Chongqing 0.74 0.56 0.72 6.8%

    Chengdu 0.88 0.58 0.67 1.9%

    Hangzhou 2.79 1.40 1.84 15.3%

    Wuhan 0.98 0.62 0.76 7.6%

    Shenyang 0.55 0.54 0.54 6.4%

    Average 2.07 0.94 1.29 0.8%

    Note: Price per unit is generated by dividing total sales consideration by the total number of transacted units(unadjusted by property attributes).

    The urban, suburban andcity-wide per-sq-m primary

    residential prices were the

    highest in Shanghai, followed

    by Beijing.

    Of all the ten major cities,

    Shanghai had the highest

    urban, suburban and city-wide

    primary residential unit prices.

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    In May 2011, Shanghai sold the

    highest number of new luxury

    homes valued at RMB5 million

    or above (567 units), followed

    by Beijing (495 units) and

    Hangzhou (217 units).

    Table 6

    Total transacted area of primary residential property (May 2011)

    CityTransacted area

    (thousand sq m)Month-on-month

    change (%)Year-on-yearchange (%)

    Beijing 761.0 38.5% 53.7%

    Shanghai 819.9 30.1% 165.5%

    Guangzhou 917.3 36.1% 85.4%

    Shenzhen 249.9 51.5% 134.8%

    Tianjin 816.2 59.8% 18.2%

    Chongqing 575.6 30.0% 62.8%

    Chengdu 1,274.4 32.5% 14.9%

    Hangzhou 383.4 42.5% 119.8%

    Wuhan 645.6 7.6% 10.8%

    Shenyang 1,043.7 12.5% 1.2%

    Total 7,487.0 22.5% 27.4%

    In May 2011, all ten major citiesexcept Chongqing (-30.0%)

    witnessed month-on-month

    growth in the transacted areas

    of primary homes, with Tianjin

    (59.8%) recording the largest

    increase.

    Table 7

    Number of primary residential units sold by price range (May 2011)

    CityPrice range (RMB million per unit)

    < 1.0 1.0-

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    JUNE 2011

    In May 2011, The Manorin Shanghai was the most

    expensive primary residential

    project in China, priced at

    RMB143,646 per sq m.

    All of the ten Mainland cities,except Shenyang (-10.4%),

    registered month-on-month

    increases in the unsold

    inventory of new homes in May

    2011, with Hangzhou recording

    the largest gain (18.7%).

    Table 8

    Total oor area of primary residential property available for sale (May 2011)

    CityAvailable inventory

    (million sq m)Month-on-month

    change (%)Year-on-yearchange (%)

    Beijing 10.2 1.8% 0.7%

    Shanghai 7.3 7.7% 28.6%

    Guangzhou 6.2 6.9% 46.3%

    Shenzhen 4.4 5.2% 10.7%

    Tianjin 8.2 10.9% 27.0%

    Chongqing 4.4 14.4% 27.1%

    Chengdu 9.2 6.6% 171.8%

    Hangzhou 3.8 18.7% 88.5%

    Wuhan 14.4 1.6% 9.7%

    Shenyang 8.0 10.4% 14.6%

    Total 76.2 4.3% 18.1%

    Table 9

    Most expensive primary residential project in each city (May 2011)

    City Project DistrictTransaction volume(number of units)

    Average price(RMB per sq

    m)

    Beijing Imperial Mansion Dongcheng 1 125,561

    Shanghai The Manor Luwan 4 143,646

    Guangzhou Canton View Bay Yuexiu 3 48,407

    Shenzhen Triumphal Bay Longjiang 2 80,000

    Tianjin No.3 Hai He Mansion Hebei 2 46,610

    Chongqing Pearl on the River Jiangbei 1 24,649

    Chengdu Island by the River Chengxi 2 33,825

    Hangzhou Orchid Residence Xiacheng 21 53,456

    Wuhan Wuhan Tiandi Jiang'an 9 32,380

    Shenyang Shenyang MIXc Residence Heping 14 22,000

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    The delineation of urban andsuburban districts in each

    city makes inter-city price

    comparison more relevant.

    Chengdu

    Shenzhen

    Guangzhou

    Hangzhou

    Tianjin

    Chongqing

    Wuhan

    Beijing

    Shenyang

    Shanghai

    Table 10

    Urban and suburban areas of ten major Chinese cities

    City Urban areas Suburban areas

    Beijing Dongcheng, Chaoyang, Xicheng,

    Xuanwu, Fengtai, Congwen,

    Haidian, Shijingshan

    Fangshan, Mentougou, Tongzhou,

    Shunyi, Changping, Daxing,

    Huairou, Pinggu

    Shanghai Huangpu, Luwan, Xuhui, Changning,

    Zhabei, Yangpu, Hongkou, Pudong

    New Area, Jing'an, Putuo

    Baoshan, Chongming, Fengxian,

    Jiading, Jinshan, Minhang, Nanhui,

    Qingpu, Songjiang

    Guangzhou Yuexiu, Liwan, Tianhe, Haizhu Baiyun, Songhua, Panyu, Huadu,

    Huangpu, Luogang, Nansha,

    Zengcheng

    Shenzhen Luohu, Futian, Nanshan, Yantian,

    Longjiang-

    Tianjin Heping, Hedong, Hexi, Nankai,

    Hebei, Hongqiao

    Xiqing, Dongli, Jinnan, Beichen,

    Wuqing, Baodi

    Chongqing Dadukou, Jiangbei, Jiulongpo,

    Nanan, Shapingba, Yubei, Yuzhong

    Banan, Beibei, Changshou,

    Hechuan, Jiangjin, Wanzhou

    Chengdu Jinjiang, Qingyang, Jinniu, Wuhou,

    Chenghua

    Longquanyi, Wenjiang,

    Qingbaijiang, Xindu, Shuangliu,

    Pixian

    Hangzhou Shangcheng, Xiacheng, Xihu,

    Gongshu, Jianggan

    Binjiang, Xiasha, Yuhang, Zhijiang

    Development Zone

    Wuhan Jiang'an, Jianghan, Qiaokou,Hanyang, Wuchang, Qingshan,

    Hongshan

    Dongxihu, Hannan, Caidian,Jiangxia, Xinzhou, Huangpi

    Shenyang Shenhe, Heping, Huanggu, Dadong,

    Tiexi New District

    Sujiatun, Dongling, Shenbei New

    District, Yuhong New District

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    JUNE 2011

    About Knight FrankKnight Frank LLP is the leading independent

    global property consultancy. Headquartered

    in London, Knight Frank and its New York-

    based global partner, Newmark Knight Frank,

    operate 209 oces in 47 countries across sixcontinents. More than 6,840 professionals

    handle in excess of US$755 billion worth of

    real estate annually, advising clients ranging

    from individual owners and buyers to major

    developers, investors and corporate tenants.

    Knight Frank has a strong presence in the

    Greater China property markets, with oces

    in Hong Kong, Beijing, Shanghai, Guangzhou

    and Macau, oering high-quality professional

    advice and solutions across a comprehensive

    portfolio of property services.

    About HoldwaysBeijing Holdways Information & Technology

    Co Ltd (hereinafter referred to as Holdways),

    founded by the China National Real Estate

    Development Group Corporation, was one of

    the rst property information and consultancyservice providers in China.

    With comprehensive property and nance

    databases and strong market research and

    analytical power, and staed by qualied and

    experienced professionals, Holdways provides

    real estate intelligence, market research,

    competitor analysis and strategic consultancy

    services to both domestic and international

    companies.

    Bringing clarity to Chinas property market

    China has the worlds largest housing market, and investorsboth foreign and localhave

    immense interest in this thriving sector. In 2010, an estimated 9.3 million new homes were sold

    across Mainland China. The real estate sector accounted for 23.8% of Chinas RMB24.1-trillion

    xed asset investments last year. Meanwhile, foreign direct investment (FDI) in Chinas real estate

    sector amounted to USD24.0 billion in 2010, accounting for 22.7% of the countrys total inbound

    FDI.

    Despite the importance of this sector, there is much misunderstanding about Chinas property

    market, due to a lack of consistent statistics. For example, inter-city price comparison is not

    always worthwhile, as some cities mix the data of subsidised housing with private housing

    statistics, while others do not. The fact that cities expand their boundaries and include additional

    suburbs in their jurisdictions at dierent rates has made the issue even more complex.

    Against this backdrop, international property consultancy Knight Frank and China-based propertyconsultancy Holdways have formed an alliance to ll the gap in accurate statistical data and bring

    clarity to Chinas property market. We have access to a unique database covering the market data

    of 35 Mainland cities, with the potential of expanding to 100 cities. We are committed to applying

    our expertise in property research and analysis to organise and present the data in a consistent

    and concise way.

    This report covers the primary-market data of Chinas ten most important cities, spanning the

    Bohai Rim region in the north; the Yangtze River Delta in the east; the Pearl River Delta in the

    south; and the western regions. To facilitate worthwhile inter-city comparison, some data, such as

    the average price of new home sales in the private market, have been reorganised to cover only

    key urban areas, with the delineation of urban and suburban districts in each city clearly stated in

    Table 10.

    Please feel free to contact us if you require more specic information about Chinas property

    market.

    We have access to a uniquedatabase covering the market

    data of 35 Mainland cities, with

    the potential of expanding to

    100 cities.

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    (20115)

    -30%-40% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

    qing

    han

    ang

    ghai

    gdu

    hou

    ijing

    hou

    hen

    njin 59.8%

    51.5%

    42.5%

    38.5%

    36.1%

    32.5%

    30.1%

    12.5%

    7.6%

    -30.0%

    /

    0.7

    22.5(-30.0)

    59.851.5

    27.4

    (-43.6)-26.1-24.4

    -23.8

    (-7. 1)

    (-1. 9)

    :

    0. 50. 5

    21.5

    (

    )

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    10

    /

    0.7

    (-7.1)

    (-1.9)

    (20115)

    -8% -6% -4% -2% 0% 2% 4% 6% 8%

    zhen

    ianjin

    zhou

    gqing

    eijing

    zhou

    ngdu

    uhan

    nghai

    yang 6.5%

    2.5%

    2.3%

    1.4%

    1.1%

    0.9%

    0.6%

    -1.0%

    -1.9%

    -7.1%

    =100

    /

    100

    120

    140

    160

    180

    200

    220

    240

    71 1717171

    2007 2008 2009 2010 2011

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    (20115)

    (/)

    (/)

    (/)

    31,327 14,419 21,429 3.6%

    38,233 17,990 22,387 1.5%

    24,091 9,718 11,254 6.6%

    15,653 - 15,653 22.1%

    19,304 8,170 10,434 5.6%

    7,834 5,830 7,656 5.5%

    9,541 5,865 6,887 1.6%

    25,904 13,575 17,573 9.4%

    9,595 6,226 7,497 5.6%

    6,711 5,785 6,215 9.8%

    19,136 9,387 12,778 0.5%

    (20115)

    ()

    ()

    ()

    344.8 124.3 203.0 0.5%

    482.5 198.0 253.4 2.9%

    261.0 115.4 132.3 0.9%

    133.5 0.0 133.5 28.6%

    171.0 81.8 101.7 1.3%

    73.6 55.6 72.1 6.8%

    88.0 58.0 66.8 1.9%

    278.8 140.0 183.7 15.3%

    98.2 62.4 75.7 7.6%

    54.5 53.6 54.0 6.4%

    206.6 93.9 128.9 0.8%

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    12

    (20115)

    76.1 38.5% 53.7%

    82.0 30.1% 165.5%

    91.7 36.1% 85.4%

    25.0 51.5% 134.8%

    81.6 59.8% 18.2%

    57.6 30.0% 62.8%

    127.4 32.5% 14.9%

    38.3 42.5% 119.8%

    64.6 7.6% 10.8%

    104.4 12.5% 1.2%

    748.7 22.5% 27.4%

    -30.0

    59.8

    567

    49521 7

    (20115)

    < 1.0 1.0-

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    (20115)

    ()

    1,023.9 1.8% 0.7%

    732.2 7.7% 28.6%

    617.7 6.9% 46.3%

    442.2 5.2% 10.7%

    816.9 10.9% 27.0%

    444.9 14.4% 27.1%

    922.7 6.6% 171.8%

    382.6 18.7% 88.5%

    1,435.5 1.6% 9.7%

    803.1 10.4% 14.6%

    7,621.8 4.3% 18.1%

    (- 10.4)

    18.7

    143,646

    (20115)

    /

    1 125,561

    4 143,646

    3 48,407

    2 80,000

    3 2 46,610

    1 24,649

    2 33,825

    21 53,456

    9 32,380

    14 22,000

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    14

    -

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    Newmark

    Knight Frank47

    2096,840

    7,550

    93024.1

    23.8

    239.922.7

    35100

    ()

    35

    100

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    Assistant Editor-in-Chief

    Jason HuDirector, Research Services

    Holdways

    +86 10 5128 4009 Ext 805

    [email protected]

    Helen LiuDirector and General Manager

    Holdways

    +86 10 5128 4009 Ext 812

    [email protected]

    Contacts

    Editor-in-Chief

    Thomas Lam

    Director, Head of Research, Greater China

    Knight Frank

    +852 2846 4819

    [email protected]

    Holdways oce

    Unit 1308, Tower C, Webok Times-Center, 17 South Zhongguancun Street, Haidian District, Beijing 100081, PRC

    17C1308100081T +86 10 5128 4009 F +86 10 8857 2885 Holdways.com

    Knight Frank oce

    Suite 302, Tower E1, Oriental Plaza, No 1 East Chang An Avenue, Dong Cheng District, Beijing 100738, PRC

    1302100738T +86 10 8518 5758 F +86 10 8518 5755 KnightFrank.com.cn

    Jacky Wei Senior Manager, Research &

    Consultancy, Beijing

    Knight Frank

    +86 10 8518 5758 Ext 816

    [email protected]

    This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted byKnight Frank or Holdways for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the views of Knight Frank or Holdways in relation to particular properties orprojects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank and Holdways. Knight Frank 2010

    Knight Frank and Holdways offices