Will China Save or Spoil the World?

Global Financial Crisis Series …

China’s Real Estate Developers: Stronger or Weaker through Crisis?

France Houdard Exolus International Advisory

June 2013 (Updated from September 2010)

France.houdard@exolus.com

M (86 21) 5100.1833 x 1100

M (1) 917.285.6528 (United States)

2

What does China look like from Space? At Night? 3

Economy: Fastest Growing Large-Scale Economy in History? 4

Wealth: Middle Class now Larger than Populations of most Countries? 5

Migration: Largest Rural-to-City Transformation in History? 6

Urbanization: Emergence of 10+ Cities the Size of Countries? 7

Office Sector 10

Shanghai/Beijing Grade-A Office Supply & Financial Performance 11

Office Demand & Growth Drivers 14

Investor Confidence Continued 18

Hotels & Leisure Sector 19

Hotel Supply – Asia Development Pipeline Comparison 20

Hotel Supply & Financial Performance 21

Hotel Demand & Growth Drivers 26

Retail Sector 29

Shanghai Retail Supply & Financial Performance 30

Retail Demand & Growth Drivers 33

China’s Economic Future…Bust or Boom? 35

Fact Today: Healthy Balance Sheets – Banks, Companies, Households 36

The FUTURE (2020): World Bank Projects China as #1 Economy in World 37

Fact Today: World’s Fastest Growing Major Economy 38

Table of Contents

3

What does China look like from Space? At Night?

Why?

Source: NASA (United States – National Aeronautics and Space Administration

4

0

1

2

3

4

5

6

7

8

9

Source: IMF

Economy: Fastest Growing Large-Scale Economy in History?

China’s Economy: Doubles every 7 Years … Tripled most Recently

3x

2x

2x

China Opens to the World

Applied to join GATT

Eliminated its dual exchange

rate

Accepted full convertibility for current account

transaction

Admitted to WTO

Hosts OLYMPIC

games

China GDP (USD trillion)

US

D (

Re

al M

ark

et R

ate

s)

5

Foreign Direct Investment: Highest in History through Global Financial Crisis

China FDI Inflows Highest in History through Global Financial Crisis

Source: China National Bureau of Statistics

0

20

40

60

80

100

120

140

US

D

Foreign Direct Investment Inflows (1990 – 2012)

Global Financial Crisis

6

Wealth: Middle Class now Larger than Populations of most Countries?

Income Structure for Urban Population

Urb

an

Po

pu

latio

n (

mill

ion

s)

Urban Household Income

(USD – PPP adjusted)

Global > US$ 107,800

Affluent US$ 53,801- 107,800

Upper Middle US$ 21,501 –

US$ 53,900

Lower Middle US$ 13,500 –

US$ 21,500 Poor < US$ 13,500

531

607

684

756

822

239

255

157

106 73

53 170 355

461 525

35

90

99

0

100

200

300

400

500

600

700

800

900

2005 2010F 2015F 2020F 2025F

531

607

684

756

822

Sources: Urbanization Rates and Population Estimates based on United Nations, World Urbanization Prospects 2007; Income Bands based on MGI Consumer Demand 2008.

Upper Middle Class

Lower Middle Class

China’s Middle Class: 400 million (2010) … 500 million (2015)

7

Migration: Largest Rural-to-City Transformation in History?

China’s Urban Population versus Rural Population

1.4 billion

1.3 billion

1.2 billion

1 billion

245 381

531

684

822 822

833

782

705

624

0

200

400

600

800

1,000

1,200

1,400

1,600

1985 1995 2005 2015 2025

57% 49% 40% 31% 23%

1.45 billion

Source: World Urbanization Prospects 2007

Urbanization

Urban Population

(million)

Rural Population

(million)

China’s Urban Population: 600 million (2010) … 700 million (2015)

8

Urbanization: Emergence of 10+ Cities the Size of Countries?

Continental-Size Population … Hyper-Density Expansion

10+ Country-Sized Cities/Corridors E-merging … Populations averaging 60 Million

Urbanization

Cities: 120 cities populations

larger than 1 million people today.

10+ Country-Sized Cities &

Corridors: Emergence of 60+ MM

Populations

Infrastructure

World-Class Super-

Infrastructures, Integrated Hubs:

Historically unprecedented levels of

investment, concentrated in hubs.

Planned - Political - Economy

Full Authority: to Plan Nationally

– and Implement

Confucian -> Socialist ->

Capitalist

Mountains

Steppe

People

9

Context: What do Geography, Demographics, Cultural History tell Us?

Structural Geography

Landmass: 3% larger than the

Landmass of United States

2/3 Country Un-inhabitable: 2/3

of Country Covered by Mountains,

Deserts, thus Un-inhabitable

Continental Demographics

Population: 1.3bn (4.3x Larger

than US Population)

Density: 90% of Population

Concentrated in Eastern Pockets

– away from Mountains/Deserts

Migrants: 200 Million Floating

Population

Cultural Diversity

Cultural Distances: Extreme

Diversity: Cultural, Languages

(298), Economic, Geographic.

Source: The Global Land One-km Base Elevation (globe) Project; ETOPO 2 Worldwide Bathymetry; The Ethnologue, Languages of the World

70% Un-inhabitable … 1.3 bn People … Density … Diversity … Wealth … Migration

Mongolia

Russia Federation

Kazakhstan

India

Myanmar

Thailand

N Korea

S Korea Japan CHINA

10

0

50

100

150

200

250

300

350

400

450

2005 2010 2015 2020 2025

millio

ns s

q.m

Shanghai

Beijing

Wuhan

Guangzhou

Chengdu

Structural Hyper-Density Requires:

1.2 1.2

8.2

16.4

25.9

7.0

8.2

9.5

11.2

-

5

10

15

20

25

30

35

40

2005 2010F 2015F 2020F 2025F

billio

ns s

qm Supply New Additions

Estimated Cumulative China New Construction Estimated Cumulative New Construction (Select Cities)

Source: MGI 2008

40 billion sq m of Additional Supply by 2025

High-Density Infrastructure, Transportation, Linkages

11

Office Sector

Developing the World’s Fastest Growing CBD’s …..

Shanghai 1993

Shanghai 2014

12

Shanghai Grade-A Office Supply

Major Grade-A Office Supply, Absorption, Vacancy

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800

1,000

1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

‘000 s

qm

Grade-A office supply (LHS) Grade-A office net absorption (LHS) Vacancy Rate

Source: Knight Frank

13

Beijing Grade-A Office Supply

Major Grade-A Office Supply, Absorption, Vacancy

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1,000

1,200

1,400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

‘000 s

qm

Grade-A office supply (LHS) Grade-A office net absorption (LHS) Vacancy Rate

Source: Knight Frank

14

Office Financial Performance (Rentals) – Shanghai Vs. Beijing

Steady Growth over Past 8 Years

50

70

90

110

130

150

170

190

210

Shanghai Beijing

Q1 2003 = 100

Source: Knight Frank

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

15

HISTORICAL: Office Demand & Growth Drivers

Global Structural’ Cost Reduction … Revenue Growth

Cost Reduction

RESOURCES

Sales Engineering

R&D

Sourcing

Production

Distribution

Marketing

Shared

Services

IT HR

F&A Procure

DRIVING Shareholder Value

RESEARCH &

DEVELOPMENT

SHARED SERVICE

CENTERS

CONTRACTS,

PARTNERSHIPS

PRODUCTION /

SOURCING

SALES &

MARKETING

Revenue Growth Innovation

16

FUTURE: Office Demand & Growth Drivers

PRODUCTION /

SOURCING

DRIVING Shareholder Value

SALES &

MARKETING

RESEARCH &

DEVELOPMENT

SHARED SERVICE

CENTERS (SSC)

CONTRACTS,

PARTNERSHIPS

RESOURCES

SSC

IT HR

F&A Pro’c

Sales Engineering

R&D

Sourcing

Production

Distribution

Marketing

Cost Reduction

Revenue Growth Innovation

17

Office Demand & Growth Drivers

Cost Reduction

China Wages 5 to 10 times Cheaper than Wages in Western Countries

Margin and Cost Pressures from Customers

Consolidation of Buying Power in Retailing and other Industries

Easier Access for Customers to Alternative Sources of supply around Globe

Revenue Growth

GDP growth a 8%+ per annum for past 10 years

China Fastest Growing Large Economy in World; Stagnant or Low-Growth in Home Markets

Following customers to China; preserving critical customer relationships

Asset Efficiency (Innovation)

China Graduates 600,000 Engineers per Year; US Graduates 50,000 per Year

Access to larger global talent pool, with relevant skills for product localization

R&D - Pressure to introduce new products, faster, better, cheaper

Fundamentals … WEALTH, TALENT, LOW COST, INFRASTRUCTURE, STRONG FINANCIAL SYSTEM

Unprecedented Pressures to Reduce COSTS, Grow REVENUES, Drive INNOVATION?

Revenue Growth

Asset Efficiency

DRIVING Shareholder Value

Cost Reduction

18

Office Demand & Growth Drivers

China FDI Inflows Highest in History through Global Financial Crisis

Source: China National Bureau of Statistics

0

20

40

60

80

100

120

140

US

D

Foreign Direct Investment Inflows (1990 – 2012)

Global Financial Crisis

19

… Investor Confidence Continued …

Investor Confidence in China #1 in World

Source: World Investment Prospects 2012 - 2014

Top 14 Most Attractive Destinations for Future Investment

(2012 – 2014)

Pe

rce

nt o

f R

esp

on

ses

0%

10%

20%

30%

40%

50%

60%

70%

China UnitedStates

Germany UnitedKingdom

France Japan India Spain Canada UnitedArab

Emirates

Brazil

20

Hotels & Leisure Sector

Developing the World’s Largest, Lowest, Highest …..

Lowest Altitude Hotel Highest Altitude Hotels Largest Golf Complex

21

Hotel Supply – Asia Development Pipeline Comparison

Over ½ of All Asia Hotel Developments are in China

Source: Lodging Econometrics

China Construction Pipeline Q2 2012

Project Stage Projects Rooms

Under Construction 1,202 306,473

Start Next 12 Months 133 36,641

Early Planning 167 63,366

Total Pipeline 1,502 406,480

Asia Pacific Construction Pipeline Q2 2012

Region Projects Rooms

China 1,502 406,480

India 379 66,867

SE Asia & Other Countries 436 88,349

Total Pipeline 2,317 561,696

22

Hotel Supply – Global Comparison

Incl. 84 five-star hotels / over 35,000 rooms*

Incl. 68 five-star hotels / over 25,500 rooms*

Total Hotel Rooms in Selected Major Cities 2010

0 20 40 60 80 100 120 140 160

Las Vegas

Beijing

Tokyo

London

Paris

New York City

Shanghai

Hong Kong

Dubai

Singapore

Seoul

Sydney

(000' Rooms)

Beijing/Shanghai now 2 of the Largest Urban Hotel Markets in World

Source: Data collected from various sources (Some data variance may exists between key sources)

23

Hotel Supply Growth

Shanghai

-

5

10

15

20

25

30

35

40

Th

ou

san

ds R

oo

ms CAAG 11.1% CAAG 13.5%

-

5

10

15

20

25

30

35

40

45

Th

ou

san

ds R

oom

s CAAG 6.1%

Olympics

Beijing

CAAG 10.6%

WORLD EXPO

Overall China Growing at Over 1,000 Hotels per Year

5-Star Hotel Supply (Rooms, 2000 – 2012)

Source: China National Tourism Association (CNTA)

24

Hotel Financial Performance

Hotel Average Room Rates - Selected Major Cities

(YTD Sep 2010, USD)

0 50 100 150 200 250 300

Paris

New York

London

Hong Kong

Beijing

Shanghai*

Buenos Aires

Berlin

Los Angeles

Hotel Occupancy - Selected Major Cities

(YTD Sep 2010)

0% 20% 40% 60% 80% 100%

New York

London

Hong Kong

Paris

Los Angeles

Buenos Aires

Berlin

Beijing

Shanghai*

Average Room Rates (ARR) Comparison

Source: STR Global

25

Hotel Financial Performance

Performance of Top Hotels in Shanghai

(YE Nov 2010)

Notes: Occ - Average Annual Room Occupancy; ARR - Average Room Rate in USD; RevPAR - Average Room Revenue Per Available Room in USD;

PAR - Per Available Room

Among Highest in World on a Total Revenue Basis

Distribution of Revenues YE November 2010

(Top 10 Shanghai Hotels)

Rooms: USD155

54%

Other: USD24,

8%

F&B: USD108,

38%

Shanghai Occ ARR RevPAR

Total

Revenue

PAR

Top 3 Hotels 58% 336$ 195$ 394$

Top 5 Hotels 56% 329$ 184$ 362$

Top 10 Hotels 58% 269$ 156$ 263$

No.: Top 10 Hotels (by RevPAR, YE Nov 2008) Rooms

1 Grand Hyatt 555

2 Shangri-la Pudong 950

3 JW Marriott 342

4 Four Seasons Hotel 439

5 Westin Shanghai 570

6 Marriott Hongqiao 313

7 Jing An Hilton Shangai 720

8 Le Royal Meridien Shanghai 761

9 The St. Regis Shanghai 328

10 Okura Garden 492

Performance of Top

Hotels in Shanghai

26

912

736

605564 540 531 526 522

460 458

400 392 392 379 353 334 328 307 305 285

67%69%

71%

55%

69%

54%

66%

70%68%

74%72%

58%

65%

53%51%

58%

68%

54%52%

63%

-

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

Sha

ngha

i

Beijin

g

Qingd

ao

She

nzen

San

ya

Gua

ngzh

ou

Han

gzho

u

Che

ngdu

Dal

ian

Jina

n

Nan

jing

Xiam

ien

Xian

Tian

jin

Suz

ho

Don

ggua

n

Cho

ngqi

ng

Zhen

gzho

u

Wuh

an

Uru

mqi

RM

B

0%

10%

20%

30%

40%

50%

60%

70%

80%

RevPAR

ARR

Occ

Hotel Financial Performance – Major Cities 2010 (5-Star Hotels)

, Source: China Tourist Hotel Association / STR Global

China 5-Star Hotels Performance (Major Cities across China, 2010)

Strong Performance Across Major Cities

Average

RevPAR in

US *RMB

450)

27

Demand Segments: 5-Star Hotels in China,

Beijing, Shanghai

CORPORATE

RELATED

DEMAND:

63-64%

FOREIGN

DEMAND:

35-53%

31.0%

20.0%

13.0%

15.0%

15.0%

7.0%

26.3%

24.2%

12.8%

20.8%

10.9%

5.1%

15.6%

33.5%

13.9%

19.5%

9.2%

8.3%

0.0% 10.0% 20.0% 30.0% 40.0%

Domestic Business Traveler &

Government

Foreign Business Traveler

MICE

Foreign Leisure

Domestic Leisure

Other

China Beijing Shanghai

Hotel Demand & Growth Drivers

Sustained Corporate Business Activity and Strong Consumer Incomes to Underpin Growth

Source: China Hotel Industry Study 2010

28

World’s Leading Foreign-Inbound Destination

Source: World Tourism Organization (UNWTO)

International Overnight Tourist Arrivals Top 10 Countries 2009

81.9

59.2

56.0

54.7

43.7

30.7

24.4

23.1

22.2

21.4

84.8

0 20 40 60 80 100

France

Spain

United States

Mainland China

Italy

United Kingdom

Germany

Ukraine

Turkey

Mexico

China incl

. HK & Macao

Millions Arrivals

100M

by 2015

China's Inbound Tourism 2000-2015F

0

20

40

60

80

100

120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2015F

Inb

ou

nd

Ove

rnig

ht

Vis

ito

rs (

mil

lio

ns

)

Overnight Visitors Increase

6.9% * 9.5% *

Hotel Demand & Growth Drivers – In-Bound Tourism to China

29

Inbound,

USD41.6

million,

24.5%

Domestic,

USD128.3

million,

75.5%

China's Domestic Tourism 2000-2015F

(billion person times)

Tourism Recipients by Source Market

(2010)

Exploding Domestic Chinese Travel

Source: China National Tourism Administration (CNTA)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2015F

Do

mesti

c T

ou

rists

(b

illio

n p

ers

on

-tim

es)

Visitor Trips Increase

11.9% * 7.4% *

* Compound Average Annual Growth

Hotel Demand & Growth Drivers – Local Chinese Tourism

30

Retail Sector

Developing the World’s Largest …

Leading Retail Formats World’s Largest Flagship World’s Largest Flagship

The Place Barbie

Louis Vuitton

Nokia

31

Shanghai Retail Supply: Shopping Center

Major Shopping Center New Supply, Absorption, Vacancy

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

0

100

200

300

400

500

600

2004 2005 2006 2007 2008 2009 2010 2011 2012

‘000 s

qm

New supply Net Absorption Vacancy Rate

Source: Colliers International Shanghai (CIS) Research

32

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 2012

Rents of Overall Market Rents of Prime Area Rents of Inner Ring Area Rents of Decentralized Area

Shanghai Retail Financial Performance (Rentals)

Shopping center Ground Floor Rental Trend

RMB per sq. m per day

Source: Colliers International Shanghai (CIS) Research

33

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Retail Financial Performance

Sustained Retail Sales Growth … Huge Shift in Discretionary Spend

Personal Expenditure

12.9% Growth (2012)

3.0

Retail Sales Growth

US

D T

rilli

ons

54

12

7

9

11

4 2

1

0

10

20

30

40

50

60

70

80

90

100%

1990

29

9

11

6

15

5

9

16

2010

Consumer Goods

Health Care

Housing

Clothing

Education

Transport &

Communications

Food

Home Appliances

Source: China National Bureau of Statistics

34 Sources: Urbanization Rates and Population Estimates based on United Nations, World Urbanization Prospects; Income Bands based on MGI Consumer Demand.

300 MM Middle Class Today … 500 MM in 6 Years

Middle Class as % of Urban Population

Urb

an

iza

tio

n P

op

ula

tion (

mill

ion

s)

Urban Household Income

(USD – PPP adjusted)

Global > US$ 107,800

Affluent US$ 53,801- 107,800

Upper Middle US$ 21,501 –

US$ 53,900

Lower Middle US$ 13,500 –

US$ 21,500 Poor < US$ 13,500

531

607

684

756

822

239

255

157

106 73

53 170 355

461 525

35

90

99

0

100

200

300

400

500

600

700

800

900

2005 2010F 2015F 2020F 2025F

531

607

684

756

822

Upper Middle Class

Lower Middle Class

Retail Demand & Growth Drivers

35

Total Urban Household Income

(PPP - Adjusted Income)

Per Capita Annual Income

(USD, PPP-Adjusted)

Heilongjiang

Jilin

Liaoning

Hebei

Beijing

Tianjin

Inner Mongolia

Shandong

Jiangsu

Shanghai

Zhejiang

Fujian

Guangdong Guangxi

Hainan

Hunan Jiangxi

Anhui Hubei

Henan

Guizhou

Yunnan

Sichuan Chongqing

Gansu

Ningxia

Shaanxi

Shanxi

Qinghai

Xinjiang

Tibet

0–17,500

17,500–20,000

20,000–25,000

25,000–30,000

30,000–40,000

>40,000

Retail Demand & Growth Drivers

Source: China National Bureau of Statistics 20010

Wealth Patterns Emerging … Highest in Coastal Regions

36

China’s Economic Future …

Bust or Boom?

37

Fact Today: Healthy Balance Sheets – Banks, Companies, Households

Insulation of Financial System … USD2 trillion Foreign Reserves … Low Inflation

China’s Financial System Healthy, Benefits from Insulation, Abundant Liquidity

China banks cleaned up in 1990s: Non-performing loans in 1997 averaged 40 – 50%; only 6% in 2007.

China’s financial system relatively insulated; imposed capital controls; modest exposure to sub-prime assets.

Forex Reserves Quadrupled in only 4 Years (‘03 – ‘07): US$ 2 trillion

The Central Bank has accumulated over USD2 trillion in foreign reserves.

The accumulation of large external surpluses means financial system enjoys abundant liquidity.

Clean Balance Sheets for Corporates and Households

State Owned Enterprise net profits as share of GDP has grown from (-1%) in 1997 to (+4.3%) in 2007.

Record corporate profit growth over past 5 years (industrial profits rose 38% per annum); liability ratios declined.

Urban incomes have nearly doubled in past 10 years.

CPI Inflation Low, has Fallen to 4%

Food price increases fading out, raw commodity prices continue to drop, as well as price of oil.

Source: Deutsche Bank; Standard Chartered; UBS; IMF; Other

38 Source: The World Bank

The FUTURE (2020): World Bank Projects China as #1 Economy in World

2009 GDP*

6,4 trillions

de $ 3,6 trillions

de $

$4.1 tr $3.8 tr $9.1 tr $14.2 tr

US China

India

$14.1 tr

Japan Japan

EU-27

France

UK

Germany

2020 GDP*

$30.0 tr $13.4 tr $28.8 tr $6.8 tr $29.6 tr

US

India

China

Japan

EU-27

France

UK

Germany

GDP* PPP-adjusted

GDP* PPP-adjusted

39

Fact Today: World’s Fastest Growing Major Economy

GDP Growth (% per year)

Source: The World Bank

Growth 2 to 5-times Faster than Major Western Economies for Past 20 Yrs

-6

-4

-2

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

China India US Japan

40

Fact Today: Stimulus Plan Well Structured, Strong Ability to Implement

Monetary Stimulus $586 billion $700 billion

GDP (PPP) $7.8 trillion $14.3 trillion

GDP $4.2 trillion $14.3 trillion

Stimulus/GDP 14% 5.10%

National Debt/GDP 20% 76%

Trade Surplus (Deficit)/GDP 10% -4%

Past Stimulus/GDP 47% (‘90’s) 3% (’81-’91)

China Stimulus Distribution Economic Stimulus - Comparative

Source: National Development and Reform Commission

China Stimulus Roughly Same Size as US … USD586 billion … Authority to Deploy

China has USD2 trillion in Foreign Reserves

4%

25%

9%

5%

9%38%

10%

Housing Rural Developm ent

Infrastructure Healthcare, Education

Environm ent Innovation & Industrial Restructuring

Disaster Reconstruction

4%

25%

9%

5%

9%38%

10%

Housing Rural Developm ent

Infrastructure Healthcare, Education

Environm ent Innovation & Industrial Restructuring

Disaster Reconstruction

4%

10%

38%9%

5%

9%

25%

Hous ing Infras tructure

R ural Development Healthcare, education

E nvironment Innovation & Indus trial R es tructuring

Dis as ter R econs truction

41

Contributions to GDP (percent of GDP PPP)

Fact Today: Focus on Consumption as % of GDP

Shifting to Service/Consumption Economy … Major Growth Potential

Source: IMF, DESTATIS CIA World Fact book

$7.8 tr $2.8 tr $14.3 tr

10%

37%

39%

6%

56%

19%

18%

-4%

71%

19%

14% Government

Consumption

Investment

Private

Consumption

Net Trade

GDP (PPP)

China Germany United States

14%

42

Fact Today: Exports Dependency Less than Neighbors

Reports on China’s Exports & Impact on Economy -- Often Significantly Overstate Dependence on Exports

Degree of China’s Export-Dependency and in Driving GDP Less than that Often Reported

The degree to which a slow-down in trade might impact GDP seems to result in frequent overstatements of

China’s export dependency.

China’s dependency on exports is much less than its neighbors, Singapore and Korea, and roughly equal to that

of Japan.

The overstatements of China’s export dependency might be rooted in a focus on China’s gross exports

(approximately 40% of GDP); which is actually not used in calculating the export-portion of GDP.

The export-portion of GDP is actually calculated based on the sum of value-add exports (only approximately 18%

of GDP)

Implications of Slow-Down in Exports

Slow down in trade does result in a decrease in GDP relative to previous years.

In last four years a very steep jump in China’s trade position added a bonus of as much as 3% on top of China’s

GDP growth, resulting in the extremely high GDP growth figures of 10 to 12%

In absence of that steep jump in China’s trade position, the 3% bonus on previous GDP growth would disappear.

Estimates on job losses from the economic slowdown in trade sector could result in a loss of anywhere between

5 and 10 MM people – mostly migrant workers from the rural countryside – and thus has little impact on internal

urban economy.

Urbanization impact. Moderate impacted on urbanization due to return of migrant workers from the trade sector

and related construction sector.

Source: Deutsche Bank; Standard Chartered; UBS; IMF; other

43

SUMMARY: What are Developers looking for through Global Crisis?

Economic Robustness, Growth … Strong Institutions … Strong Stimulus … Strong Fundamentals

Economic Size and Growth Potential

Strong Institutional, Banking, Financial Stability, Access to Capital

Stimulus – Impact on Construction, Infrastructure, Urban/Rural Development

Strong Underlying Fundamentals and Drivers across Classes

Office – Corporate Investment/Expansion – Production, Distribution, R&D

Hotel – Corporate, MICE, Leisure (foreign/domestic)

Retail – Urban/Rural Income Growth, Expenditures

44 Copyright © 2013 Exolus. All rights reserved..

For a Comparative Perspective with the other BRIC Countries Please Refer to the Following Research Reports

Found on Slideshare @

http://www.slideshare.net/Exolus/china-2010-2020-v58slideshare

http://www.slideshare.net/Exolus/india-2020-what-india-will-look-like-in-the-future

http://www.slideshare.net/Exolus/brazil-2020-what-will-brazil-look-like-in-the-future

http://www.slideshare.net/Exolus/russia-2020-what-will-russia-look-like-in-the-future

Download Reports @

www.exolus.com/en/knowledge/research.html

India 2020 Brazil 2020 Russia 2020 China 2020

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Global Expansion Strategy & Cross-Border Investment Execution

(Greenfield, M&A, Joint Ventures, Outsourcing)

About Exolus: Exolus is a hybrid management consulting and transaction advisory firm. We work with

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