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  • Platinum Broking IMPORTANT DISCLOSURES ARE PROVIDED ON THE LAST PAGE OF THIS REPORT

    Hainan Property Guide 27 May 2013

    Sources: Hainan provincial government website

  • Hainan Property GuideLIMI May 2013

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    Table of Contents

    PART A CITY PROFILE ............................................................ 3 PART B MARKET SEGMENTS ................................................... 7 PART C DEVELOPERS IN HAINAN ........................................ 12 Appendix 1 RECENT POLICIES ..................................................................... 13 Appendix 2 MAP OF FUNCTION GROUPS ...................................................... 15Appendix 3 TRANSPORTATION OVERVIEW ................................................. 16 Appendix 4 OTHER ECONOMIC AND SOCIAL ISSUES ................................... 17

  • Hainan Property GuideLIMI May 2013

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    PART A CITY PROFILE

    1. Overview Hainan. Hainan Province, including the Island of Hainan, the Islands of Sansha and South China Sea, is located at Chinas southernmost point. Under its administration, there are three municipalities (Haikou, Sanya and Sansha), six county-level cities, four counties and six minority autonomous counties. The Island of Hainan is separated from mainland China by the Qiongzhou Strait. To the west lies Vietnam, and to the south it faces Indonesia and the Philippines. The Island of Hainan has an area of 33,900 sq km and accounts for 95.8% of the total land area of Hainan Province. Demographics. Prior to 1988, the Island of Hainan was a part of Guangdong Province due to its geographical proximity. The island was separated from Guangdong Province and became Hainan Province in 1988 to spur economic development. At the end of 2011, Hainans population was about 9.1 million, accounting for 0.7% of national total population of 1.4 billion. Haikou, the capital city of Hainan, has a population of 2.0 million and the highest population density in Hainan of 888 people per sq km, far exceeding the average figure of 253 in Hainan Province. Sanya, a popular tourist destination, has a population density of 358. The population of Sanya has grown at an average annual rate of 3.58% since 2000, 0.48 ppts higher than that of Haikou and the highest in Hainan Province. This level of growth is expected to be maintained in the coming years as Sanyas comprehensive tourism infrustructure continues to support sector growth, leading to an increase in employment opportunities. Among other cities, Danzhou (Hainans second most populated city as of 2010) and Dongfang saw their populations grow at an annual rate of 1.1% and 1.3% respectively from 2000 to 2010. Exhibit 1: Hainans population distribution and population density (2010)

    Administration Districts

    Population (unit '000)

    Land area (sq km)

    Population Density (person/sq km)

    Total 8,672 34,211 253Haikou 2,046 2,305 888Sanya 685 1,915 358Lingao 428 1,317 325

    Wanning 546 1,884 290Danzhou 932 3,265 286Qionghai 483 1,693 285Lingshui 320 1,128 284Ding'an 285 1,187 240

    Chengmai 467 2,045 228Wenchang 537 2,485 216Tunchang 257 1,232 209Dongfang 408 2,256 181Ledong 459 2,763 166

    Changjiang 224 1,610 139Baoting 147 1,161 126

    Wuzhishan 104 1,129 92Baisha 168 2,117 79

    Qiongzhong 174 2,706 64Sansha Islands 0.44 13 34

    Source: 2010 Census

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    Geographics. Hainan province is the only tropical province in China. The Island of Hainan is the main island of the province and is on a similar latitude to Hawaii. Temperatures range from 17-29C during the year because of the tropical monsoon climate, and the coast line spans 1,528 km. The combination of climate and ocean views makes the island an ideal place for tourism. The central part of the island is rather mountainous with 81 mountain peaks above 1,000m in altitude. The island has five national nature reserve areas and over 20 provincial reserve areas. Exhibit 2: Geographical location of Hainan

    Source: Google Maps 2. Economic overview GDP. As of 2012, the GDP of Hainan Province was RMB285.5 billion, lower than the national average, while GDP per capita was RMB32,374 representing approximately one-third of the GDP per capita in Shenzhen and Shanghai. Tourism, hospitality, retail, transportation, telecommunication and logistics are the mainstays of Hainans economy, with the tertiary industry accountingfor 47% of GDP in 2012. In 2011, the detailed 12th Five-Year Plan for Hainan stated average annual GDP growth from 2011 to 2015 to be around 13%, with local fical revenue growing over 20% each year, fixed asset investment (FAI) growing at 23% while consumer prices remained stable. In 2011 and 2012, Hainan recorded GDP growth of 12% and 9%; FAI grew 39% and 36% respectively; and consumer price index rose 6.1% and 3.2% respectively, 0.7 ppts and 0.6 ppts higher than the national figure respectively. Hainan has a flourishing agricultural industry, accounting for nearly a quarter of its GDP. Because of Hainans warm climate, the island has over 120 types of fruits, over 4,000 tropical plant species, over 2,500 different herbs and over 800 types of trees suitable for commercial use. Crops with wide plantation area and the highest economic value are rubber, coconut, oil palm, pepper, lemongrass and cocoa.

    Exhibit 3: Hainan statistics at a glance (2012) Pop GDP GDP per capita(m) (RMBb) (RMB) (RMBb) (% of GDP) (RMBb) (% of GDP) (RMBb) (% of GDP)

    Hainan 8.9 285.5 32,374.0 71.1 24.9% 80.4 28.1% 134.0 46.9%Shenzhen 13.2 1,295.0 98,255.7 0.0 0.0% 573.7 44.3% 721.3 55.7%Shanghai 23.8 2,010.1 84,459.4 12.8 0.6% 791.3 39.4% 1,206.1 60.0%National 1,354.0 51,932.2 38,354.0 5,237.7 10.1% 23,531.9 45.3% 23,162.6 44.6%

    Tertiary IndustryCity Primary Industry Secondary Industry

    Source: National Bureau of Statistics

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    Exhibit 4: Hainan and national GDP growth Exhibit 5: Hainan and national CPI

    Source: National Bureau of Statistics, Wind Disposable income of urban households. Per capita disposable income for Hainan has been lower than the national average for the past 5 years, but a higher YoY growth rate has been observed since 2010. As a result, the disposable income gap between urban households in Hainan and first tier cities has narrowed. Exhibit 6: Per capita disposable income for urban households

    RMB YoY Growth RMB YoY Growth RMB YoY GrowthHainan 12,497.0 9.1% 15,581.0 24.7% 18,368.0 17.9%

    Shenzhen 29,244.5 9.4% 32,380.9 10.7% 36,505.0 12.7%Shanghai 28,838.0 8.1% 31,838.0 10.4% 36,230.0 13.8%National 17,174.7 8.8% 19,109.4 11.3% 21,809.8 14.1%

    City 201120102009

    Source: National Bureau of Statistics Macro monetary environment. The overall macro monetary environment appears moderately loose as Chinas recovery remains fragile. In 1Q of 2013, China recorded quarterly GDP growth of 7.7%, 0.2% lower QoQ and below market expectation. As the inflation rate dropped to 2.1% in March, well under the the 3.5% target, we believe monetary policy in the near term will focus on driving consumption growth. We believe the overall credit environment will remain loose, and the property market is expected to benefit from the abundant liquidity in the market. 3. Hainans strategic position 3.1 International tourism island and shopping centre. In accordance with the State Developments Opinion Regarding the Developing Hainan into an Inernational Tourism Island 2010 (The Plan), the Island of Hainan is being positioned to become an international tourism hotspot by 2020, due to its pleasant climate and natural scenery. The Plan focuses on building an internationally popular travel destination through accelerated progress of Hainans tourism sector and the overall service industry. At the same time, the Plan called for environmental protection and preservation, as well as balanced growth during the process. Building on tourism infrastructure. According to The Plan, by 2020, the Island of Hainan is to have a sophisticated modern service industry; an upgrated international reputation as a desirable travel destination; complete infrustructure for fast and convenient travel between attractions and cities; further opening up of the tourism sector including visa exemption and free flow of capital and resources; optimised attractions with diversity and quality; introduction of tourism management and modernised sales and marketing from corporations with internationally well-known hotel management groups and travel agencies.

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