Hong Kong Residential Market9 March, 2016

Soft landing for home prices

No indicative signs of construction cost going down

Long term demand still beyond supply

Rise of interest rate may further defer

Anticipated 2% of rental growth should help partly counteract an expected

increase of 25-50 basis points of mortgage payment

Shortfall in housing supply Private homes completion (11,280 units) still below absorption rate (16,826

units) Supply starts picking up but still below historical average

Source: Rating and valuation Department, Colliers

Sales volume set to remain slow Weaken market sentiment Widen expectation gap between buyers and sellers Resulted in lower transaction volume

Source: Land Registry

Record-low in Feb 2016:1,807 units

The turning point

Source: Rating and valuation Department, Colliers

2016

Mass -10%

Luxury -15%

Down-cycle in 2016 (1) Potential US interest rate rise (2) New supply on the rise

As of Jan 2016(since peak in Sep):Mass

8.9%Luxury 4.6%

Residential market remains optimistic

Land sale shows strong interest of mainland developers

Medium to long term still positive

Lowest sales volume in 25 years, only 1,800 transactions in Feb

compared to long term average of 7,600

Are we at the bottom?

Mass market continues to be soft, so far drop by 4% YTD

2nd hand luxury market still 15-20% price gap

Too early to relax cooling measures

Q & A