China Retail Property Chart Book Research Analysts INDUSTRY PRIMER

Home , Beijing Department Store, Deji Plaza, Forum 66, Global Harbor (Shanghai), K11 (Shanghai), Line 3 (Shanghai Metro)

26 November 2012 Asia Pacific/China Equity Research Real Estate / Consumer Discretionary

Kevin Yin 852 2101 7655 [email protected] Analysis of major cities and their submarkets Jinsong Du 852 2101 6589 Figure 1: Major cities’ relative attractiveness for retail properties [email protected] Vivian Zhao 852 2101 7472 [email protected]

Wenhan Chen 852 2101 6407 [email protected]

Duo Chen 852 2101 7350 [email protected] Contribution by Parker Ding

Source: Credit Suisse estimates Credit Suisse APAC Property Team

Jinsong Du (Regional head and China) Credit Suisse China Property and China Consumer research teams are jointly publishing a report on China’s retail property market. This chart book is the Stephen Rich (Australia) accompanying material for that report, with detailed analysis of 13 major cities, Cusson Leung (Hong Kong) and the submarkets in each cities, as well as case studies on shopping malls Teddy Oetomo (Indonesia) and department stores in those submarkets. Minseok Sinn (Korea) ■ Huge difference between cities. Our analysis shows that supply / demand, Tingmin Tan (Malaysia) vacancy rate and rental changes are very different among cities. Based on Yvonne Voon (Singapore) our analysis, we believe that Shenyang, Zhengzhou, Wuhan and Shanghai are in a severe oversupply situation, while Guangzhou, Wuxi, Nanjing and Chung Hsu (Taiwan) Hangzhou are in much better shape. The situation in Beijing, Chongqing, Chai Techakumpuch (Thailand) Chengdu, Qingdao and Xi’an is somewhere in the middle.

■ Submarkets within each city are also very different: The attractiveness of location and upcoming retail space pipeline are also very different among submarkets within each city. Our analysis on submarkets, together with case studies for some submarkets, show that the investment return of shopping malls and department stores may vary significantly, depending on which submarkets they are in. ■ Stock implications in a separate report. In our China Shopping Mall sector report published on 21 November 2012, we have detailed the stock implications from our analysis. Click here for the China Shopping Mall Sector Report—All malls are not created equal.

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26 November 2012 Ranking the major cities We rank 13 major cities’ attractiveness to shopping mall operators by looking at the We rank 13 major cities’ following aspects: attractiveness to shopping mall operators by looking at (1) Demand potential: The current and future income level and retail sales in each city; demand potential, supply (2) Supply situation: The existing total GFA of main retail space (shopping malls and situation and health of department stores) and pipeline in each city; operators (3) Health of operators: The malls’ average vacancy rate, market rent and rental growth in each city, and the resulting average payback period for the investment. Based on the following analysis, our conclusion is that Shenyang, Zhengzhou, Wuhan and Shanghai are in a severe oversupply situation, while Guangzhou, Wuxi, Nanjing and Hangzhou are in much better shape. The situation in Beijing, Chongqing, Chengdu, Qingdao and Xi’an is somewhere in the middle.

Figure 2: City ranking

Source: Credit Suisse estimates The main factor for our city attractiveness ranking is the supply/demand dynamics, measured by the retail sales per sq m of retail space and disposable income per sq m of retail space in each city.

Figure 3: City ranking on retail sales of consumer goods / Figure 4: City ranking on retail sales of consumer goods / total retail space (2Q12) total retail space (2015E) (Rmb/sqm) (Rmb/sqm) 400,000 300,000 350,000 250,000 300,000 oversupply oversupply 200,000 250,000

200,000 150,000

150,000 100,000 100,000 50,000 50,000

- -

Source: CEIC, Jones Lang LaSalle, Credit Suisse estimates Note: 2015E retail sales of consumer goods data is based on each city’s 12th Five-Year Plan. Source: CEIC, Jones Lang LaSalle, government websites. Credit Suisse estimates

China Retail Property Chart Book 2 26 November 2012

Figure 5: City ranking on disposable income / total retail Figure 6: City ranking on disposable income / total retail space (2Q12) space (2015E) (Rmb/sqm) (Rmb/sqm) 450,000 250,000 400,000 oversupply oversupply 350,000 200,000 300,000 150,000 250,000 200,000 100,000 150,000

100,000 50,000 50,000 - -

Source: CEIC, Jones Lang LaSalle, Credit Suisse estimates Note: 2015E disposable income data is based on each city’s 12th Five- Year Plan. Source: CEIC, Jones Lang LaSalle, government websites. Credit Suisse estimates We also use the current city average rent, land cost and construction cost for retail space to calculate the expected payback period for a typical greenfield mall project in each city. The city ranking based on payback period is largely the same as the ranking on supply/demand. We also rank the cities using the current shopping mall vacancy rate, which also results in similar rankings.

Figure 7: Payback period (after mall opening) based on Figure 8: Vacancy rate also shows some cities’ retail current average local cost shows significant difference markets are very healthy while others are at severe risks between cities (Years) Payback period Average 30% Vacancy rate 16 14.4 24.3% 25% 14 20.7% 12 20% oversupply 9.7 9.9 10 9.4 15% 8 7.3 12.6% 12.7% 6.0 6.2 10.9% 5.3 5.6 6 4.7 10% 3.8 3.9 6.8% 4 2.7 4.5% 5.0% 5.2% 5% 3.3% 2 2.3% 1.0% 1.5% 0 0%

Source: Credit Suisse estimates, company data, Jones Lang LaSalle, Source: Jones Lang LaSalle Soufun

China Retail Property Chart Book 3 26 November 2012 Beijing As of end 2011, Beijing’s permanent population was 20 mn and disposable income per capita was Rmb32,900 per year, which was slightly behind Shanghai’s Rmb36,200 per year, Guangzhou’s Rmb34,400 per year, and Shenzhen’s Rmb36,500 per year. Despite its relatively low disposable income, Beijing’s GDP growth has remained at a relatively stable level, thanks to the accelerated growth in consumption spending. Specifically, consumption contributed close to 58% of total GDP in Beijing during the first half of 2012. This compares to the 47.5% contribution a year ago and in the backdrop of a 7.2% increase in overall GDP growth, representing potentially the start of a strong shift in the composition of local economy. A strong emergence of new CBDs is a key feature in the Beijing market, compared to other tier-1 cities. Such CBDs include the Third Embassy area, Zhongguancun submarkets, etc. Supply and demand Beijing’s shopping mall supply accelerated since 2004. Shopping mall supply as of 3Q12 totalled 4.45 mn sq m, 7.8 times of 2003 supply of 0.57 mn sq m. By the end of 3Q12, shopping malls took 70% of total retail space supply.

Figure 9: Retail sales of consumer goods Figure 10: Urban disposable income per capita (Rmb bn) Beijing retail sales of consumer goods (Rmb per person) Beijing urban disposable Income per capita 800 Beijing retail sales of consumer goods YoY (RHS) 25% 35,000 Beijing urban disposable Income per capita YoY (RHS) 14%

700 30,000 12% 20% 600 25,000 10% 500 15% 20,000 8% 400 15,000 6% 300 10% 10,000 4% 200 5% 100 5,000 2%

- 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 11: Total supply (mn sqm) Beijing shopping mall supply Beijing department store supply 7.0 Beijing shopping mall supply / Total retail space supply 100% 90% 6.0 80% 5.0 70% 60% 4.0 50% 3.0 40%

2.0 30% 20% 1.0 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 3Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 4 26 November 2012

Figure 12: Retail sales of consumer goods / retail space Figure 13: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Beijing’s vacancy rate is 12.7% by the end of 3Q12. According to Jones Lang LaSalle’s local analyst, the vacancy rate of Beijing’s core submarkets (within 4th ring) is around 8%, and the vacancy rate for suburban submarkets (Daxing, Shijingshan, Changping, Tongzhou, and Fengtai) is around 15% on an average. If new supply comes into the market with low uptake, the vacancy of the whole market will be pushed up. This happened in 3Q11, 1Q12, 2Q12 and 3Q12. In 3Q11, Shine City (分钟寺新业广场) and CR Land Living Mall (华润五彩城) opened at around 20% vacancy rate. In 1Q12, Capita Crystal (凯德晶品购物中心) opened at around 50% vacancy rate. In 2Q12, INDIGO (颐堤港) opened at around 50% vacancy rate. In 3Q12, Seasons Place Phase II (金融街购物中心二期) and Gemdale Plaza (金地广场) opened at around 40% vacancy rate. These high-vacancy projects pushed up the market vacancy in the corresponding periods.

Figure 14: Shopping mall total supply and vacancy Figure 15:Shopping mall new supply/ absorption/ vacancy (mn sqm) Beijing total SM supply Beijing vacancy rate (RHS) (sqm) Beijing net new SM supply Beijing net new SM absorption 5.0 18% 350,000 Beijing vacancy 21% 4.5 16% 300,000 18% 4.0 14% 250,000 15% 3.5 12% 12% 3.0 200,000 10% 9% 2.5 150,000 8% 2.0 6% 100,000 6% 1.5 3% 50,000 1.0 4% 0% 0.5 2% - -3%

- 0% (50,000) -6%

1Q09 3Q12 2Q08 3Q08 4Q08 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (100,000) -9% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 16: Key projects opened at high vacancy rate Retail Open Current Project District Completion Format GFA vacancy vacancy Shine City 分钟寺新业广场 Fengtai 3Q11 SM 50,000 20% 0% CR Land Living Mall 华润五彩城 Haidian 3Q11 SM 200,000 20% 0% CapitaMall Crystal 凯德晶品购物中心 Haidian 1Q12 SM 75,000 19%* 19%* INDIGO 颐堤港 Chaoyang 2Q12 SM 86,000 50% 50% Seasons Place Phase II 金融街购物中心二期 Xicheng 3Q12 SM 16,000 40% 40% Gemdale Plaza 金地广场 Chaoyang 3Q12 SM 29,000 40% 40% Note: * reflects the pre-commitment numbers at opening. Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates)

China Retail Property Chart Book 5 26 November 2012

Pipeline and rental Beijing’s retail space pipeline totals 4.6 mn sq m, 59% of current total supply of 7.8 mn sq m. 54% of the pipeline is in suburban areas, causing high oversupply pressure in future. However, we do not consider this as a serious problem for the market, as: (1) oversupply in suburban areas is mainly caused by a small population, although the suburban population is growing very fast. (2) Many shopping malls’ opening may be postponed until the surrounding neighbourhood gets mature or downgraded to low-end stores or strata- title sold by developers, which will all help to bring relief to the oversupply burden.

Figure 17: Pipeline—breakdown by year Figure 18: Pipeline—breakdown by submarket - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 (mn sqm) (mn sqm) Before 2011 Wangfujing Xidan 2011 West Chang'an Avenue CBD 2012E Zhongguancun Third Embassy 2013E E2R

2014E E5R Surburban 2015 forward Others Beijing pipeline - DS and others Beijing pipeline - SM Beijing retail space existing stock Beijing retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Actual completions in 2009/10/11 were at 23%/88%/23% of planned areas, respectively.

Figure 19: Planned and actual retail space completion Figure 20: Ground floor rental trend (sqm) Beijing planned completion Beijing actual completion (1Q2005=100) Beijing effective prime rent 1,800,000 200 1,600,000 180

1,400,000 160 140 1,200,000 120 1,000,000 100 88% 800,000 80

600,000 60 23% 40 400,000 41% 20 200,000 -

3Q06 1Q11 3Q05 1Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 3Q11 1Q12 3Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Rentals dropped during 3Q08–2Q09. We believe this is because the high-end retailers were more hurt during the financial crisis, so the desire to open new stores was low. Therefore, rentals were lowered down for the brand new malls or for the renewed contracts of existing malls.

China Retail Property Chart Book 6 26 November 2012

Figure 21: Forecast completion versus actual completion (need to check with Jones Lang LaSalle why not match) Planned completion GFA (sqm) Actual completion GFA (sqm) 2009 Chang'an mall 250,000 Landgent Centre 26,600 Glory mall 130,000 U-town Lifestyle Centre 110,000 Sanlitun SOHO 130,000 Raffles City 40,000 U-town Phase I 110,000 Glory Mall 100,000 One Mall 110,000 Qianmen Street 56,491 Wangjing One City 107,945 EC Mall 52,471 Donghua International Center 100,000 Wangfujing international shopping center 80,000 Qian Men I 80,000 Qian Men II 80,000 The Village (North) 74,000 Qian Men III 60,000 China World Trade Centre Phase 3 57,000 Parkview Green 56,000 North Star Green Garden 41,496 Raffles City 40,000 Fortune Mall 40,000 Guanghualu SOHO 38,000 Wangfujing Yuyuan Apartment 35,002 T.T. Centre 26,000 Legend Centre 10,480 World Financial Center 6,000 Legendale Palace Hotel 3,953 The CBD Corridor 3,000 Total 1,668,876 Total 385,562 2010 Le Mall 290,000 One Mall 110,000 The Village (North) 74,000 Cuiwei Plaza 37,600 Ping'an IFC 30,900 Chaoyang Joy City 230,000 Paseo Mall 45,632 Cuiwei Jiamao Shopping Mall 34,000 Macao Center 50,000 Fortune Mall 40,000 Cuiwei Jiamao Shopping Mall 34,000 City Mall 30,900 Cuiwei Plaza 37,600 The Village (North) 74,000 China World Trade Center Phase 3 57,000 Zhongkun Plaza 210,000 Fortune Mall 40,000 Chaoyang Joy City 42,000 Hualian Wanliu Shopping Mall 110,000 Parkview Green 56,000 Total 867,132 Total 766,500 2011 China World Shopping Mall, Ph3 57,000 China World Shopping Mall, Ph3 57,000 Macao Center 50,000 Galleria 35,000 Wangfu International Shopping Centre 38,000 Gongsan Plaza 50,000 Parkview Green 56,000 Care City Shopping Center 94,100 Le Mall 290,000 Guoson Centre 88,865 Total 579,865 Total 236,100 Source: Jones Lang LaSalle, Credit Suisse Research Submarket analysis There are seven major submarkets in Beijing: CBD, Third Embassy Area, W. Chang’an Ave., Wangfujing, Xidan, East 2nd Ring Road, and Zhongguancun. Details are summarised as below:

China Retail Property Chart Book 7 26 November 2012

Figure 22: Beijing submarket summary Retail Submarket Emergence Year GFA (000 sqm) Major developers and operators, existing and future CBD 1999 550 Yintai Property Group Third Embassy Area 2008 500 The Swire Group, Ping An W. Chang’an Ave. 2008 595 Wanda, CapitaLand Wangfujing 2000 565 Sun Hung Kai Properties Xidan 2007 300 COFCO, Financial Street Holding Co Ltd East 2nd Ring Road 1996 490 CapitaLand, Beijing Zhaotai Real Zhongguancun 2004 1,150 Beijing Hualian Group, New Yansha Holding Source: Jones Lang LaSalle, Credit Suisse Research

Figure 23: Beijing submarket

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1 – Third Embassy Currently, there are three department stores with total retail GFA of around 162,000 sq m and five shopping malls with total retail GFA of around 361,900 sq m in the Third Embassy submarket. The significance of Third Embassy as a new emerging CBD was frozen in 2008 with the completion of a landmark project Solana (蓝色港湾国际商城), which measured total construction GFA of 150,000 sq m. The Third Embassy area is unique in its rich multi-cultural and multinational environment, because it is in the centre of the embassy area. The residential projects in this area are positioned in the mid-towards high end, catering to multinational corporations. Going forward, it is expected there will be around 134,140 sq m new shopping mall area to be completed in this area through 2014, i.e., 26% of existing retail space. The future pipeline GFA is roughly split equal between three major projects, Sunny Region, Yongli Mall, and Tongying Centre.

China Retail Property Chart Book 8 26 November 2012

Figure 24: Third Embassy submarket Retail GFA Label Type Project Project Completion (sqm) Operator A DS Lufthansa Center 燕莎友谊商城 1992 42,000 Parkson Group B DS Pacific Department Store (PCP Store) 太平洋百货(盈科店) 2001 70,000 Pacific DS Co. Ltd C SM Solana 蓝色港湾国际商城 2008 150,000 Beijing Blue Harbor Properties Co D SM The Village (South) 三里屯南区 2008 72,000 Swire E SM City Mall 都汇天地 2010 30,900 Ping An of China F SM The Village (North) 三里屯(北区) 2010 74,000 Swire G SM Galleria 凤凰汇 2011 35,000 China Resource H DS Gongsan Plaza 世茂工三 2011 50,000 Shimao I SM Sunny Region 四季中心 2013 40,000 Changqing Co. Ltd SM Yongli Mall 屯三里 2013 50,000 Jingmao Real Estate Co.Ltd SM Tongying Centre 北京通盈中心 2014 44,140 Source: Jones Lang LaSalle, Credit Suisse estimates

Figure 25: The Third Embassy submarket

Source: Google map, Credit Suisse estimates

China Retail Property Chart Book 9 26 November 2012

Figure 26: Third Embassy submarket

(mn sqm) Third Embassy submarket pipeline - DS and others Third Embassy submarket pipeline - SM 0.50

0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Submarket study 2 - Xidan Currently, there are eight department stores with total retail GFA of around 325,000 sq m and three shopping malls with a total retail GFA of around 23,426 sqm in the Xidan submarket. Xidan is a traditional retail submarket in Beijing, and before 2007, most of its retail venues looked like old style department stores. In 2007, this submarket experienced a surge by the completion of Seasons Place (金融街购物中心) adding GFA 89,000 sq m, followed by an even bigger project Xidan Joy City, which was positioned for the youth. Both projects were shopping malls which were new to this submarket. Like any mature submarket, there will be limited additional supply in Xidan. It is expected there will be one new shopping mall, Maxon Center, with a total of around 47,347 sq m retail space to be completed by 2013, and one department store, Xidan Ginza at GFA 36,000 sq m to be added during the same year.

Figure 27: Xidan submarket Retail GFA Label Type Project Project Completion (sqm) Operator A DS Xidan Department Store 西单商场 1970 65,000 B DS Xidan Shopping Centre 西单购物中心 1991 37,000 Blue Island Co. Ltd C DS Parkson (Fuxingmen) 百盛购物中心 1994 30,000 Parkson Group D DS Xidan International Mansion 西单国际大厦 1996 20,000 Xidan Int'l Mansion Development Co. Ltd C DS Parkson (phase 2) 百盛购物中心二期 1998 20,000 Parkson Group E DS Zhongyou Department Store 中友百货商场 1999 70,000 Zhongyou DS Co. Ltd F SM Capital Times Square 首都时代广场 2000 33,426 Wharf Group G DS Grand Pacific Department Store 君太太平洋百货 2003 63,000 Grand Pacific Co. Ltd H SM Seasons Place 金融街购物中心 2007 89,000 Finance Street Holding Co. Ltd I SM Xidan Joy City 西单大悦城 2008 115,000 Jing Yuan Real Estate Co. D DS Xidan International Mansion 西单国际大厦 2008 20,000 Xidan Int'l Mansion Co. Ltd H SM Seasons Place Phase II 金融街购物中心二期 2012 12,000 Finance Street Holding Co. Ltd J DS Xidan Ginza 西单银座中心 2013 36,000 Haoyang Real Estate SM Maxon Center 美晟国际广场 2013 47,347 Finance Street Holding Co. Ltd Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 10 26 November 2012

Figure 28: Xidan submarket

Source: Google map, Credit Suisse

Figure 29: Xidan submarket (mn sqm) Xidan submarket pipeline - DS and others Xidan submarket pipeline - SM 0.60

0.50

0.40

0.30

0.20

0.10

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Case Study: Parkson Xidan Fuxingmen store (3368.HK) Xidan Fuxingmen store is Parkson’s flagship and first store in mainland China. The store was founded in 1994, with total GFA of 30,000 sq m. Location advantage was one core feature of this Parkson flagship. It targets mid-to-high end consumers. This well-perceived positioning not only helped to set the tone of this store itself, but also later on paved way for brand synergy with the other two Parkson stores that opened in Beijing: the Parkson Beijing Metrocity store (opened in 2007) and Parkson Sun Place store (opened in 2010). Parkson Xidan Fuxingmen store also spearheads the current e-commerce initiative of the Parkson Group. Parkson’s e-commerce strategy differentiates from other players in that it focuses on tying the physical stores with the web channel, so the web portal serves as an additional communication channel and transaction platform for the store. With the rapid expansion of the Parkson network of stores, Parkson’s flagship in Beijing currently accounts for less than 20% of the group’s total gross sales proceeds. But this store has maintained its crown jewel status via several rounds of renovations and improvements. It went through a phase II expansion in 1998, adding another 20,000 sq m

China Retail Property Chart Book 11 26 November 2012

GFA. In 2012, it started a major renovation, with its first stage due to complete and second stage to last into 2013. After the rejuvenation, the store is expected to experience a jump in productivity and contribute to the group’s performance.

Figure 30: Parkson Xidan Fuxingmen store Figure 31: Parkson Xidan Fuxingmen store

Source: Company website Source: Company website.

China Retail Property Chart Book 12 26 November 2012 Shanghai Shanghai is one of the four Tier 1 cities and also considered one of the financial and commercial centres of China. The State Council designated it to be developed into a global financial centre. Shanghai’s total permanent population was 24 mn and total GDP of Rmb1,920 bn in 2011. It has strong consumption power: disposable income is Rmb36,230 per person, and total retail sale of consumer goods reached Rmb681 bn in 2011. As one of the most developed cities of China, Shanghai is the first choice of many international brands entering China. Supply and demand Shanghai’s shopping mall supply accelerated since 2002. Shopping mall supply as of 3Q12 totalled 5.87 mn sq m, 6.5 times of 2001 supply of 0.90 mn sq m. By the end of 3Q12, shopping mall took 80% of total retail space supply.

Figure 32: Retail sales of consumer goods Figure 33: Urban disposable income per capita (Rmb bn) Shanghai retail sales of consumer goods (Rmb per person) Shanghai urban disposable Income per capita 800 Shanghai retail sales of consumer goods YoY (RHS) 20% 40,000 Shanghai urban disposable Income per capita YoY (RHS) 16%

700 18% 35,000 14% 16% 600 30,000 12% 14% 500 12% 25,000 10% 400 10% 20,000 8% 8% 300 15,000 6% 6% 200 10,000 4% 4% 100 2% 5,000 2% - 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 34: Total supply (mn sqm) Shanghai shopping mall supply Shanghai department store supply 8.0 Shanghai shopping mall supply / Total retail space supply 100%

7.0 90% 80% 6.0 70% 5.0 60% 4.0 50%

3.0 40% 30% 2.0 20% 1.0 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 3Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 13 26 November 2012

Figure 35: Retail sales of consumer goods / retail space Figure 36: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Shanghai’s vacancy rate is very low—new malls usually open at less than 10% vacancy rate. The vacancy as of 4Q11 was only 3.8%. Since 1Q12, the vacancy has dragged up slightly by SML Mall, whose 1Q12 vacancy was 24%.

Figure 37: Shopping mall total supply and vacancy Figure 38:Shopping mall new supply/ absorption/ vacancy (mn sqm) Shanghai total SM supply Shanghai vacancy rate (RHS) (sqm) Shanghai net new SM supply Shanghai net new SM absorption 7.0 8% 400,000 Shanghai SM vacancy 10%

6.0 7% 300,000 8% 6% 5.0 6% 5% 200,000 4.0 4% 4% 3.0 100,000 3% 2% 2.0 2% - 0% 1.0 1% (100,000) -2%

- 0%

2Q08 4Q09 2Q11 3Q08 4Q08 1Q09 2Q09 3Q09 1Q10 2Q10 3Q10 4Q10 1Q11 3Q11 4Q11 1Q12 2Q12 3Q12 1Q08 (200,000) -4% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 39: Key projects opened at high vacancy rate Project Submarket District Completion Format Retail GFA Open vacancy Current vacancy SML Mall 日月光中心广场 Huaihai Road Luwan 3Q10 SM 148,502 24% 7% Note: SML Mall was opened in 3Q10 but included into Jones Lang LaSalle basket in 1Q12, when the vacancy rate was 24%. Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Pipeline and Rental Shanghai’s pipeline totals 6.09 mn sq m, 86% of current total supply of 7.06 mn sqm. West Nanjing Road has a big pipeline, and the oversupply risk is reasonably low in our view, because: (1) it is a city-level retail cluster with strong demand; (2) the pipeline is spread in almost ten malls in the next four-five years, and some of them are office spaces supporting retail. On the other hand, Putuo district (considered as a decentralised area) may face high oversupply risk in the future, with some huge supply thanks to Yuexiu Global Harbor (GFA= 320,000 sqm).

China Retail Property Chart Book 14 26 November 2012

Figure 40: Pipeline—breakdown by year Figure 41: Pipeline—breakdown by submarket - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 - 0.1 0.2 0.3 0.4 0.5 0.6 0.7 (mn sqm) (mn sqm) The Bund Before 2011 East Nanjing Road Xujiahui 2011 West Nanjing Road Huaihai Road 2012E Hongqiao Shanghai New Commercial City 2013E Little Lujiazui Xintiandi 2014E Zhongshan Park Jing'an Temple 2015 forward Yu Garden Shanghai pipeline - DS and others Shanghai pipeline - SM Shanghai retail space existing stock Shanghai retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Note: only include prime locations. Source: Jones Lang LaSalle, Credit Suisse Research Actual completions in 2009/10/11 were at 9%/68%/30% of the planned area, respectively. Some projects were delayed due to: (1) contractors’ improper planning and poor site management; (2) developers’ inadequate finance and payments for construction; (3) fire permits; (4) leasing difficulties. Some other projects were removed from Jones Lang LaSalle’s coverage as they did not qualify for the new Jones Lang LaSalle retail coverage definition established in 2010.

Figure 42: Planned and actual retail space completion Figure 43: Ground floor rental trend (sqm) Shanghai planned completion Shanghai actual completion (1Q2005=100) Shanghai effective prime rent 500,000 160 450,000 140 400,000 120 350,000 68% 100 300,000 80 250,000 60 200,000 150,000 40 30% 100,000 20 9% 50,000 -

1Q08 3Q10 3Q05 1Q06 3Q06 1Q07 3Q07 3Q08 1Q09 3Q09 1Q10 1Q11 3Q11 1Q12 3Q12 2009 2010 2011 1Q05 Note: only include prime locations. Source: Jones Lang LaSalle, Source: Jones Lang LaSalle, Credit Suisse Research Credit Suisse Research

China Retail Property Chart Book 15 26 November 2012

Figure 44: Forecast completion versus actual completion Planned completion GFA (sqm) Actual completion GFA (sqm) 2009 Tom Lee Building 14,859 Barbie's House 3,500 Park Place 45,669 Zara - Gao Sheng Building 1,500 No1 department store shopping mall 42,000 The Bund Plaza 14,000 Ivy Commercial Building 21,000 Mall 818 20,600 Rock Bund 28,200 Ping'an Insurance building 26,000 Henderson Project - Huangpu 28,000 Shanghai IFC (Phase I) 83,000 Shanghai World Financial Center 10,000 Xintiandi 113 27,100 Jinchang Mall 32,514 Emperor Star City 70,000 Total 428,342 Total 39,600 2010 Shiliupu Harbour Tourism Centre 21,000 Peninsula Hotel 6,500 Shanghai IFC (Phase I) 83,000 Bosideng 7,000 Peninsula Hotel 13,000 Euro Plaza 9,000 Tom Lee Building 14,859 Shimao Shangdu 8,400 Park Place 45,669 SML Mall 148,502 Rock Bund 28,200 Xintiandi Style 29,500 SML Central Plaza 70,000 OPA 7,000 Xintiandi 113 27,100 Shanghai ifc Mall (Ph1) 100,000 Shanghai Agile International Plaza 32,500 Ping'an Insurance building 26,000 SHK Xiangyang market project 75,000 Henderson Project - 155 NJE 28,000 Total 464,328 Total 315,902 2011 Wheelock Square 5,000 Sinan Mansions 20,000 Sinan Mansions 20,000 Henderson Metropolitan 35,450 Park Place 45,669 Parkson - Changning 40,000 Henderson Metropolitan 28,000 Shanghai Agile International Plaza 32,500 Shanghai ifc Mall (Ph2) 10,000 Ping'an Insurance building 10,000 Yifeng House 21,000 Eco City 20,000 Emperor Star City 70,000 Hermes Home 4,000 Rock Bund 50,000 Total 316,169 Total 95,450 Source: Jones Lang LaSalle, Credit Suisse Research Submarket analysis There are five major submarkets in Shanghai: East Nanjing Road, West Nanjing Road, Xujiahui, Huaihai Road, and Lujiazui. Details are summarised as below:

China Retail Property Chart Book 16 26 November 2012

Figure 45: Shanghai submarket summary Retail Emergence DS GFA SM GFA Submarkets Year (000 sqm) (000 sqm) Major Developers and Operators, Existing and Future East Nanjing Road Pre-1995 310 235 Bailian Group, Henderson West Nanjing Road Pre-1995 140 245 Hang Lung, Kerry Group, Hutchison Whampoa, CITIC Xujiahui 1995 165 305 Shanghai Xujiahui Commerce, Bailian Group, Hang Lung Huaihai Road Pre-1995 130 530 Shui On, Hong Kong New World, Huaihai Commercial Group, Bailian Group Lujiazui 2002 110 580 Sun Hung Kai, Chia Tai Group, Lujiazui Group, Bailian Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 46: Shanghai submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1—Nanjing West Road Nanjing West Road is located at the centre of Shanghai and is the high-end retail submarket. It has convenient transportation with access to Metro Lines 2 and 7 and close to city centre transport hub—People Square. Nanjing West Road is one of the most mature submarkets in Shanghai, and is the shopping destination for not only surrounding residents but also the whole city. Currently, there are eight shopping malls with total retail GFA of 245,209 sq m and 13 department stores and others with retail GFA of 197,700 sq m. There are nine shopping malls and one department store planned to be opened before 2017.

China Retail Property Chart Book 17 26 November 2012

Figure 47: Nanjing West Road submarket Retail Lable Type Project Project Completion GFA (sqm) Operator DS Shanghai No.9 DS 第九百货 1952 8,000 Joinbuy Group Other Shanghai Centre 上海商城 1990 6,400 AIG, Shangri-La Asia and others DS Yongle Commercial Building 永乐商厦 1996 11,000 Shanghai Yongle SM China Venturetech Plaza 中创大厦 1996 12,800 Shanghai Jingan Commercial A SM Westgate Mall 梅龙镇广场 1997 68,082 Hutchison Whampoa, Cheung Kong Other Kerry Centre 嘉里中心 1998 4,500 Kerry Properties, Shangri-La Group Other Jingan New Era Tower 静安新时代大厦 2000 4,000 Shanghai People Enterprise Group Other Sunny 993 锦江向阳大厦 2000 6,000 Jinjiang International Holdings B SM CITIC Square 中信泰富广场 2000 34,500 CITIC Group C SM Plaza 66 恒隆广场 2001 53,000 Hang Lung Group SM Ciro's Plaza 仙乐斯广场 2002 24,612 Gaw Capital Partners, Callan (China) SM Concord Plaza Ph1 协和城 1 期 2003 22,100 China Properties Group Limited D DS Golden Eagle DS 上海金鹰国际购物广场 2004 40,000 Golden Eagle Group E DS City Plaza 久光百货 2004 90,000 Lifestyle International Holdings Other Zara Flagship Zara 旗舰店 2006 1,500 N/A Other Huangpu River 湟普汇 2007 5,000 Hong Kong Zhongyi Group Other Marks & Spencer 玛莎百货 2008 3,900 Shanghai Xianghong Department Store SM In Point 四季坊 2008 9,515 CSI Properties F SM Mall 818 818 广场 2009 20,600 ING Other Euro Plaza 通利大厦-Uniqlo 2010 9,000 Shanghai Tong Li Jie Sheng Real Estate G Other Shimao Shangdu 世茂商都 2010 8,400 Shimao Group DS Reel Department Store 芮欧百货 2012 45,669 Cross Ocean(Reel Department Store) H SM Kerry Centre Ph2 "嘉里中心 2 期 2012 73,000 Kerry Properties SM Jing'an Xiaoting 静安小亭 2013 82,750 Henry Group Holdings Limited SM Eco City 1788 国际中心 2013 21,000 Sunpower Development & Construction SM Concord Plaza Ph2 协和广场 2 期北 2013 19,199 China Properties Group Limited I SM Henderson 688 Project 恒基 688 南京西路项目 2014 20,000 Henderson Land Development SM West Nanjing Rd Project 南京西路茂名路 2014 52,000 Jingan Metro Group SM Concord Plaza Ph2 (South) 协和广场 2 期南 2015 20,000 China Properties Group Limited SM Concord Plaza Ph3 协和城 3 期 2016 120,000 China Properties Group Limited SM Dazhongli Project 大中里项目 2016 100,000 HKR International, Swire Source: Jones Lang LaSalle, Credit Suisse Research

Figure 48: Nanjing West Road submarket

Source: Google map, Credit Suisse estimates

China Retail Property Chart Book 18 26 November 2012

Figure 49: Nanjing West Road submarket (mn sqm) West Nanjing Road submarket pipeline - DS and others West Nanjing Road submarket pipeline - SM 0.50

0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Case study - Plaza 66 (Hang Lung – 0101 HK) Hang Lung Plaza 66 is located in Nanjing West Road, was named as one of the "10 Most Famous Commercial Streets in China" according to the China Commercial Walking Street Committee in 2005. Hang Lung acquired the land in December 1993 and the shopping mall was opened in 2Q01 with total GFA of 53,600 sq m. This mall is positioned as a high- end one, and the tenant list includes Who’s Who of the world’s top luxury brands.

Figure 50: Hang Lung Plaza 66 Developer/Operator Hang Lung Group Opening Date 2Q 2001 Total Retail GFA (sqm) 53,600 (B/1-5/F) Number of Car Parking Lots 408 Market Positioning High-end Ground Floor Net Rent (RMB/sqm/day) 65-80 Occupancy Rate (%) 100% Anchor Tenants B1: VERTU, ZENITH, HUBLOT, CHAUMET 1/F: DIOR HOMME, BVLGARI, TOD’S, PRADA, HERMES, LOUIS VUITTON 2/F: HUGO BOSS, GIORGIO ARMANI, FENDI 3/F: DIESEL, DAKS, MAX&CO., I. T 4/F: VERRI, BABY DIOR, KOSTA BODA, WEDGWOOD 5/F: ZEN, Xiaonanguo , Pingchuan Source: Jones Lang LaSalle, Credit Suisse Research

Figure 51: Hang Lung Plaza 66 Figure 52: Hang Lung Plaza 66

Fashion

F&B

Watches &Jewelry

Household

Services

0% 10% 20% 30% 40% 50% 60% 70% Source: Hang Lung Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 19 26 November 2012

Submarket study 2—Hongqiao Road The Hongqiao submarket, located in the western part of Shanghai, is a new city level submarket. Hongqiao submarket has convenient transportation with access to Metro Lines 2, 3 and 10 and is close to the Hongqiao transport hub (Hongqiao airport and Hongqiao railway station). Besides, Hongqiao submarket is connected with the city centre and the suburban submarkets. The convenient transportation and lower commercial costs have attracted lot of international retailers. Currently, there are four shopping malls with a total retail GFA of around 177,600 sq m and three department stores with retail GFA of around 100,000 sqm. Four shopping malls and one department store are planned to be opened before 2015. CR Land MIXc is about 20 minutes’ drive to Hongqiao submarket and 10 minutes ‘drive to Hongqiao transport hub. The MIXc phase 1 is planned to be opened in 2015 with GFA of 240,000 sqm.

Figure 53: Hongqiao Road submarket Lable Type Project 项目 Completion Retail GFA (sqm) Operator DS Friendship Department Store - Hongqiao 友谊商城 1994 20,000 Bailian Group A SM Shanghai City Centre Ph1 虹桥上海城 1 期 2002 84,000 Treasury Holdings B SM Hongqiao Tiandu 虹桥天都 2007 30,000 Shanghai Dingtian Development C DS Huijin Department Store 汇金百货 2008 40,000 Xujiahui Government D SM Metro Plaza 天山商厦 2008 20,000 Shanghai Changning Real Estate E SM Hongxing Plaza 泓鑫时尚广场 2008 43,600 Shanghai Hongxin Co., Ltd DS Parkson - Changning 百盛-长房国际 2011 40,000 Shanghai Changning Real Estate DS Takashimaya 高岛屋百货 2012 61,016 Gubei Group SM L'avenue 尚嘉中心 2012 51,601 LVMH, STDM China A SM Shanghai City Centre Ph3 虹桥上海城 3 期 2013 40,000 Treasury Holdings SM Jin Hongqiao 金虹桥国际中心 2014 82,000 APP, Shanghai Urban Dev. Other SOHO Tianshan Project SOHO 天山路项目 2015 16,991 SOHO China F SM MIXc* 万象城 2015 240,000 CR Land and Shentong Note: MIXc is 20 minutes ‘drive to Hongqiao submarket. Source: Jones Lang LaSalle, Credit Suisse Research Figure 54: Hongqiao Road submarket

Source: Google map, Credit Suisse estimates

China Retail Property Chart Book 20 26 November 2012

Figure 55: Hongqiao Road submarket (mn sqm) Hongqiao submarket pipeline - DS and others Hongqiao submarket pipeline - SM 0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 21 26 November 2012 Guangzhou Guangzhou is the capital of Guangdong Province and is considered to be one of the four Tier 1 cities in China. It has a total residential population of 12.7 mn, and total GDP of Rmb1,230 bn. It has a strong consumption power and disposable income is Rmb34,438 per person; total retail sale of consumer goods reached Rmb524 bn in 2011. Guangzhou’s retail supply/demand situation is one of the best in China, with strong demand and relatively low retail space supply. Therefore, Guangzhou’s vacancy rate is one of the lowest among the 13 cities we study, only 2.3% as of 3Q12. Its rental is also the highest in China, even beating Shanghai, Beijing and Shenzhen. Supply and demand Guangzhou’s shopping mall supply accelerated since 2004. Shopping mall supply as of 3Q12 totalled 1.48 mn sq m, 2.2 times of 2003 supply of 0.67 mn sq m. By the end of 3Q12, shopping mall took 89% of total retail space supply. During 2005-09, very few new supplies came into the market. According to Jones Lang LaSalle’s local analyst, this is because commercial land supply in mature submarkets was very limited and developers did not want to take the risk of entering in the new developing submarkets.

Figure 56: Retail sales of consumer goods Figure 57: Urban disposable income per capita (Rmb bn) Guangzhou retail sales of consumer goods (Rmb per person) Guangzhou urban disposable Income per capita 600 Guangzhou retail sales of consumer goods YoY (RHS) 30% 40,000 Guangzhou urban disposable Income per capita YoY (RHS) 20%

35,000 500 25% 15% 30,000 400 20% 10% 25,000

300 15% 20,000 5%

15,000 200 10% 0% 10,000 100 5% -5% 5,000

- 0% - -10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 58: Total supply (mn sqm) Guangzhou shopping mall supply Guangzhou department store supply 1.8 Guangzhou shopping mall supply / Total retail space supply 100% 1.6 90%

1.4 80% 70% 1.2 60% 1.0 50% 0.8 40% 0.6 30% 0.4 20% 0.2 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 3Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 22 26 November 2012

Figure 59: Retail sales of consumer goods / retail space Figure 60: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Guangzhou’s vacancy rate is one of the lowest among the 13 cities—even the most vacant mall’s vacancy rate is lower than 15%, and vacancy as of 3Q12 was only 2.3%. Unlike most of the other cities, Guangzhou’s vacancy rate decreased while supply increased in the past few years, mainly because new malls opened at very high occupancy rate (usually >90%). In 3Q12, Happy Valley (太阳新天地) opened at around 15% vacancy rate, slightly dragging up the market vacancy rate from 1.2% as of 2Q12 to 2.3% as of 3Q12.

Figure 61: Shopping mall total supply and vacancy Figure 62:Shopping mall new supply/ absorption/ vacancy (mn sqm) Guangzhou total SM supply Guangzhou vacancy rate (RHS) (sqm) Guangzhou net new SM supply Guangzhou net new SM absorption 1.6 9% 300,000 Guangzhou SM vacancy 30%

1.4 8% 250,000 25% 7% 1.2 200,000 20% 6% 1.0 150,000 15% 5% 100,000 10% 0.8 4% 50,000 5% 0.6 3% - 0% 0.4 2% (50,000) -5% 0.2 1% (100,000) -10%

- 0% (150,000) -15%

2Q08 3Q12 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (200,000) -20% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 63: Key projects opened at high vacancy rate Project Submarket District Completion Format Retail GFA Open vacancy Current vacancy Happy Valley 太阳新天地 Zhujiang New Town Luwan 3Q12 SM 1,291,668 15% 15% Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Guangzhou’s pipeline totals 1.76 mn sqm, 101% of current total supply of 1.75 mn sqm. We believe the traditional mature submarkets are very unlikely to face oversupply issues due to relatively low supply base and strong demand. 37% of the pipeline is located in Zhujiang New Town, a new CBD that may still take years for the retail market to get mature. Many malls in this area are mainly as mid-end ones and thus may face fierce leasing competition.

China Retail Property Chart Book 23 26 November 2012

Figure 64: Pipeline—breakdown by year Figure 65: Pipeline—breakdown by submarket - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 - 0.2 0.4 0.6 0.8 1.0 1.2 (mn sqm) (mn sqm) Huanshi Road Before 2011 Beijing Road

2011 Tianhe CBD

Shangxia Jiu Road 2012 Linyuan West Road

2013 Zhujiang New Town

Baiyun 2014 Panyu

2015 forward Haizhu Guangzhou pipeline - DS and others Guangzhou pipeline - SM Guangzhou retail space existing stock Guangzhou retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Actual completions in 2009/10/11were at 20%/75%/17% of the planned area, respectively. In most of the cases, construction delay, OP issuing, internal decoration and pre-leasing progress affected the openings.

Figure 66: Planned and actual retail space completion Figure 67: Whole building rental trend (sqm) Guangzhou planned completion Guangzhou actual completion (1Q2005=100) Guangzhou effective prime rent 800,000 180

700,000 160 140 600,000 120 500,000 100 400,000 80 75% 300,000 60

200,000 40 17% 20 100,000 20% -

3Q12 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Due to the strong retail demand and relatively limited retail space supply, Guangzhou’s average rental has been increasing along the way and is even higher than that of Beijing, Shanghai and Shenzhen.

China Retail Property Chart Book 24 26 November 2012

Figure 68: Forecast completion versus actual completion Planned completion GFA (sqm) Actual completion GFA (sqm) 2009 Seasons Mall (F1-5, F1-4) 17,227 Bercy Plaza 40,000 Metropolitan Plaza 87,000 OneLink Walk 55,000 Bercy Plaza 40,000 Total 199,227 Total 40,000 2010 OneLink Walk 55,000 OneLink Walk 55,000 Seasons Mall (F1-4, F1-5) 71,773 West Tower 35,000 Poly Zhonghuan Plaza 70,000 Seasons Mall I+II 71,773 Taikoo Hui 120,000 Baiyun Wanda Plaza 140,000 West Tower 35,000 Fashion Tianhe Commercial Center Phase I 50,000 Total 401,773 Total 301,773 2011 Taikoo Hui 120,000 Taikoo Hui 120,000 Fashion Tianhe Commercial Center Phase I 50,000 Poly Central Plaza 70,000 Metropolitan Plaza 87,000 Happy Valley 120,000 Fashion Tianhe Commercial Center Phase II 110,000 Mall of the World 143,000 Total 700,000 Total 120,000 Source: Jones Lang LaSalle, Credit Suisse Research Submarket analysis There are five major submarkets in Guangzhou: Tianhe North, Shangxia Jiu, Zhujiang New Town, Beijing Road, and Huanshi East. Details are summarised as below:

Figure 69: Guangzhou submarket summary Emergence DS GFA SM GFA Retail submarkets Year (000 sqm) (000 sqm) Major developers and operators, existing and future Tianhe North 1996 0 785 Swire Properties, Onelink Industrial, Dapeng Properties, Guangdong Holdings Ltd, Kaisa Group Shangxia Jiu 1996 0 60 Hutchison Whampoa Property, Henderson Land Development Zhujiang New Town 2010 35 70 GTLandmark Group, Yuexiu Properties, Highsun Group Beijing Road 1990 120 180 Guangzhou Grandbuy, Xinsheng Properties, Guangzhou Lixing Properties Huanshi East 1978 25 45 Guangzhou Friendship Department Store, Guangzhou Junyi Properties Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 25 26 November 2012

Figure 70: Guangzhou submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1—Tianhe North Tianhe North is the CBD of Guangzhou and is also one of the three CBDs approved by the State Council. It has convenient transportation with access to Metro Lines 1 and 3 as well as The Aucomatic People Mover (APM). Tianhe North is one of the largest and most mature submarkets in Guangzhou, and is the shopping destination for not only surrounding residents but also the whole city. Currently, there are eight shopping malls with a total retail GFA of around 784,450 sqm and one department store with retail GFA of around 58,000 sqm. Only one shopping mall is planned to be opened in 2013. Overall, the new supply will be limited in the mid-term. We expect this submarket to continue to be the most mature and popular retail submarket in Guangzhou, supported by strong demand.

Figure 71: Tianhe North submarket Lable Type Project Completion Retail GFA (sqm) Operator A SM Tee Mall 1996 160,000 N\A B SM Sky Galleria 1997 33,450 N\A SM Times Square 1999 56,000 N\A C SM Tianhe Entertainment Square 1999 30,000 N\A D SM Grandview Mall 2004 290,000 N\A E DS Grandbuy--Zhongyi Store 2006 58,000 N\A F SM Bercy Plaza 2009 40,000 Kaisa Group Holdings G SM OneLink Walk 2010 55,000 Onelink Industrial H SM Taikoo Hui 2011 120,000 Swire Properties I SM Hong Cheng Area Project 2013 80,000 Sun Hung Kai Properties Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 26 26 November 2012

Figure 72: Tianhe North submarket

Source: Google map, Credit Suisse

Figure 73: Tianhe North submarket (mn sqm) Tianhe north pipeline - DS and others Tianhe north pipeline - SM 0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Case Study – Taikoo Hui (Swire 1972.HK) Taikoo Hui is located in the Tianhe North submarket. The shopping mall was opened in September 2011 with total retail GFA of around 120,000 sq m. Tahkoo Hui currently has 180 brand shops, and one high-end supermarket. Retail sales have been encouraging since its open, with about 97% occupancy rate as of June 2012. Retail sales for 2H12 are expected to increase as more shops open and more office tenants move in.

China Retail Property Chart Book 27 26 November 2012

Figure 74: Taikoo Hui Figure 75: Taikoo Hui

Source: Swire Properties Source: Swire Properties Submarket study 2—Zhujiang New Town Zhujiang New Town is located in the Tianhe District. The government planned to build it as a new CBD for Guangzhou. It enjoys convenient transportation with access to Metro Lines 3 and 5 as well as APM. Zhujiang New Town emerged in 2010 with the completion of West Tower and Seasons Mall. Currently, there is one shopping mall (Seasons Mall) with retail GFA of 71,773 sqm and one department store (West Tower) with retail GFA of 35,000 sqm. There are nine shopping malls in the pipeline and are planned to be opened with a total retail GFA of 609,750 sqm, almost six times of existing retail space. We believe this submarket may still take years to get mature and the malls in this region may face fierce pre-leasing competition.

Figure 76: Zhujiang New Town submarket Lable Type Project Completion time Retail GFA (sq m) Operator A DS West Tower 2010 35,000 Guangzhou Investment B SM Seasons Mall I+II 2010 71,773 GTLandmark Group C SM Mall of the World Phase I 2012 80,000 Guangzhou New Central Axis D SM Happy Valley 2012 120,000 Paragon Group (Guangzhou) Ltd C SM Mall of the World Phase II 2012 40,000 Guangzhou New Central Axis B SM Seasons Mall III 2012 17,163 GTLandmark Group C SM Mall of the World Phase III 2013 30,000 Guangzhou New Central Axis B SM Seasons Mall IV 2014 82,587 GTLandmark Group SM ZJNT B1-1 Project 2014 50,000 Yuehai Group F SM SHKP Project 2015 150,000 Sun Hung Kai Properties E SM East Tower (Chow Tai Fook Centre) 2016 40,000 Chow Tai Fook / New World China Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 28 26 November 2012

Figure 77: Zhujiang New Town submarket

Source: Google map, Credit Suisse

Figure 78: Zhujiang New Town submarket (mn sqm) Zhujiang New Town submarket pipeline - DS and others Zhujiang New Town submarket pipeline - SM 0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 29 26 November 2012 Chengdu Chengdu is the capital city of Sichuan Province and is also considered as the economic centre of Western China. It has a strong retail market, partially thanks to local people’s high willingness to spend—total retail sales of consumer goods reached Rmb286 bn in 2011. The strong market attracts both retailers and developers: many retailers choose Chengdu to open their first store in Western China. Therefore, Chengdu’s retail space supply accelerated since 2006, about 2–3 years ahead of most of the other tier II cities. The local government plans to enlarge the city scale and develop the new CBD—the New South Area. 36% of the retail space pipeline is located in this area, which may still take years to get mature. The same story unfolded for some parts of the Second Ring Rd Commercial Loop. We expect malls to have more diversified performance due to varying progress in city redevelopment, infrastructure upgrade and market maturity. Supply and demand Chengdu’s shopping mall supply accelerated since 2006. Shopping mall supply as of 2Q12 totalled 1.79 mn sqm, 6.7 times of 2005 supply of 0.27 mn sqm. By the end of 2Q12, shopping malls took 69% of total retail space supply.

Figure 79: Retail sales of consumer goods Figure 80: Urban disposable income per capita (Rmb bn) Chengdu retail sales of consumer goods (Rmb per person) Chengdu urban disposable Income per capita 350 Chengdu retail sales of consumer goods YoY (RHS) 30% 30,000 Chengdu urban disposable Income per capita YoY (RHS) 25%

300 25% 25,000 20% 250 20% 20,000 200 15% 15% 15,000 150 10% 10% 10,000 100 5% 50 5% 5,000

- 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 81: Total supply (mn sqm) Chengdu shopping mall supply Chengdu department store supply 3.0 Chengdu shopping mall supply / Total retail space supply 100% 90% 2.5 80% 70% 2.0 60% 1.5 50% 40% 1.0 30% 20% 0.5 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 30 26 November 2012

Figure 82: Retail sales of consumer goods / retail space Figure 83: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Chengdu’s vacancy rate is one of the highest among the 13 cities—12.6% by the end of 2Q12. According to Jones Lang LaSalle’s local analyst, the high vacancy is partially dragged up by two high vacancy malls: (1) Uno Mall (天汇购物中心) with 30% vacancy; (2) SM City (SM 广场) with 45% vacancy. If we exclude these two malls, Chengdu’s vacancy should be around 10%—still quite high, in our view. If new supply comes into the market with low take-up, the vacancy of the whole market will be dragged up. This happened in 3Q11, when Uno Mall (天汇购物中心) opened at 50% vacancy rate and Suning Plaza opened at 20% vacancy rate. These two malls’ vacancy rate stayed high till now, due to slow leasing progress and even some tenants withdrawn.

Figure 84: Shopping mall total supply and vacancy Figure 85:Shopping mall new supply/ absorption/ vacancy (mn sqm) Chengdu total SM supply Chengdu vacancy rate (RHS) (sqm) Chengdu net new SM supply Chengdu net new SM absorption 2.0 20% 400,000 Chengdu SM vacancy 60% 1.8 18% 50% 1.6 16% 300,000 40% 1.4 14% 1.2 12% 200,000 30% 1.0 10% 20% 100,000 0.8 8% 10% 0.6 6% - 0% 0.4 4% 0.2 2% -10% (100,000)

- 0% -20%

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (200,000) -30% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 86: Key projects opened at high vacancy rate Project Submarket District Completion Format Retail GFA Open vacancy Current vacancy Uno Mall 天汇购物中心 Luomashi Qingyang 3Q11 SM 250,000 50% 30 % Suning Plaza 苏宁广场 Second Ring Rd Hi-Tech 3Q11 SM 120,000 20 % 45 % Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Chengdu’s pipeline totals 4.05 mn sq m, 158% of current total supply of 2.56 mn sq m. 36% of the pipeline is located in New South Area, an emerging district that may still take years to get mature. The government successfully attracted many shopping mall developers into this district in the past few years. Some of the upcoming shopping malls are very close to each other, so may face fierce leasing competition in the future. The Eastern and Northern parts of the Second Ring Rd Commercial Loop also have huge retail space pipeline and will also take years to get mature. As supply increases, we expect the malls to have more diversified performance due to different progress of city redevelopment, infrastructure upgrade, and market maturity.

China Retail Property Chart Book 31 26 November 2012

Those properties enjoying good locations and accessibility, or operated by experienced developers are more likely to achieve better leasing progress and performance, while those without may suffer from intense competition.

Figure 87: Pipeline—breakdown by year Figure 88: Pipeline—breakdown by submarket - 0.5 1.0 1.5 2.0 2.5 - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 (mn sqm) (mn sqm) Before 2011 Chunxi Rd&Yanshikou

2011

Second Ring Rd Commercial Loop 2012

2013 New South Area

2014

Luomashi 2015 forward Chengdu pipeline - DS and others Chengdu pipeline - SM Chengdu retail space existing stock Chengdu retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Actual completions in 2009/10/11 were at 143%/196%/140% of the planned area, respectively. The main reasons are: (1) Jones Lang LaSalle expanded coverage to the emerging areas. For example, they included Ito Yokado Jianshe Rd Store in 2009, included the Paradise Walk (Sanqianji) and Chengdu Hualian in 2010, and included Wangfujing shopping centre in 2011. Delays are more often seen in new developing areas. For example, Uno Mall was delayed from 2010 to 2011. OCC, Central City, Raffles City, etc. are delayed from 2011 to 2012. The delays are mainly due to under-matured submarkets, leasing difficulties, construction progress and developers’ strategies.

Figure 89: Planned and actual retail space completions Figure 90: Ground floor rental trend (sqm) Chengdu planned completion Chengdu actual completion 1Q2005=100) Chengdu effective prime rent 600,000 140% 180 160 500,000 140 120 400,000 196% 100 300,000 80 60 200,000 40 143% 100,000 20 -

1Q12 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 32 26 November 2012

Figure 91: Forecast completion vs actual completion Planned completion GFA (sqm) Actual completion GFA (sqm) 2009 Renhe Spring Department Store (West) 48,520 Wangfujing (expansion) 3,000 E-Go 18,000 Renhe Spring Plaza 60,000 Ito-Yokado Jianshe Rd Store 32,000 Total 66,520 Total 95,000 2010 Yanlord Square 45,000 Yanlord Landmark 44,000 Astronavigation Building 18,000 "Renhe Spring Department Store P3 25,300 Renhe Spring Department Store P3 25,300 (Rendong Store P3)" 50,000 GTC Galleria Chengdu 48,470 Paradise Walk (Sanqianji) 31,722 Uno Mall 30,000 Chengdu Hualian 100,000 Chicony Department Store 53,619 GTC Galleria Chengdu 21,856 Total 166,770 Total 326,497 2011 Astronavigation Building 18,000 Uno Mall 250,000 Suning Plaza 120,000 Suning Plaza (New South Area Store) 120,000 OCC 26,587 Far Eastern Department Store 50,000 Uno Mall 30,000 Ito-Yokado (New South Area Store) 50,000 Central City 40,000 Wangfujing Shopping Centre 100,000 Chengdu Department Store 50,000 Ito-Yokado New South Area Store 50,000 Raffles City 74,000 Total 408,587 Total 570,000 Source: Jones Lang LaSalle, Credit Suisse Research Submarket analysis There are four major submarkets in Chengdu: Chunxi Road & Yanshikou, Luomashi, Second Ring Rd Commercial Loop, and New South Area. Details are summarised as below:

Figure 92: Chengdu submarket summary Emergence DS GFA SM GFA Retail Submarkets Year (000 sqm) (000 sqm) Major Developers and Operators, Existing and Future Chunxi Road & Yanshikou 1989 490 120 Wangfujing, Yanlord, Renhe, Lan Kwai Fong, Chicony, Far Eastern Luomashi 1996 20 430 Quanxing, Chengdu He Neng New City Plaza, Qianjiang Yingtong, R&F 2nd Ring Rd Commercial Loop 2003 240 970 SM Group, Capita Retail, GTC, Wanda, Renhe, Longfor, Lippo, Suning New South Area 2011 50 0 Jinruitai Group Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 33 26 November 2012

Figure 93: Chengdu submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1—Second Ring Rd Commercial Loop (Chenghua part) The second Ring Rd Commercial Loop follows Chengdu’s Second Ring Road, across five urban districts. It is still a new developing retail market compared to Chunxi Road & Yanshikou, and Luomashi. The shopping malls and department stores mainly serve the needs of surrounding residents. Currently, there are three department stores with total retail GFA of around 83,722 sqm and four shopping malls with total retail GFA of around 556,000 sqm in Second Ring Rd Commercial Loop (Chenghua part) submarket. There will be five shopping malls with total retail GFA of 678,586 sqm to be opened during 2013–2017. We expect the local supply and demand to be relatively balanced over 2012–14.

China Retail Property Chart Book 34 26 November 2012

Figure 94: Second Ring Rd Commercial Loop (Chenghua Part) submarket Retail GFA Label Type Project 项目名称 Completion (sqm) Developer A DS Beijing Hualian (ShuangQiao Zi Store) 北京华联双桥子店 2004 20,000 C DS Ito-Yokado ( Jianshe Rd Store) 伊藤洋华堂建设路店 4Q09 32,000 Sichuan Tonghui 四川同辉实业 DS Chengdu Hualian 成都华联 3Q10 31,722 Chengdu Hualian B SM SM City SM 广场 3Q06 180,000 SM Group D SM Paradise Walk (Sanqianji) 龙湖三千集 3Q10 50,000 Longfor Group E SM MIXc 万象城 2Q12 244,000 China Resources Land F SM Mid-Town 财富又一城 2Q12 82,000 Sun-Top SM Chengdu 339 成都 339 2013 84,000 Chengdu Fulai Real Estate SM WECity 环球汇 2015 124,586 KWG and Hong Kong Land G SM International Commercial Centre 环球贸易广场 2016 120,000 SHKP, Henderson Land and Wharf SM Longemont Shopping Center 龙之梦购物中心 2017 350,000 Perenial and Summit Group SM Lotte World 乐天大世界-攀成钢地块 2017 TBC Lotte Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 95: Second Ring Rd Commercial Loop (Chenghua Part) submarket

Source: Google map, Credit Suisse estimates

Figure 96: Second Ring Rd Commercial Loop (Chenghua Part) submarket (mn sqm) Second Ring Rd Commercial Loop (Chenghua part) pipeline - SM 0.70 Second Ring Rd Commercial Loop (Chenghua part) pipeline - DS and others

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China Retail Property Chart Book 35 26 November 2012

Case study: The MIXc (CR Land 1109 HK) CR Land’s Chengdu MIXc is located in the Chenghua part of the Second Ring Rd Commercial Loop. It was opened in May 2012, with total retail GFA of around 244,000 sq m, making it the third-largest shopping mall in Chengdu. For the first operation month in 1H12, Chengdu MIXc achieved rentals worth HK$10.52 mn and a 55% occupancy rate. We expect its operation performance to catch up with MIXc Hangzhou and Shenyang as the surrounding neighbourhood gets more and more mature.

Figure 97: Chengdu MIXc Developer China Resources Land Open time May-2012 GFA (sqm) 244,000 Floor Efficiency 62.50% Positioning Mid-High Anchor Tenants Central Department Store; Novo Concept; Ole'; Broadway Cinima Number of car park 1,700 Sales revenue on opening date Rmb4 mn Source: Jones Lang LaSalle, Credit Suisse Research

Figure 98: Chengdu MIXc location Figure 99: Chengdu MIXc tenant mix

Fashion 32%

Department Store 21%

F&B 20%

Others 12%

Supermarket 8%

Recreation 7%

0% 5% 10% 15% 20% 25% 30% 35%

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Submarket study 2 – New South Area New South Area is a new developing submarket. The government successfully attracted many shopping mall developers into this area in the past few years. New South Area has access to Metro Line 1 and the Third Ring Road. It will mainly serve the needs of people from surrounding emerging residential and office buildings in this area. Currently, there is one department store with total retail GFA of around 50,000 in New South Area. There will be nine shopping malls and one department store with total retail GFA of 1,326,188 sq m to be opened during 2013-16. Some of the upcoming shopping malls are very close to each other, so may face fierce pre-leasing competition in future.

China Retail Property Chart Book 36 26 November 2012

Figure 100: New South area submarket Label Type Project 项目名称 Completion Retail GFA (sqm) Developer DS Ito-Yokado (New South Area Store) 伊藤洋华堂南部新区店 4Q11 50,000 Jinruitai Group SM Nine Square 九方 4Q12 85,601 CATIC Real Estate A SM Master Max 首座 MAX 2013 64,000 Dading Property B SM Moi Retail 茂业中心 2013 60,000 Moi Group C SM Aux Plaza 奥克斯商业广场 2013 200,000 Aux Real Estate D SM Palm Spring International Centre 棕榈泉国际中心 2013 40,000 Palm Spring E SM New Century Mall of Global 新世纪环球购物中心 2013 400,000 Chengdu Exhibition and Tourism DS OCC 成都地铁控制中心大楼 2014 26,587 Chengdu Metro SM Renhe Spring International Plaza 仁和春天国际广场 2015 150,000 Renhe Group SM Magic Cube 大魔方 2016 120,000 Chengdu Media Group SM Intime Center 银泰购物中心 2016 180,000 Intime Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 101: New South Area submarket

Source: Google map, Credit Suisse

Figure 102: New South Area submarket (mn sqm) New South Area pipeline - DS and others New South Area pipeline pipeline - SM 0.90

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China Retail Property Chart Book 37 26 November 2012 Chongqing Chongqing is a fast-growing large city and the transport hub of western China. It has a huge resident population of 29 mn (compared to 20 mn in Beijing) and urban population of 7.7 mn. In 2011, total GDP was Rmb1,001 bn, and total retail sales of consumer goods was Rmb349 bn. Chongqing’s fast-growing economy and large population base attracted many developers and retailers. As a result, retail space supply increased sharply in the past five years. Chongqing’s vacancy rate stood at 10.9% at end-2Q12—one of the highest among the 13 cities. Although the vacancy rate in core districts such as Jiefangbei is lower than 1%, in some suburban areas it is still very high. The retail space pipeline in some suburban areas is also quite large. We expect the large local population will help support the large local retail supply, but this process may still take years. Supply and demand Chongqing’s shopping mall supply has accelerated since 2009: as of 2Q12, it totalled 1.46 mn sq m, 3.2 times the 2008 supply of 0.45 mn sq m. By the end of 2Q12, shopping malls constituted 79% of total retail space supply.

Figure 103: Retail sales of consumer goods Figure 104: Urban disposable income per capita (Rmb bn) Chongqing retail sales of consumer goods (Rmb per person) Chongqing urban disposable Income per capita 400 Chongqing retail sales of consumer goods YoY (RHS) 30% 25,000 Chongqing urban disposable Income per capita YoY (RHS) 18%

350 16% 25% 20,000 300 14% 20% 12% 250 15,000 10% 200 15% 8% 150 10,000 10% 6% 100 4% 5% 5,000 50 2% - 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

Figure 105: Total supply (mn sqm) Chongqing shopping mall supply Chongqing department store supply 2.0 Chongqing shopping mall supply / Total retail space supply 100% 1.8 90% 1.6 80% 1.4 70% 1.2 60% 1.0 50% 0.8 40% 0.6 30% 0.4 20% 0.2 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 38 26 November 2012

Figure 106: Retail sales of consumer goods / retail space Figure 107: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Chongqing’s vacancy rate was 10.9% as at end-2Q12—one of the highest among the 13 cities. According to Jones Lang LaSalle’s Chongqing local analyst, the vacancy rate in core districts such as Jiefangbei is lower than 1%, but in some suburban areas it can be very high. If new supply comes into a market with low take-up, the vacancy rate of the whole market will be dragged up. This happened in 1Q10, 2Q10, 3Q11 and 4Q11. In 1Q10, Chongqing Tiandi (重庆天地) opened with an 80% vacancy rate. In 2Q10, SML Square (日月光中心广场) opened with a 60% vacancy rate. In 3Q11, Chongqing Times Square (重庆时代广场) started out with a 68% vacancy rate, while in 4Q11, MEE (汇美尚) opened with a 50% vacancy rate, IFC Mall (英利国际购物中心) with 85%, Starlight Place (星光时代广场) with 47%, and Starry Street Phase I (星悦荟 1 期) started off with a 46% vacancy rate. However, the leasing situation of most of these projects improved, helping to gradually bring down the city’s vacancy rate.

Figure 108: Shopping mall total supply and vacancy Figure 109:Shopping mall new supply/ absorption/ vacancy (mn sqm) Chongqing total SM supply Chongqing vacancy rate (RHS) (sqm) Chongqing net new SM supply Chongqing net new SM absorption 1.6 25% 300,000 Chongqing SM vacancy 30% 1.4 20% 250,000 25% 1.2 200,000 20% 1.0 15% 0.8 150,000 15% 10% 0.6 100,000 10% 0.4 5% 50,000 5% 0.2 - 0%

- 0%

3Q08 1Q12 2Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 2Q12 1Q08 (50,000) -5% Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

Figure 110: Key projects that opened with a high vacancy rate Project District Completion Format Retail GFA Open vacancy Current vacancy Chongqing Tiandi 重庆天地 Hualongqiao 1Q10 SM 50,400 80% 12% SML Square 日月光中心广场 Jiefangbei 2Q10 SM 70,000 60% 41% Chongqing Times Square 重庆时代广场 Jiefangbei 3Q11 SM 30,000 68% 21% MEE 汇美尚 Jiefangbei 4Q11 SM 10,544 50% 60% IFC Mall 英利国际购物中心 Jiefangbei 4Q11 SM 34,783 85% 20% Starlight Place 星光时代广场 Nanping 4Q11 SM 69,000 47% 10% Starry Street Phase I 星悦荟 1 期 Beibinlu 4Q11 SM 19,391 46% 23% Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates)

China Retail Property Chart Book 39 26 November 2012

Pipeline and rental Chongqing’s retail space pipeline totals 3.60 mn sq m, 187% of existing retail space supply of 1.92 mn sq m. Currently, traditional core submarkets (Jiefangbei, Guanyingqiao, and Nanping) cover the demand of the main urban areas (Yuzhong, Jiangbei, Shapingba, Nan’an, Jiulongpo, Beibei, Yubei, Dadukou, and Banan). The large supply in these districts in the future could still be supported by strong demand from the large local population base. So there won’t necessarily be a severe oversupply in the future, according to Jones Lang LaSalle’s Chongqing local analyst.

Figure 111: Retail space pipeline—breakdown by year Figure 112: Retail space pipeline—by submarket - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 - 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 (mn sqm) (mn sqm) Jiefangbei Before 2011 Guanyinqiao Nanping Daping 2011 Xinpaifang Hualongqiao 2012 Yangjiaping Jiangbeizui Zhaomushan 2013 Shapingba Dashiba 2014 Lianglukou Nanbinlu Beibinlu 2015 forward Dadukou Chongqing pipeline - DS and others Chongqing pipeline - SM Chongqing retail space existing stock Chongqing retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research 2009/2010/2011 actual retail space completion was 47%/74%/63% of the planned amount, respectively. In 2009, Jones Lang LaSalle removed some projects that did not qualify for the standard of “prime retail”, causing actual completion to be lower than forecast. In 2010, one project was removed from Jones Lang LaSalle’s coverage list, and two other projects delayed opening due to a delay in construction and developers’ change of plans. In 2011, the delay was mainly due to construction, and developers extending the pre-leasing term.

Figure 113: Planned and actual retail space completion Figure 114: Ground floor rental trend (sqm) Chongqing planned completion Chongqing actual completion (1Q2005=100) Chongqing effective prime rent 800,000 200

700,000 180 160 600,000 140 500,000 120 74% 100 400,000 63% 47% 80 300,000 60 200,000 40 20 100,000 -

3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 40 26 November 2012

Figure 115: Forecast completion versus actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Cape Coral 60,000 New Century Department Store (Jiangbei) 12,000 Ding Hao Shi Ji Xin Cheng 50,000 Grand Ocean Department Store 42,000 Broadway 65,000 Wanda Plaza 140,000 Fuli Ocean Square 70,000 Brilliance Shopping Mall 136,000 Shunxiang Yijiequ 120,000 Neo China Top City 200,000 Brilliance Shopping Mall 130,000 Total 695,000 Total 330,000 2010 SML Square 140,000 Chongqing Tiandi 84,000 Chongqing Xintiandi 80,000 SML Square 140,000 Huanghua Xinjiyuan 80,000 Huanghua Xinjiyuan 80,000 Dan Feng Bai Lu 34,329 StarLight 68 34,329 Chongqing Fortune Centre 140,000 IMIX PARK 90,000 Cape Coral 60,000 IFDC 48,000 Total 582,329 Total 428,329 2011 R&F Shopping Centre 70,000 NOVO 40,000 SM Square 140,000 Chongqing Times Square 54,000 Cape Carol 60,000 Starlight Place 138,000 Chongqing Fortune Centre 140,000 Mee 20,000 Chongqing Jin Ying Financial Centre 10,624 IFC Mall 55,000 Chongqing World International Centre 30,100 Starry Street Phase I 32,318 IFDC 48,000 Maison Mode 37,500 Total 536,224 Total 339,318 Source: Jones Lang LaSalle, Credit Suisse research Submarket analysis There are seven major submarkets in Chongqing: Jiefangbei, Yangjiaping, Guanyinqiao, Nanping, Shapingba, Daping, and Xinpaifang. Details for these are summarised below:

Figure 116: Chongqing submarket summary Emergence DS GFA SM GFA Retail sub-markets Year (000 sq m) (000 sq m) Major developers and operators, existing and future Jiefangbei 1980s 145 365 Hutchison Whampoa, Chongqing General Trading Group, Wharf, Yingli International Real Estate Limited Yangjiaping 2005 40 145 CapitaMalls, Longfor, Chongqing Zhengsheng Property Guanyinqiao 2000 165 315 Longfor, Sincere Group, Chongqing General Trading Group, Chongqing Rongkeguangkong Industry Ltd Nanping 2000 40 450 Wanda Group, Bailian Group, Sincere Group Shapingba 2008 0 120 CapitaMalls, Huanghua Group Daping 2012 0 0 Longfor, Yingli International Real Estate Limited Xinpaifang 2012 0 0 CC Land Holdings, SM Group, HKI China Land Limited Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 41 26 November 2012

Figure 117: Chongqing submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1: Jiefangbei Jiefangbei is located in Yuzhong district, and has convenient access to metro lines 1 and 2. It is Chongqing’s most mature submarket with more than 30 years retail development history. It is the shopping destination for not only the surrounding residents but also the entire city and tourists. Currently, there are five department stores with total retail GFA of around 182,250 sq m and five shopping malls with total retail GFA of around 369,000 sq m in Jiefangbei. Going forward, four more shopping malls with total retail GFA of 331,115 sq m are planned to be opened by 2015. We believe the strong demand of this submarket will be able to support future new supply.

China Retail Property Chart Book 42 26 November 2012

Figure 118: Jiefangbei submarket Retail GFA Label Type Project 项目名称 Completion (sq m) Developer A DS Chongbai Department Store 重百大楼 1985 26,000 Chongqing General Trading Group B DS New Century Department Store 新世纪百货 1993 20,000 Chongqing General Trading Group C SM Metropolitan Plaza 大都会 1997 100,000 Hutchison Whampoa D DS Wangfujing Department Store 王府井百货 2003 58,750 N\A E DS Maison Mode 美美时代广场 1Q05 37,500 Wharf F SM SML Square 日月光中心广场 2Q10 140,000 Dinggu G DS NOVO NOVO 1Q11 40,000 TOPPY H SM Chongqing Times Square 重庆时代广场 3Q11 54,000 Wharf I SM Mee 汇美尚 4Q11 20,000 Shui On China Central Properties J SM IFC Mall 英利国际购物中心 4Q11 55,000 Yingli International Real Estate K SM Chongqing JinYing Financial Centre 重庆金鹰财富中心 3Q12 10,624 Chongqing Zhongfei Group L SM Guotai Square 国泰广场 2013 60,600 Jiahe M SM Chongqing World Financial Centre 重庆环球金融中心 2014 37,891 Worthy Property SM Raffles City 凯德朝天门来福士 2015 222,000 CapitaMalls Source: Jones Lang LaSalle, Credit Suisse Research

Figure 119: Jiefangbei submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 43 26 November 2012

Figure 120: Jiefangbei submarket (mn sqm) Jiefangbei submarket pipeline - DS and others Jiefangbei submarket pipeline - SM 0.45

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0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Submarket study 2: Yangjiaping Yangjiaping is located in Jiulongpo district, has access to metro line 2 and mainly serves the needs of people from southwest Chongqing. The positioning in Yangjiaping is mainly low-to-mid end. Currently, there is one department store with total retail GFA of 42,000 sq m and two shopping malls with GFA of around 131,816 sq m in Yangjiaping. Going forward, the retail market in this area will be upgraded by the entry of CR Land MIXc, which is due to be opened in 2014.

Figure 121: Yangjiaping submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Operator A DS Grand Ocean Department Store 大洋百货 2009 42,000 Chongqing Zhengsheng Property B SM CapitaMall Jiulongpo 凯德广场九龙坡 2005 53,816 CapitaMalls C SM Paradise Walk (west) 西城天街 2008 78,000 Longfor D SM MIXC Phase I 万象城 1 期 2014 240,000 China Resources D SM MIXC Phase II 万象城 2 期 2017 or after 50,000 China Resources Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 44 26 November 2012

Figure 122: Yangjiaping submarket

Source: Google map, Credit Suisse

Figure 123: Yangjiaping submarket

(mn sqm) Yangjiaping submarket pipeline - DS and others Yangjiaping submarket pipeline - SM 0.30

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0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Submarket study 3: Guanyinqiao Guangyinqiao is located in Yubei district, with access to metro line 3. It is also a mature retail submarket, and attracts high foot traffic. Currently, there are five department stores with total retail GFA of 164,860 sq m and three shopping malls with total retail GFA of 264,329 sq m in Guanyinqiao. Going forward, there will be seven shopping malls with total retail GFA of 383,279 sq m (planned to be opened by 2015).

China Retail Property Chart Book 45 26 November 2012

Figure 124: Guanyinqiao submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Developer A DS Chongbai Department Store 江北重百商场 2000 22,877 Chongqing General Trading Group B DS New Century Department Store 江北新世纪百货 2001 23,375 Chongqing General Trading Group C SM Paradise Walk (North) 北城天街 2003 140,000 Longfor D DS Maoye Department Store 茂业百货 2004 64,608 Maoye Group E DS New World Department Store 新世界百货 3Q06 42,000 N\A B DS New Century Department Store 江北新世纪百货 1Q09 12,000 Chongqing General Trading Group F SM StarLight 68 星光 68 广场 4Q10 34,329 Sincere Group G SM IMIX PARK 大融城 4Q10 90,000 Chongqing Rongkeguangkong H SM R&F Ocean Plaza phase1 富力海洋广场 1 期 3Q12 18,367 R&F SM Rongheng Times Square 融恒时代广场零售项目 2013 26,400 Rongheng SM New Century Shopping Mall 阳光世纪购物中心 2013 86,000 Chongqing General Trading Group SM Tianhe International Plaza Retail 天合国际广场零售项目 2014 25,160 Chongqing Yongde Real Estate SM Huanghua International SM 煌华国际购物中心 2015 107,152 Wong Wan( International )Holdings H SM R&F Ocean Plaza Phase II 富力海洋广场 2 期 2015 80,000 R&F SM Loncin Guanyinqiao Retail Project 隆鑫观音桥零售项目 2015 40,200 Loncin Group Source: Jones Lang LaSalle, Credit Suisse research

Figure 125: Guanyinqiao submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 46 26 November 2012

Figure 126: Guanyinqiao submarket

(mn sqm) Guanyinqiaosubmarket pipeline - DS and others Guanyinqiao submarket pipeline - SM 0.50

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0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Case study - North Paradise Walk (Longfor 960 HK) Longfor’s Chongqing North Paradise Walk is located in Guanyinqiao submarket. This shopping mall was completed in 2003 and offers retail GFA of around 146,262 sq m (rentable GFA of 120,778 sq m), which is currently the largest retail centre in Chongqing. Chongqing North Paradise Walk now has over 300 brand shops, one department store, two large supermarkets, three esplanades, and one UME cinema. In 2011, the occupancy in Longfor’s Chongqing North Paradise Walk was maintained at 99% and gross rental income increased 22% YoY to Rmb241 mn.

Figure 127: Chongqing North Paradise Walk Figure 128: Chongqing North Paradise Walk (Rmb mn) Gross rental income Occupancy (RHS) 300 120%

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Source: Longfor Source: Longfor

China Retail Property Chart Book 47 26 November 2012 Hangzhou By aggregate demand, Hangzhou outshines the 13 cities we examined Hangzhou’s 2011 GPD rose to Rmb701 bn, with a YoY growth of 10.1%. This growth was largely boosted by the private sector, which continued to be the pillar of the economy, accounting for 67% of the city’s GDP. This deep-rooted commercial market provides a solid bedrock for the Hangzhou economy, in our view. In particular, Hangzhou’s GDP is further amplified by the adjacent satellite cities with booming private wealth and pent-up demand. The highways built around Hangzhou effectively enlarge the radius of its shopping centres. Demand sustained by strong GDP per capita and consumption power: The CAGR of urban disposable income per capita from 2008-11 was 12.2%, the highest among major Yangtze River Delta cities. Among all the cities we have studied, Hangzhou has one of the lowest vacancy rates in its shopping malls, and yet its current identifiable retail space pipeline is a lot more rational compared to other Tier 2 cities that are more emblematic of China’s mall construction boom. Hangzhou’s supply, relative to its demand and adjusted for local consumption, is one of the healthiest among the 13 cities we examined. Newly created submarkets: Growth driver is emerging Solid status of established old commercial districts: Wulin and Hubin. These two old commercial districts are not only supported by the existing commercial infrastructure, but also draw on destination-driven traffic (for instance, both Wulin and Hubin are close to the Xihu area, and are on the pathway to this tourism magnet.) Qianjiang New City and City West: The new supply is emerging in a decentralised and suburban manner, which, in our view, is a good measure to avoid overheating supply. This scattered approach allows for better exploration of the adjacent areas. Supply and demand Hangzhou’s shopping mall supply has accelerated since 2009. Shopping mall supply as of 2Q12 totalled 0.59 mn sq m, 5.5 times the 2008 supply of 0.11 mn sq m. By the end of 2Q12, shopping malls occupied 49% of total retail space supply.

Figure 129: Retail sales of consumer goods Figure 130: Urban disposable income per capita (Rmb bn) Hangzhou retail sales of consumer goods (Rmb per person) Hangzhou urban disposable Income per capita 300 Hangzhou retail sales of consumer goods YoY (RHS) 45% 35,000 Hangzhou urban disposable Income per capita YoY (RHS) 16%

40% 14% 250 30,000 35% 12% 25,000 200 30% 10% 25% 20,000 150 8% 20% 15,000 6% 100 15% 10,000 10% 4% 50 5% 5,000 2%

- 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 48 26 November 2012

Figure 131: Total supply (mn sqm) Hangzhou shopping mall supply Hangzhou department store supply 1.4 Hangzhou shopping mall supply / Total retail space supply 100% 90% 1.2 80% 1.0 70% 60% 0.8 50% 0.6 40%

0.4 30% 20% 0.2 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse research

Figure 132: Retail sales of consumer goods / retail space Figure 133: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Vacancy rate Hangzhou’s vacancy is the lowest among the 13 cities—only 1% as of 2Q12. Unlike most other cities, as its supply increased, its vacancy rate actually went down. Shopping malls opened in 4Q09, 1Q10, 2Q10, and 2Q12 all had very decent absorption and low vacancy rates. According to Jones Lang LaSalle’s local analyst, the district’s low vacancy is driven by high demand from retailers to enter its market.

Figure 134: Shopping mall total supply and vacancy Figure 135:Shopping mall new supply/ absorption/ vacancy (mn sqm) Hangzhou total SM supply Hangzhou vacancy rate (RHS) (sqm) Hangzhou net new SM supply Hangzhou net new SM absorption 0.7 6% 300,000 Hangzhou SM vacancy 7%

0.6 5% 250,000 5%

0.5 200,000 4% 3% 0.4 150,000 3% 1% 0.3 100,000 2% -1% 0.2 50,000

-3% 0.1 1% -

- 0% (50,000) -5%

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Hangzhou’s retail space pipeline totals 3.09 mn sq m, 231% of the current total supply of 1.33 mn sq m. Wulin and Hubin, the traditional CBD areas, are unlikely to see oversupply in the future, in our view, thanks to a smaller future pipeline and strong demand. A large amount of supply will likely emerge in City West in the next few years, but we consider this to be relatively healthy, because the area has a large population, strong consumption power, and a low

China Retail Property Chart Book 49 26 November 2012 existing supply base. Suburban areas will also have large shopping mall supply but these will mostly be community malls with specific consumer groups and will thus not face competition from other malls. We are more concerned about City North.

Figure 136: Hangzhou pipeline—breakdown by year Figure 137: Hangzhou pipeline—breakdown by submarket - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 (mn sqm) (mn sqm) Wulin Before 2011 Hubin

2011 City Northwest

Qingchun 2012E Qianjiang New City

2013E Binjiang

City Northeast 2014E Jiubao & Xiasha

2015 forward Xiaoshan Hangzhou pipeline - DS and others Hangzhou pipeline - SM Hangzhou retail space existing stock Hangzhou retail space pipeline Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Actual retail space completion in 2009/2010/2011 was 38%/68%/3% of the planned amount, respectively. Delays were mainly due to: (1) Changes in government plans. For example, the government had planned Bolang Culture Street ( 波浪文化城 ) as a department store, but then it failed and ended up as an outlet. Jones Lang LaSalle removed this project from its coverage list as Jones Lang LaSalle does not cover outlets. (2) Development delays. Hubin International Boutique Compound (湖滨名品街) has been delayed many times due to disappointing pre-leasing progress. (3) Change in strategy. Global Centre (环球中心商场) planned to open as a store in 2011, but later on recruited Intime in 2012. (4) Economic prospects. Developers usually adjust their beginning plans according to economic prospects. This is very common in mainland China, especially in some new CBDs that are not mature, and where governments usually need to push project development forward.

Figure 138: Planned and actual retail space completion Figure 139: Ground floor rental trend (sqm) Hangzhou planned completion Hangzhou actual completion (1Q2005=100) Hangzhou effective prime rent 1,200,000 250

1,000,000 200

800,000 150

600,000 100 38% 400,000 68% 50 200,000 - 3%

3Q05 1Q07 3Q08 1Q10 3Q11 1Q06 3Q06 3Q07 1Q08 1Q09 3Q09 3Q10 1Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 50 26 November 2012

Figure 140: Forecast completion versus actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Global Centre 57,000 Hangzhou Tower (D) 35,000 In City 29,000 Intime Shopping Centre–Qingchun 95,000 Lianhua Shopping Centre 80,000 Hangzhou Tower (C) 35,000 Intime Shopping Centre–Qingchun 150,000 Zhongdu Department store 26,000 Intime Shopping Centre–Chenxi 150,000 Rainbow Department Store-Xiaoshan Store 17,800 Intime Shopping Centre–Qianjiang New city 80,000 Star Light Avenue Phase 1 150,000 Canhigh Centre 70,000 Yinlong Department Store 55,000 Hubin International Boutique Compound (Phase II) 81,000 Bolang Culture Street 120,000 The MIXc (City Crossing) 240,000 International Time Square 30,000 Total 1,087,000 Total 413,800 2010 In City 29,000 In City 53,000 Jiebai Department Store–Yuanhua 20,000 Jiebai Department Store–Yuanhua 45,000 The MIXc (City Crossing) 240000 The MIXc Mall Phase 1 240,000 Global Centre 57,000 Bolang Culture Street 120,000 Hualian UDC Time Square 30,000 Total 496,000 Total 338,000 2011 Bolang Culture City 60,000 Hangzhou Department Store 7,023 Global Centre 57,000 Hubin International Boutique Compound (Phase II) 100,000 Total 217,000 Total 7,023 Source: Jones Lang LaSalle, Credit Suisse research Submarket analysis There are four major submarkets in Hangzhou: Wulin, Hubin, Qianjiang New City & Qingchun, and City Northwest. Details for these are summarised below:

Figure 141: Hangzhou submarket summary Retail sub-markets Emergence DS GFA SM GFA year (’000 sq m) (’000 sq m) Major developers and operators, existing and future Wulin 1980s 295 0 Hangzhou Tower Group, Intime Group Hubin 1980s 280 10 Hangzhou Hubin Property Development Co, Ltd Qianjiang New City & Qingchun 2009 120 145 China Resources, Sun Hung Kai, CapitaLand City Northwest 2005 0 85 SITICP, Xifang Group Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 51 26 November 2012

Figure 142: Hangzhou submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1: Wulin Currently, there are 11 department stores with total retail GFA of around 350,023 sq m and no shopping mall in the Wulin submarket. There was a supply surge in this submarket in 2009, due to the expansion of Hangzhou Tower C and D sets, adding 70,000 sq m of retail GFA. Another 110,000 sq m of new shopping malls is expected to be completed in this area through 2016, 31% of the existing retail space. No further department stores will be added. In the pipeline of shopping malls, the Wulin Square Mixed-use Project (shopping mall of 60,000 sq m) is likely to be completed in 2016 and will be a major new project. Overall, the new supply will be limited to the Wulin submarket in the mid-term.

Figure 143: Wulin submarket Label Type Project Project Completion Retail GFA (sq m) Operator A DS Hangzhou Tower (A) 杭州大厦(A 座) 1989 25,000 Hangzhou Tower Group B DS Hangzhou Department Store 杭州百货大楼 1989 40,000 Hangzhou Department Store C DS Jiebai Department Store 杭州解百 1989 60,000 Jiebai Group D DS Intime Department Store-Wulin 银泰百货大楼 1998 45,000 Intime A DS Hangzhou Tower (B) 杭州大厦(B 座) 1999 35,000 Hangzhou Tower Group E DS Lane Crawford 连卡佛 2002 6,000 Lane Crawford F DS GDA Plaza 国大百货 4Q07 12,000 Guoda Group A DS Hangzhou Tower (D) 杭州大厦(D 座) 2Q09 35,000 Hangzhou Tower Group A DS Hangzhou Tower (C) 杭州大厦(C 座) 3Q09 35,000 Canhigh B DS Hangzhou Department Store 杭州百货大楼 3Q11 7,023 Hangzhou Department Store G DS Intime-West Lake Culture Plaza Store 银泰西湖文化广场店 2Q12 50,000 Intime Group H SM GDA City Plaza 国大城市广场 3Q14 50,000 GDA I SM Wulin Square Mixed-use Project 武林广场综合体 2016 60,000 Hangzhou Tourism Group Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 52 26 November 2012

Figure 144: Wulin submarket

Source: Google map, Credit Suisse

Figure 145: Wulin submarket (mn sqm) Wulin submarket pipeline - DS and others Wulin submarket pipeline - SM 0.35

0.30

0.25

0.20

0.15

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0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research

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Case study - Intime Wulin Flagship Store (1833.HK) Wulin store is Intime’s first store and its legacy flagship in Hangzhou, contributing to around 25-30% of group-wide GSP in the past few years. It was founded in 1998, with a total GFA of nearly 42,000 sq m and an operating area of around 34,000 sq m. Intime Wulin is located at the heart of the Wulin commercial district. Outstanding same store sales: Mature department stores usually delivers single-digit same-store sales, as traffic footfall has plateaued and flattened year on year, and ASP tends to tread consistently with the level of location inflation and consumption upgrade. Compared against peers and in spite of being almost 14 years old, Intime Wulin store stands out with its consistent delivery of double-digit same-store sales growth in the past few years. It is worth noting that before the current subway construction dealt its full-blown impact on Wulin store and brought about a -4% same store sales growth in 1H12, the store was still delivering double-digit same store sales growth in January and February this year, despite an already deteriorating macro outlook.

Figure 146: Intime Wulin Store exterior Figure 147: Intime Wulin’s historical same-store sales and gross sales proceeds ) 3,000 n 13.2% m ( 13.0% b 2,500 m R 12.8% 12.6% 2,000 12.4% 1,500 12.2% 12.0% 1,000 11.8% 11.6% 500 11.4% 0 11.2% 2008 2009 2010 2011 Wulin GSP Wulin SSSG

Source: Company data Source: Company Data, Credit Suisse Intime Wulin’s recipe for success: Clearly defined positioning differentiates it away from competition. Consistent with Intime’s overall positioning, Intime Wulin caters mainly to the young fashion crowd. Its customers’ typical ASP ranged around Rmb850-900. Through its assortment of merchandising, it carefully targets the young consumer crowd aged 18-35, including college graduates, and white collar office workers, with the majority being women. Compared to nearby competitors such as Hangzhou Tower, Intime Wulin carries a lot less luxury brands. Correspondingly, its sales have benefited from more resilient traffic footfall and less volatile consumer demand. Driver for further growth under its current business model: (1) Being at the hub of the commercial flow of Hangzhou city, we believe the current subway construction would mitigate the risk of dispersing the flow of weekend shopping traffic brought about by the emerging new residential zones – as the convenience of the subway equalizes across the old and new districts. Wulin being a non-residential center would more likely benefit from the construction of the subway which greatly enables shopping traffic flow from the residential zones to the commercial retail hubs. (2) Reorganizing and further optimization of merchandising assortments: reorganization involves 600 brands and 1/3 of store GFA. The end goal is to further amplify the fashion strength by creating uniform theme for third and fourth floors dedicated to women’s fashion wear emphasizing quality and ambience.

China Retail Property Chart Book 54 26 November 2012

Submarket study 2: Hubin Currently, there are four department stores with a total retail GFA of around 223,000 sq m and three alternative shopping formats with total retail GFA of around 18,700 sq m in the Hubin submarket. The alternative “other” retail formats that exist in Hubin district are mainly pedestrian streets that are dedicated to retail functions. The emergence of these formats is attributable to Hubin’s unique asset, the West Lake, which draws close to 30 mn tourists annually. Going forward, Hubin district expects around 238,000 sq m of new retail space to be completed through 2015, 98% of the existing retail space.

Figure 148: Hubin submarket Retail GFA Operator Label Type Project 项目名称 Completion (sq m) A DS Yuanhua Shopping Centre 元华购物中心 2002 45,000 Yuanhua Group B Other Xihu Tiandi 西湖天地 2003 5,700 Shuion Group C Other Hubin Int'l Boutique Compound-1 湖滨名品街一期 4Q05 10,000 Hangzhou Hubin Property & Intime D DS Lixing Department Store 利星名品广场 4Q06 33,000 Lixing Department Store E DS Intime Shopping Centre- Hubin 银泰购物中心 2Q08 100,000 Intime Group F DS Jiebai Department Store – Yuanhua 解百新元华 1Q10 45,000 Jiebai Group G Other Dragon Hotel-Retail 黄龙饭店零售部分 2Q12 3,000 Hangzhou Tower Group C SM Hubin Int'l Boutique Compound-2 湖滨名品街二期 1Q13 100,000 Hangzhou Hubin Property & Intime I SM Kerry Project 嘉里建设项目 2015 88,000 Kerry Properties C Other Hubin Int'l Boutique Compound-3 湖滨名品街三期 2015 50,000 Hangzhou Hubin Property & Intime Source: Jones Lang LaSalle, Credit Suisse estimates

Figure 149: Hubin submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 55 26 November 2012

Figure 150: Hubin submarket (mn sqm) Hubin submarket pipeline - DS and others Hubin submarket pipeline - SM 0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Submarket study 3: Qianjiang New City Qianjiang New City is located to the west of Qiantang River, and to the east of Hangzhou’s traditional retail core (Wulin and Hubin). Qianjiang New City is a rising star in terms of growth in retail space, both in terms of office space and residential real estates. Although Qianjiang has just emerged as a submarket in Hangzhou, it is set apart by its high-end positioning (mainly high-end residential projects), which are already largely completed. A second aspect that makes Qianjiang unique is its close proximity to Wulin and Hubin. The district’s retail base is fairly low, making it an under-penetrated and low competition level zone. The only major retail venue currently operating is MIXc Mall Phase I, which has a GFA of 240,000 sq m. MIXc will further solidify its lion’s share position with its planned 50,000 sq m MIXc Mall Phase II, due to commence operations in 2015. The other two pipelines in this area are Raffles City (80,000 sq m) and GT Land Plaza (50,000 sq m). Both are due to be completed before MIXc Mall Phase II.

Figure 151: Qianjiang New City submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Operator A SM The MIXc Mall Phase 1 万象城 2Q10 240,000 China Resource & SHKP B SM Raffles City 来福士 4Q13 80,000 CapitaLand C SM G.T. Land Plaza 高德置地广场商业 1Q14 50,000 G.T. Land A SM The MIXc Mall Phase 2 (MIXc Street) 万象城二期商业街 2015 50,000 China Resource & SHKP Source: Jones Lang LaSalle, Credit Suisse estimates

China Retail Property Chart Book 56 26 November 2012

Figure 152: Qianjiang New City submarket

Source: Google map, Credit Suisse

Figure 153: Qianjiang New City submarket (mn sqm) Qianjiang New City submarket pipeline - DS and others Qianjiang New City submarket pipeline - SM 0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 57 26 November 2012 Nanjing Urbanisation and new cluster create favourable conditions for developers: As the capital city of one of China’s most affluent province, Jiangsu, Nanjing’s total population jumped 77% from a decade ago, reflecting the fast urbanisation trend in most major tier 2 cities in China. What made this market addressable is that, aside from the expansion of the city boundary, population density shot up quickly in several districts, creating desirable retail hot spots. According to Jones Lang LaSalle, among all districts, Jianye (Hexi, a new district) stood out with the most rapid growth in population density; in the core areas of Nanjing, population density has also risen to 20-30,000 per sq km. Xinjiekou, Gulou, and Confucius Temple are the traditional submarkets, while Hexi is a rising new submarket. Xinjiekou alone accounts for almost two-thirds of the department store GFA supplies of the four CBDs put together and provides roughly a third of their total shopping mall supplies. With the development of subways that connect other CBDs in and around Nanjing, Jiangning and Jianye (Hexi) are rising with high retail capacity. Mall build-out was rising not only in city centres such as Xinjiekou, but was also more concentrated in new districts such as Hexi CBD of Jianye district. In Hexi, new developing projects feature large capacity complexes, often with apartments, hotel, office, and entertainment, as well as retail space. These multi-use projects will facilitate the formation of the Hexi community and hence secure retail footfall in this district. Supply and demand Nanjing’s shopping mall supply has accelerated since 2008. As of 2Q12, this totalled 0.74 mn sq m, 6.7 times that of the 2007 supply of 0.11 mn sq m. At end-2Q12, shopping malls occupied 67% of total retail space supply.

Figure 154: Retail sales of consumer goods Figure 155: Urban disposable income per capita (Rmb bn) Nanjing retail sales of consumer goods (Rmb per person) Nanjing urban disposable Income per capita 300 Nanjing retail sales of consumer goods YoY (RHS) 45% 35,000 Nanjing urban disposable Income per capita YoY (RHS) 35% 40% 250 30,000 30% 35% 25,000 25% 200 30% 25% 20,000 20% 150 20% 15,000 15% 100 15% 10,000 10% 10% 50 5% 5,000 5%

Figure 156: Total supply (mn sqm) Nanjing shopping mall supply Nanjing department store supply 1.2 Nanjing shopping mall supply / Total retail space supply 100% 90% 1.0 80% 70% 0.8 60% 0.6 50% 40% 0.4 30% 20% 0.2 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 58 26 November 2012

Figure 157: Retail sales of consumer goods / retail space Figure 158: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Vacancy rate Nanjing’s vacancy rate was around 3.3% as of 2Q12—one of the lowest among the 13 cities. Unlike most other cities, its vacancy rate went down as supply increased in the past few years, thanks to retailers’ strong demand to enter the Nanjing market, according to Jones Lang LaSalle’s local analyst. Vacancy increased slightly in 4Q10, mainly because Universal Mall (大观天地) opened at a high vacancy rate. Universal Mall is located in Xiaguan district, an emerging submarket which falls behind other submarkets in terms of retail development. In 2Q12, vacancy increased slightly as a result of the deteriorating retail traffic in Gulou district. According to Jones Lang LaSalle’s local analyst, this district is experiencing difficult times due to mis-positioning and demolition. As a result, many malls in this district have seen worsening take-ups since 2Q12.

Figure 159: Shopping mall total supply and vacancy Figure 160:Shopping mall new supply/absorption/vacancy (mn sqm) Nanjing total SM supply Nanjing vacancy rate (RHS) (sqm) Nanjing net new SM supply Nanjing net new SM absorption 0.8 5% 200,000 Nanjing SM vacancy 16% 0.7 5% 4% 150,000 12% 0.6 4% 0.5 3% 100,000 8% 0.4 3% 50,000 4% 0.3 2% 2% 0.2 - 0% 1% 0.1 1% (50,000) -4%

- 0%

2Q09 2Q08 3Q08 4Q08 1Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (100,000) -8% Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Pipeline and rentals Nanjing’s retail space pipeline totals 2.07 mn sq m, 138% of existing total supply of 1.50 mn sq m. In terms of the breakdown, 20% of the pipeline is in traditional CBD: 9% in Xinjiekou, 4% in Confucius Temple, and 7% in Gulou. As mentioned previously, Gulou’s retail traffic is already deteriorating and may keep on underperforming in the future. About 52% of Nanjing’s retail space pipeline is in Hexi district, a developing new CBD that may still need years to mature. We expect to see fierce leasing competition.

China Retail Property Chart Book 59 26 November 2012

Figure 161: Nanjing pipeline—breakdown by year Figure 162: Nanjing pipeline—breakdown by submarket - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 (mn sqm) (mn sqm) Xinjiekou Before 2011 Hexi

2011 Gulou

Confucius Temple 2012 Jiangning

2013 Shuanglong Avanue Yuhuatai 2014 Chengdong

Xiaguan 2015 forward Xuanwu Nanjing pipeline - DS and others Nanjing pipeline - SM Nanjing retail space existing stock Nanjing retail space pipeline Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Actual retail space completion in 2009/2010/2011 was 36%/2%/39% of the planned amount, respectively.

Figure 163: Planned and actual retail space completion Figure 164: Ground floor rental trend (sqm) Nanjing planned completion Nanjing actual completion (1Q2005=100) Nanjing effective prime rent 500,000 200 450,000 180 400,000 160 140 350,000 120 300,000 100 250,000 80 200,000 60 36% 39% 150,000 40 100,000 20 - 50,000 2%

3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 60 26 November 2012

Figure 165: Forecast completion versus actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Lianqiang International Plaza 15,000 New City Mall Hongqiao Centre 30,000 Jiaye International Shopping Mall 35,000 Nanjing Wanda Plaza 177,100 Green Land Plaza 60,000 Deji Plaza Phase II 85,000 Universal Mall 100,000 Nanjing International Plaza Shopping Mall 80,000 Wanda Plaza Phase One 60,000 Total 435,000 Total 207,100 2010 Hua Li International Shopping Mall 34,000 Universal Mall 73,000 NIC Shopping Mall (Phase I) 88,000 G. City (North Tower) 8,000 SHEWALK 35,000 Universal Mall 100,000 Deji Plaza Phase II 85,000 Green Land Plaza 60,000 Total 402,000 Total 81,000 2011 Zifeng Plaza 60,000 Zifeng Plaza 48,200 SHEWALK 36,000 NIC Shopping Mall (Phase I) 88,000 NIC Shopping Mall (Phase I) 88,000 SHEWALK Shopping Centre 40,000 Deji Plaza Phase II 85,000 Jin Ao Shopping Mall 25,000 Lang Ma International Shopping Mall 47,000 Kai Run Grand Town 30,000 Total 371,000 Total 176,200 Source: Jones Lang LaSalle, Credit Suisse research Submarket analysis There are four major submarkets in Nanjing: Xinjiekou, Shanxi Road, Hexi, and Confucius Temple. Details of these are given below:

Figure 166: Nanjing submarket summary Retail Emergence DS GFA SM GFA sub-markets year (’000 sq m) (’000 sq m) Major developers and operators, existing and future Xinjiekou 1952 230 135 Nanjing Deji Group, Golden Eagle, Sunning Shanxi Road 2001 135 135 Greenland, Spring Land Group Hexi 2009 0 215 Wanda, Golden Eagle, F&T Group Confucius Temple 2008 0 100 Pengxin Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 61 26 November 2012

Figure 167: Nanjing submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1: Xinjiekou Currently, there are seven department stores with total retail GFA of around 292,000 sq m and four shopping malls with total retail GFA of around 219,000 sq m in Xinjiekou submarket. Supply surged in 2012 in this submarket mainly due to the completion of Deji Plaza Phase II, with total GFA of 85,000 sq m—by far the largest shopping venue in this submarket. Deji II further strengthened the competitive position of Deji I, which totalled GFA of 65,000 sq m and was completed in 2005. Going forward, it is expected there will be around 172,000 sq m of new retail space to be completed through 2013, 34% of the existing retail space. Of this, the Sunning project (shopping mall: 50,000 sq m) and Golden Eagle phase II (shopping mall: 80,000 sq m) will both be competed in 2013 and will be major new projects.

China Retail Property Chart Book 62 26 November 2012

Overall, new supply will likely surge in 2013, but visibility of the pipeline after 2013 appears to be low. Judging based on the already established retail environment, the abundance of existing operators, and the relative scarcity of land in central Nanjing, major new entrants in the retail space are less likely to take place in Xinjiekou and more likely to be in other newly emerging districts such as Hexi or Jiangning.

Figure 168: Xinjiekou submarket Label Type Project Project Completion Retail GFA (sq m) Operator A DS Nanjing Xinjiekou Department Store 南京新百 1952 41,000 Golden Eagle B DS Nanjing Central Emporium 南京中央商场 1996 40,000 Nanjing Central DS Group C DS Nanjing Friendship Hualian DS 南京友谊华联百货 2000 35,000 Jinsheng Group D DS Golden Eagle Department Store 金鹰国际购物中心 2002 40,000 Golden Eagle E DS Oriental Department Store 东方商城 2002 30,000 Golden Eagle F DS Grand Ocean Department Store 大洋百货 2003 76,000 Grand Ocean G SM Wanda Shopping Mall 万达广场 2003 45,000 Wanda H SM Deji Plaza 德基广场 2Q05 65,000 Deji Group I DS Sunning Galaxy Department Store 银河国际广场 1Q07 30,000 Sunning J SM Golden Wheel In-Citi 金轮新天地 3Q08 24,000 Golden Wheel Group H SM Deji Plaza Phase II 德基广场 2 期 2Q12 85,000 Deji Group K SM Kai Run Gold Town (IST Mall) 凯润金城 4Q12 42,000 大发集团 SM Sunning Xinjiekou Project 苏宁新街口项目 2013 50,000 Sunning DS Golden Eagle Project (Ph.3) 金鹰三期 2013 80,000 Golden Eagle Source: Jones Lang LaSalle, Credit Suisse estimates

Figure 169: Xinjiekou submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 63 26 November 2012

Figure 170: Xinjiekou submarket (mn sqm) Xinjiekou submarket pipeline - DS and others Xinjiekou submarket pipeline - SM 0.60

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0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Case study – Golden Eagle Xinjiekou (Golden Eagle 3308.HK) Unbeatable location advantage: Golden Eagle Xijiekou flagship store opened in 1996 and is located at the centre of Xinjiekou CBD, with six floors and a GFA of nearly 35k sq m. It is a landmark of Xinjiekou. Merchandising selection is key for Golden Eagle, aside from prime location. It offers a full range of merchandise categories, among which, the store is known for its wide range of women’s footwear, international cosmetics brands, mid-to-high end women’s apparel, as well as casual wear. It was one of the leading operators in Nanjing to introduce international brands such as Lancome, Estee Lauder, Dior, Dunhill, BOSS, Cartier, Coach. Positioned at the sweet spot: Golden Eagle Xinjiekou store is positioned at the mid-to- high end but not at the very high end. This differentiates it from the newly emerged neighbouring Deji Shopping Mall, which leans more towards high-end international luxury brands such as Louis Vuitton, Burberry, Salvatore Ferragamo, Fendi, Prada, and Miu Miu. Optimal strategy leads to sustainable record profitability: Through careful merchandise selection and review, Golden Eagle has been able to reach a concessionary percentage rate at nearly mid-twenties, in spite of the range of western brands it carries (which usually pay lower commission rates). This concessionaire rate level is the highest in the Golden Eagle store network. Hub and spoke strategy: Centering around Xinjiekou store, Golden Eagle’s strategy in Nanjing is to open more stores in the city but in newer districts such as Hexi. By far, it has Nanjing Zhujiang store (33.6k sq m, opened in 2008), Nanjing Xianlin store (43k sq m, opened in 2010), Nanjing Hanzhong store (12.5k sq m, opened in 2009) and one managed store of Nanjing Orient Department Store (44k sq m). Nanjing Jianning store is planned to open in 2014, with a GFA of 127k sq m, Nanjing Hexi store to open in 2015, with planned GFA of 160k sqm.

China Retail Property Chart Book 64 26 November 2012

Figure 171: Golden Eagle Xinjiekou store

Source: Company data

Figure 172: Golden Eagle Xinjiekou store historical sales 4000 30% 3500 25% 3000 20% 2500 2000 15% 1500 10% 1000 5% 500 0 0% FY 07 FY 08 FY 09 FY 10 FY 11 1H 12

GSP (Rmb mn) SSSG Source: Company data Submarket study 2: Hexi Currently, there are no department stores in Hexi. Since this is a newly developed district, all stocks and future pipelines are in the form of shopping malls. Currently, total shopping mall GFA is about 287,000 sq m, consisting of three projects, with Wanda Plaza being the most prominent (GFA of 177,000 sq m, completed in 4Q09). Nine new shopping malls, with a total GFA of around 957,810 sq m of retail space, are expected to be completed in this area through 2016—triple the existing retail space. Among which, Huaxin Town (GFA 178,000 sq m) will be added in 2013, Golden Eagle Jianye City (GFA 200,000 sq m) will be added in 2014, and Sunning Olympic Project (GFA 100,000 sq m) will be added in 2015. Another project by CR Land, the MIXc project, has been proposed but is not yet under construction.

China Retail Property Chart Book 65 26 November 2012

Figure 173: Hexi submarket Label Type Project Project Completion Retail GFA (sq m) Operator A SM Zhongtai International SM 中泰国际广场 2Q08 70,000 B SM Nanjing Wanda Plaza 南京建邺万达广场 4Q09 177,100 Dalian Wanda Group Corporation Ltd C SM SHEWALK Shopping Centre 嘉业国际购物中心 3Q11 40,000 Jiaye Real Estate D SM Yu Run International Plaza 朗玛(雨润)国际广场 4Q12 92,000 Yu Run E SM Jin Ao Shopping Mall 金奥大厦 4Q12 39,810 Jiangsu Jindadi F SM Huaxin Town 华新城 2013 178,000 Walsin Lihwa G SM Jinji Mall Street 金基精品商业街 2013 20,000 Kingjee H SM Jianye G. City 建邺金鹰天地 2014 200,000 Golden Eagle I SM Hexi SHK Project 河西新鸿基项目 2015 78,000 SHK J SM Nanjing World Trade Centre 南京世贸中心 2015 50,000 F&T Group K SM Sunning Olympic Project 苏宁奥体广场 2015 100,000 Sunning SM MIXc 万象城 2016 200,000 China Resource Source: Jones Lang LaSalle, Credit Suisse research

Figure 174: Hexi submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 66 26 November 2012

Figure 175: Hexi submarket (mn sqm) Xinjiekou submarket pipeline - DS and others Xinjiekou submarket pipeline - SM 0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 67 26 November 2012 Qingdao Qingdao is a major seaport and one of the economic centres of Shandong province. It had a total resident population of 7.7 mn and total GDP of Rmb662 bn in 2011. Disposable income is Rmb28,567/person, and retail sales of consumer goods totalled Rmb230 bn in 2011. The upgrade in transportation in the past few years helped to enlarge the potential trade areas and promote development of the retail market. Supply and demand Qingdao’s shopping mall supply accelerated post 2009. As of 2Q12, shopping mall supply totalled 0.78 mn sq m, 5.0 times the 2008 supply of 0.16 mn sq m. By end-2Q12, shopping malls should occupy 67% of total retail space.

Figure 176: Retail sales of consumer goods Figure 177: Urban disposable income per capita (Rmb bn) Qingdao retail sales of consumer goods (Rmb per person) Qingdao urban disposable Income per capita 250 Qingdao retail sales of consumer goods YoY (RHS) 50% 30,000 Qingdao urban disposable Income per capita YoY (RHS) 30% 45% 25,000 25% 200 40% 35% 20,000 20% 150 30% 25% 15,000 15% 100 20% 15% 10,000 10% 50 10% 5,000 5% 5% - 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

Figure 178: Total supply (mn sqm) Qingdao shopping mall supply Qingdao department store supply 1.4 Qingdao shopping mall supply / Total retail space supply 100% 90% 1.2 80% 1.0 70% 60% 0.8 50% 0.6 40%

0.4 30% 20% 0.2 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse research

Figure 179: Retail sales of consumer goods / retail space Figure 180: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 68 26 November 2012

Vacancy rate If new supply comes into the market with low take-up, the vacancy of the whole market will be pushed up. This happened in 2Q10. In 2Q10, Marina City (百丽广场) and Darling Harbour (心海广场) opened at a 50% vacancy rate. As these two malls’ leasing conditions improved, Qingdao’s vacancy rate went down gradually to 6.8% at end-2Q12.

Figure 181: Shopping mall total supply and vacancy Figure 182:Shopping mall new supply/absorption/vacancy (mn sqm) Qingdao total SM supply Qingdao vacancy rate (RHS) (sqm) Qingdao net new SM supply Qingdao net new SM absorption 0.9 25% 200,000 Qingdao SM vacancy 20% 0.8 20% 0.7 150,000 15% 0.6 15% 0.5 100,000 10% 0.4 10% 0.3 50,000 5%

0.2 5% 0.1 - 0%

- 0%

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (50,000) -5% Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

Figure 183: Key projects opened at high vacancy rate Project District Completion Format Retail GFA Open vacancy Current vacancy Marina City 百丽广场 Shinan 2Q10 SM 80,000 50% 18% Darling Harbour 心海广场 Shinan 2Q10 SM 36,000 50% 21% Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Pipeline and rental Qingdao’s pipeline totals 2.05 mn sq m, 179% of the current total supply of 1.14 mn sq m.

Figure 184: Qingdao pipeline—breakdown by year Figure 185: Qingdao pipeline—breakdown by submarket - 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 (mn sqm) (mn sqm) Before 2011 Shinan

2011 Laoshan

2012 Shibei 2013

Licang 2014

2015 forward Sifang Qingdao pipeline - DS and others Qingdao pipeline - SM Qingdao retail space existing stock Qingdao retail space pipeline Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Actual retail space completion in 2009/2010/2011 was 24%/29%/240% of planned amount, respectively. 2011 actual retail space completion is 240% of forecast amount, mainly because Jones Lang LaSalle included two new malls into its coverage list: Yue Xi Ke Lai (悦喜客来购物广场) and ShineCity (新业广场).

China Retail Property Chart Book 69 26 November 2012

Figure 186: Planned and actual retail space completion Figure 187: Ground floor rental trend (sqm) Qingdao planned completion Qingdao actual completion (1Q2005=100) Qingdao effective prime rent 900,000 180

800,000 160

700,000 140 120 600,000 100 500,000 80 400,000 60 300,000 24% 240% 40 200,000 29% 20 100,000 -

1Q08 3Q05 1Q06 3Q06 1Q07 3Q07 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

Figure 188: Forecast completion versus actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Eastern City Shopping Mall 160,000 Leader Shopping Centre 35,000 QDZ International Trade Centre 60,000 CBD Wanda Plaza 120,000 Zhuoting Square 9,625 Central Avenue Phase I 43,463 Marian City 80,000 Powerlong City Plaza 400,000 Wanda Centre 50,000 Capland Shopping Centre 17,000 Central Avenue 50,000 Total 826,625 Total 198,463 2010 QDZ International Trade Centre 40,000 Lifespace 54,000 Marina City 80,000 Marina City 80,000 Capland Shopping Centre 17,000 Darling Harbour 36,000 Qingdao Dar-ling 36,000 The Agora Centre 27,015 Taian-Shenguotou Business Centre 20,000 Farglory International Plaza 30,000 Powerlong City Plaza 329,395 Total 579,410 Total 170,000 2011 Capland Shopping Centre 17,000 Yue Xi Ke Lai 65,000 The Agora Centre 45,000 ShineCity 45,500 Farglory International Plaza 30,000 Powerlong City Plaza 110,000 Total 92,000 Total 220,500 Source: Jones Lang LaSalle, Credit Suisse research Submarket analysis There are six major submarkets in Qingdao: Shinan Eastern, Shibei CBD, Shinan Western, Taidong, Laoshan, and Licang. Details of these are given below:

China Retail Property Chart Book 70 26 November 2012

Figure 189: Qingdao submarket summary Retail Emergence DS GFA SM GFA Submarkets Year (’000 sq m) (’000 sq m) Major developers and operators, existing and future Shinan (Eastern) 1998 170 220 AEON, Hisense Group, Dashang Group, SunnyWorld Shibei CBD 2009 0 170 Wanda, GIC Shinan (Western) 1980s 65 65 Likelai Group, The Lion Group Taidong 1980s 25 50 Liqun Group, Wanda Laoshan 2009 35 75 Leader Group, Zendai Group Licang 1990s 80 110 Likelai Group, Weekly Group, Liqun Group, Powerlong Group Source: Jones Lang LaSalle, Credit Suisse research

Figure 190: Qingdao submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1: Shinan The Western Shinan submarket is located in the southwest of Qingdao, and has the longest retail market history in the district. It is close to Qingdao railway station and future metro lines 1, 2, and 3. This area is positioned for the mid-end and is the tourists’ major shopping destination during the summer time. Eastern Shinan is located in the southeast of Qingdao, and has future access to metro lines 2 and 3. This area is Qingdao’s largest office cluster and an important luxury residential area. It contains both low-end and high- end brands, targeting Qingdao residents and tourists. Currently, there are seven department stores with a retail GFA of 253,000 sq m, and six shopping malls with a retail GFA of 286,300 sq m. In the future, 13 new projects with a total retail GFA of 922,925 sq m are due to be completed by 2015. The pipeline is 171% of the existing retail space, putting high pressure on occupancy rates and rentals.

China Retail Property Chart Book 71 26 November 2012

Figure 191: Shinan submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Operator A DS Orient Trading Building 东方贸易大厦 1992 11,000 B DS Qingdao Fada Building 青岛发达大厦 1996 20,000 C DS Plaza Printemps 巴黎春天广场 1997 27,000 Printemps Department Store D SM Jusco Shopping Centre 佳世客购物中心-东部店 1998 40,000 E SM Crowne Plaza Qingdao 皇冠假日 2000 2,500 F DS Sunshine Dept. Store 阳光百货 2003 30,000 G DS Parkson Dept. Store 百盛 2004 35,000 H DS Qingdao Guohuo Building 青岛国货商场 2004 20,000 I DS Mykal 麦凯乐 3Q06 110,000 SM Hisense Plaza–Olympics Store 海信广场-奥林匹克店 2Q08 62,800 Hisense Group SM Marina City 百丽广场 2Q10 80,000 Taishan SM Darling Harbour 心海广场 2Q10 36,000 SM Yue Xi Ke Lai 悦喜客来购物广场 1Q11 65,000 Likelai Group SM HNA Centre 海航万邦中心 2013 38,000 IMC Real Estate SM Farglory International Plaza 远雄国际广场 2013 36,000 青岛深华房地产有限公司 SM Capland Shopping Centre 凯悦购物广场 2013 17,000 Qingdao Capland SM Tsingdao Centre 青岛中心 2013 42,000 China Rail DS InZone 银座商城 2013 54,000 Lushang SM Oceanwide International SC 泛海购物中心 2013 34,000 SM The MIXc 华润万象城 2014 290,000 SM Huanhai Gloria Hotel 环海凯莱商务酒店 2014 19,039 Gloria Hotels & Resorts SM Blue Sea New Port 蓝海新港城 2015 192,689 Blue Sea New Port Property SM City Centre 鲁商中心 2015 50,000 Lushang SM Greentown Project 绿城项目 2015 35,465 Greentown Group SM Shiao Plaza 世奥大厦 2015 34,732 Shanghai Shimao Co Ltd SM Hisense Plaza Phase II 海信广场二期 2015 80,000 Hisense Group Source: Jones Lang LaSalle, Credit Suisse research

Figure 192: Shinan submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 72 26 November 2012

Figure 193: Shinan submarket (mn sqm) Shinan submarket pipeline - DS and others Shinan submarket pipeline - SM 0.50

0.45

0.40

0.35

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0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Submarket study 2: Shibei Shibei submarket is located to the north of Shinan submarket, and will have future access to metro line 3. It is under the local government’s urban development plan, and is now more mature than a typical “new CBD” such as Chengdu New South Area. Currently, there is one department store with total retail GFA of 26,000 sq m and three shopping malls with total retail GFA of 215,500 sq m. In the pipeline, there are two department stores with total retail GFA of 71,300 sq m, and two shopping malls with total retail GFA of 209,470 sq m.

Figure 194: Shibei submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Operator A DS Liqun Building 利群商厦 1993 26,000 Liqun Group B SM Wanda Plaza (Taidong) 青岛万达广场 2003 50,000 C SM CBD Wanda Plaza CBD 万达广场 4Q09 120,000 Dalian Wanda D SM ShineCity 新业广场 1Q11 45,500 阳光新业地产股份有限公司 E DS Rainbow Dept. Store 天虹百货 2013 50,000 Jingxi Property Development F SM Central Plaza 中央广场 2013 117,470 Huazhu G SM Jusco Shopping Centre-Hefei Rd Store 佳世客购物中心 2013 92,000 AEON DS Wangfujing 王府井百货 2014 21,300 Qingfang Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 73 26 November 2012

Figure 195: Shibei submarket

Source: Google map, Credit Suisse

Figure 196: Shibei submarket (mn sqm) Shibei submarket pipeline - DS and others Shibei submarket pipeline - SM 0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Submarket study 3: Licang Licang is located in the northern part of Qingdao and far from the traditional CBD, but will get future access to metro lines 2 and 3. It has recently been developed into a mass- market residential area. Retail supply entered this area to serve local residents, and consists mostly of low-to-mid-end positioning. Currently, there are two department stores with a retail GFA of around 68,000 sq m and one shopping mall with total retail GFA of around 110,000 sq m in Licang sub market. The pipeline consists of one department store with total retail GFA of 67,261 sq m, and three shopping malls with total retail GFA of 313,600 sq m.

China Retail Property Chart Book 74 26 November 2012

Figure 197: Licang submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Operator A DS Qingdao Beifang Guomao Building 青岛北方国贸大厦 1995 36,000 B DS Weekly Cangkou Shopping Centre 维客沧口购物中心 2003 32,000 Weekly Group C SM Powerlong City Plaza 宝龙城市广场 4Q11 110,000 Powerlong Group D SM Licang Wanda Square 李沧万达广场 3Q12 112,600 Dalian Wanda E SM Sunning Square 苏宁电器广场 4Q12 41,000 苏宁置业 F SM RockCity 伟东乐客城 4Q12 160,000 Weidong Group G DS InZone Shopping Centre 银座购物中心 2014 67,261 Lushang Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 198: Licang submarket

Source: Google map, Credit Suisse

Figure 199: Licang submarket

(mn sqm) Licang submarket pipeline - DS and others Licang submarket pipeline - SM 0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Case study 1 - Powerlong City Plaza (Powerlong 1238.HK) Powerlong City Plaza is located in Licang submarket. This shopping mall was opened in December 2011 and offers a retail GFA of around 110,000 sq m, making it one of the largest retail centres in this submarket. Its occupancy rate is over 98%. With 3 shopping malls and 1 department store to come into Licang retail submarket, competition can get more fierce and occupancy rate and rental can be under pressure.

China Retail Property Chart Book 75 26 November 2012

Figure 200: Powerlong City Plaza Submarket Licang Developer Powerlong Group Completion date Dec-2011 Total GFA (sq m) 110,000 Efficiency 60% Comments The mall is the first urban complex in Licang retail zone Anchor tenant Bolloon Department Store (21,000 sqm); China Resources Vanguard Supermarket (25,000 sqm); Watsons; UNIQLO; Loong Mic Fashion KTV; HG Entertainment Source: Jones Lang LaSalle, Credit Suisse research

Figure 201: Powerlong City Plaza Figure 202: Powerlong City Plaza tenant mix

F&B 34%

Fashion 28%

Home 11%

Kids 11%

Sports 6%

Jewelry / Accessories 5%

Entertainment 2%

Service 2%

Cosmetics 1% 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: Company data Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 76 26 November 2012 Shenyang Shenyang is a major city in northeast China and also the capital city of Liaoning Province. In 2010, it had a total permanent population of 8 mn, and around 25 mn within the surrounding satellite regions. Total retail sales of consumer goods was Rmb243 bn and disposable income was Rmb23,326/person in 2011. Many international developers and brands, especially luxury brands, choose Shenyang as their first stop in northeast China. Shenyang’s shopping mall supply has tripled in the past four years and its vacancy rate is one of the highest among the 13 cities, while its rental rates are among the lowest— showing signs of oversupply. Supply and demand Shenyang’s shopping mall supply spiked after 2009. Shopping mall supply as of 2Q12 totalled 2.5 mn sq m, 3.4 times the 2008 supply of 0.74 mn sq m. By end-2Q12, shopping malls occupied 67% of total retail space supply.

Figure 203: Retail sales of consumer goods Figure 204: Urban disposable income per capita (Rmb bn) Shenyang retail sales of consumer goods (Rmb per person) Shenyang urban disposable Income per capita 300 Shenyang retail sales of consumer goods YoY (RHS) 25% 25,000 Shenyang urban disposable Income per capita YoY (RHS) 30%

250 25% 20% 20,000

200 20% 15% 15,000 150 15% 10% 10,000 100 10%

5% 5,000 50 5%

Figure 205: Total supply (mn sqm) Shenyang shopping mall supply Shenyang department store supply 4.0 Shenyang shopping mall supply / Total retail space supply 100%

3.5 90% 80% 3.0 70% 2.5 60% 2.0 50%

1.5 40% 30% 1.0 20% 0.5 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 77 26 November 2012

Figure 206: Retail sales of consumer goods / retail space Figure 207: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Vacancy rate Shenyang’s vacancy rate is one of the highest among the 13 cities. Some shopping malls operate at high vacancy rates due to self-operating issues, such as Mid Town (潮汇百货) in Taiyuanjie Street, Fanhua Plaza (泛华广场) in Hunnan area, Rich Gate (华府购物中心) in CBD area, and Bailian Shopping Centre (百联购物中心) in Mid Golden Corridor. Other shopping malls operate at high vacancy rates because they are still cultivating their markets, and they entered the market with a large GFA, such as Longemont Shopping Centre (龙之梦购物中心) in Dadong District with total GFA of 350,000 sq m.

Figure 208: Shopping mall total supply and vacancy Figure 209:Shopping mall new supply/absorption/vacancy (mn sqm) Shenyang total SM supply Shenyang vacancy rate (RHS) (sqm) Shenyang net new SM supply Shenyang net new SM absorption 3.0 30% 400,000 Shenyang SM vacancy 28%

2.5 25% 300,000 21%

2.0 20% 200,000 14%

1.5 15% 100,000 7%

1.0 10% - 0%

0.5 5% (100,000) -7%

- 0% (200,000) -14%

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (300,000) -21% Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

Figure 210: Key projects opened at high vacancy rate Project District Completion Format Retail GFA Open vacancy Current vacancy Rich Gate 华府购物中心 Shenhe 4Q07 SM 94,054 45% 25% Bailian 百联购物中心 Shenhe 1Q08 SM 104,547 10% 30% Mid Town 潮汇百货 Heping 4Q09 SM 51,604 25% 45% Fanhua Plaza 泛华广场 Hunnan 4Q09 SM 94,054 40% 45% Longemont 龙之梦购物中心 Dadong 3Q11 SM 350,000 45% 40% Tianrun Plaza 天润广场 Shenhe 1Q12 SM 126,322 45% 40% Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Pipeline and rental Shenyang’s retail space pipeline totals 3.49 mn sq m, 95% of current total supply of 3.66 mn sq m. Some commercial clusters, such as Zhongjie Street, have faced huge supply pressure in recent years and are likely to in the future, in our view. Besides Zhongjie Street, Golden Corridor will also face oversupply, with another nine projects due to come up in the next

China Retail Property Chart Book 78 26 November 2012 three years. (Note: Golden Corridor is a long street from north to south of Shenyang. North Golden Corridor is in Huanggu District and South Golden Corridor is in Wulihe area.)

Figure 211: Shenyang pipeline—breakdown by year Figure 212: Shenyang pipeline—breakdown by submarket - 0.5 1.0 1.5 2.0 2.5 3.0 - 0.5 1.0 1.5 2.0 2.5 (mn sqm) Zhongjie (mn sqm) Before 2011 Taiyuan Street CBD 2011 Tiexi Square-Xinghua Street Wulihe 2012 Mid-Corridor Hunnan 2013 Qingnian Avenue Others Beiling Street & Ningshan Road 2014 Olympic Centre Beihang 2015 forward Huanggu Shenyang pipeline - DS and others Shenyang pipeline - SM Shenyang retail space existing stock Shenyang retail space pipeline Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research Actual retail space completion in 2009/2010/2011 was 50%/76%/184% of the planned amount, respectively.

Figure 213: Planned and actual retail space completion Figure 214: Ground floor rental trend (sqm) Shenyang planned completion Shenyang actual completion (1Q2005=100) Shenyang effective prime rent 1,400,000 180 160 1,200,000 184% 140 1,000,000 120

800,000 100 80 600,000 60 50% 76% 400,000 40 20 200,000 -

3Q08 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse research Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 79 26 November 2012

Figure 215: Forecast completion versus actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Shenyang Wulihe Shopping Mall 50,000 Shenyang Wulihe Shopping Mall 46,393 Shenyang Joy City Phase I 340,000 Shenyang Joy City Phase I 129,539 Yifeng Times Plaza 180,000 Shenyang MidTown 51,604 L'Avenue 36,300 Pan China Project Phase I 94,054 Hang Lung Plaza 109,700 Wanda Plaza 88,900 Lifestyle Plaza Phase I 100,000 Total 816,000 Total 410,490 2010 L'Avenue 36,300 NewMart Bloom 60,000 Maoye Centre 30,000 Hang Lung Palace 66 109,700 Hang Lung Plaza 109,700 Tiexi Wanda Plaza 106,253 Tiexi Wanda Project 200,000 Zhongxing–Shengyang Commercial Building Ph III 85,078 Yifeng Times Plaza 180,000 Shimao Department Store 59,000 Total 556,000 Total 420,031 2011 MOI 80,000 Chateau Jolie 20,000 L'Avenue 36,300 Fortune Plaza 106,900 New World Department Store 32,500 MOI Department Store 82,000 The MIXc 200,000 Shenyang Joy City Block C 102,000 Star Mall Shenyang Plaza 129,000 Shenyang Joy City Block D 56,000 Dragon Dream Asia City 150,000 New World Department Store Zhongjie 70,000 L'Avenue 36,300 The MIXc 200,000 Shenyang Commercial DS 91,000 Yashi Departments Store 38,000 Dragondream Shopping mall 350,000 Total 627,800 Total 1,152,200 Source: Jones Lang LaSalle, Credit Suisse research Submarket analysis There are six major submarkets in Shenyang: Taiyuan Street, Zhongjie Street, Dashang Group, CBD, Mid-Golden Corridor, and Wulihe. Details are given below:

Figure 216: Shenyang submarket summary Retail Emergence DS GFA SM GFA Submarkets Year (000 sq m) (000 sq m) Major Developers and Operators, Existing and Future Taiyuan Street 1980s 430 285 New World, Wanda, Zhongxing, Changchun Ouya Zhongjie Street 1980s 460 1000 Happy Family, COFCO, Lifestyle Holdings, Hang Lung, Dashang Group CBD 2006 130 240 Sunnyworld, Charter Group, Hang Lung, Henderson, L Capital Mid-Golden Corridor 2008 0 305 Bailian, China Resources Wulihe 2007 160 45 MOI, Kaisa, Shimao Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 80 26 November 2012

Figure 217: Shenyang submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1: Zhongjie & CBD Zhongjie submarket is located at the centre of Shenyang, and has access to metro line 1. It is a traditional retail submarket, and rapidly being upgraded from a low-to-mid-end positioning to a high-end positioning, with some new projects completed by national and international developers. The CBD submarket is a high-end retail market. Charter Shopping Centre in this area is recognised as one of Shenyang’s most mature luxury malls. It attracts rich people not only from Shenyang but also from the district’s satellite cities. Currently, there are nine department stores with total retail GFA of around 586,700 sq m and ten shopping malls with total retail GFA of around 1,614,055 sq m in Zhongjie & CBD submarket. There are two department stores in the pipeline with total retail GFA of 213,714 sq m, and six shopping malls with total retail GFA of 459,000 sq m.

China Retail Property Chart Book 81 26 November 2012

Figure 218: Zhongjie & CBD submarket Retail Label Type Subject project (Eng) 项目名称 Submarket Completion GFA (sq m) Developer DS Shenyang Commercial DS 商业城 Zhongjie 1991 79,000 Shangyecheng DS Shenyang Spring Department Store 沈阳春天百货 Zhongjie 1998 60,000 A DS New Mart Shopping Mall 新玛特购物中心 Zhongjie 2002 98,000 Dashang Group B SM Happy Family Shopping Mall 兴隆大家庭 Zhongjie 2002 197,000 Happy Family DS 0101 Fashion Town 罕王百货 Zhongjie 4Q05 23,000 HanKING DS Charter Shopping Centre 卓展购物中心 CBD 4Q06 91,400 Charter C SM Rich Gate Shopping Mall 华府购物中心 CBD 4Q07 240,000 Rich Gate D SM Shenyang Joy City Phase I 沈阳大悦城 Zhongjie 2Q09 129,539 COFCO E SM Hang Lung Palace 66 皇城恒隆广场 Zhongjie 3Q10 109,700 Hang Lung SM Fortune Plaza 大发广场 Zhongjie 1Q11 106,900 South China Group F SM Shenyang Joy City Block C 沈阳中粮大悦城 C Zhongjie 1Q11 102,000 COFCO DS L'Avenue 卓越中心 CBD 2Q11 36,300 LVMH & STDM JV DS New World DS 新世界百货中街店 Zhongjie 2Q11 70,000 New World DS Shenyang Commercial DS 商业城 Zhongjie 2Q11 91,000 F SM Shenyang Joy City Block D 沈阳中粮大悦城 D Zhongjie 2Q11 56,000 COFCO DS Yashi Departments Store 雅仕百货 Zhongjie 3Q11 38,000 SM 龙之梦购物中心 Zhongjie 3Q11 350,000 Submit SM Tianrun Plaza 天润广场 Zhongjie 1Q12 126,322 Tuanrun G SM One Mall 盾安新一城 Zhongjie 2Q12 196,594 Dunan H DS Jiuguang Department Store P1 久光百货 1 期 Zhongjie 3Q12 120,000 Lifestyle Intl I SM Hang Lung Forum 66 市府恒隆广场 CBD 4Q12 81,000 Honglong Plaza SM Sun Wah IFC Shopping Centre P1 新华国际金融中心 CBD 4Q12 38,000 Sun Wah DS Sunnyworld Dept Store 阳光新地中心 CBD 2013 93,714 SunnyWorld SM Pan-china Plaza PH2 泛华广场二期 CBD 2013 50,000 Pan China SM Rich Gate New Region 华府新天地 CBD 2013 155,000 Huarui J SM Shenyang International Finance Centre 沈阳国际金融中心 CBD 2013 55,000 Henderson Land HK SM Yuyuan Tourist Mart 上海豫园商城北中街 Zhongjie 2014 80,000 Yuyuang Source: Jones Lang LaSalle, Credit Suisse research

Figure 219: Zhongjie & CBD submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 82 26 November 2012

Figure 220: Zhongjie & CBD submarket (mn sqm) Zhongjie-CBD submarket pipeline - DS and others Zhongjie-CBD submarket pipeline - SM 1.20

1.00

0.80

0.60

0.40

0.20

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research Case study 2—Hang Lung Palace 66 (Hang Lung Prop 101 HK) Hang Lung Palace 66 is located in Zhongjie&CBD submarket of Shenyang. This shopping mall was opened in 3Q10 and offers a retail GFA of around 110,000 sq m. In 1H12, the gross rental income from Hang Lung Palace 66 Shenyang was HK$82 mn and occupancy rate was at 90%. There will be another Hang Lung shopping mall—Hang Lung Forum 66 (luxury project) to be completed in this area in 2012 and add a retail GFA of around 80,000 sq m. We believe the existing stock and upcoming new retail space will take a long time for the local market to absorb, thus exert pressure on occupancy and rental.

Figure 221: Hang Lung Palace 66 Figure 222: Hang Lung Forum 66 location

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Submarket study 2: Mid-Golden Corridor Mid-Golden Corridor is located in Shenhe and Heping District, the centre of the city’s urban area. It has convenient access to metro lines 1 and 2. Since 2003, the government has emphasised the development of the Golden Corridor. The retail market in this area emerged in 2008 with the open of the Bailian Shopping Centre. In 2Q12, CR Land opened the MIXc with a total retail GFA of 200,000 sq m, positioned for mid-to-high end retailers. Going forward, one shopping mall with a total GFA of 95,971 sq m is planned to be opened in 2014.

China Retail Property Chart Book 83 26 November 2012

Figure 223: Mid-Golden Corridor submarket Label Type Project 项目名称 Completion Retail GFA (sq m) Developer A SM Bailian Shopping Centre 百联购物中心 1Q08 104,547 Bailian B SM The MIXc 万象城 2Q11 200,000 China Resources Land C SM Eton Centre 沈阳裕景中心 2014 95,971 Eton Group Source: Jones Lang LaSalle, Credit Suisse research

Figure 224: Mid-Golden Corridor submarket

Source: Google map, Credit Suisse

Figure 225: Mid-Golden Corridor submarket (mn sqm) Mid-Corridor submarket pipeline - DS and others Mid-Corridor submarket pipeline - SM 0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse research

China Retail Property Chart Book 84 26 November 2012 Wuhan Hankou is Wuhan’s traditional retail heartland, but Wuchang is growing in prominence: Hankou houses approximately a quarter of Greater Wuhan’s population, with a population density of about three times that of Wuchang and Hanyang. Hankou is Wuhan’s established heart of retail, and is already positioned more towards the high-end. Wuchang, critically located next to the Yangtze River bank and strategically embracing the tourist-heavy East Lake, is Wuhan’s upcoming retail powerhouse. From now through 2016, almost half of Wuhan’s additional retail supply should come from Wuchang, mainly from Guanggu and Wuluo road areas. Shopping malls dominate future pipeline: Shopping malls dominate the pipeline in all submarkets in Wuhan. Counting out the expansion projects of some existing venues, GFA of all new shopping mall projects are above 55,000 sq m, ranging mostly from 60,000 sq m to 80,000 sq m. New subways and bridges should unlock emerging consumption power. At present, Wuhan has one subway in operation and six lines under construction. The most prominent line is M2, which could be the first among the other three metro lines to cross the Yangtze River, connecting Hankou and Wuchang. The greater intra-city connectivity, particularly M2 and M4 subway lines, should unlock the pent-up demand from the residents in the adjacent suburb areas, which houses over 40% of greater Wuhan’s population. Supply and demand Wuhan’s shopping mall supply has been accelerating since 2010. Shopping mall supply as of 2Q12 totalled 2.0 mn sq m, or 2.4 times of that in 2009. As of end-2Q12, shopping malls accounted for 71% of the total retail space supply.

Figure 226: Retail sales of consumer goods Figure 227: Urban disposable income per capita Rmb bn) Wuhan retail sales of consumer goods (Rmb per person) Wuhan urban disposable Income per capita 350 Wuhan retail sales of consumer goods YoY (RHS) 30% 25,000 Wuhan urban disposable Income per capita YoY (RHS) 18% 16% 300 25% 20,000 14% 250 20% 12% 15,000 200 10% 15% 150 8% 10,000 10% 6% 100 5,000 4% 50 5% 2% - 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 228: Total supply (mn sqm) Wuhan shopping mall supply Wuhan department store supply 3.5 Wuhan shopping mall supply / Total retail space supply 100% 90% 3.0 80% 2.5 70% 60% 2.0 50% 1.5 40%

1.0 30% 20% 0.5 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 85 26 November 2012

Figure 229: Retail sales of consumer goods / retail space Figure 230: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Wuhan’s vacancy was 5.0% as of 1Q12 (2Q12 data is not available because Jones Lang LaSalle updates Wuhan data on a half yearly basis in 1Q and 3Q). Some malls opened at high vacancy rates, pushing up the city’s vacancy rates in 2Q10 and 3Q11. In 2Q10, Wuhan Mall (武汉摩尔) opened at an 18% vacancy rate. In 3Q11, West Garden (西园商业街) opened at a 20% vacancy rate and Wuhan International Plaza Ph.2 (武汉国际广场二期) at 20% vacancy rate.

Figure 231: Shopping malls—total supply and vacancy Figure 232:Shopping malls—new supply, absorption and vacancy (mn sqm) Wuhan total SM supply Wuhan vacancy rate (RHS) (sqm) Wuhan net new SM supply Wuhan net new SM absorption 2.5 10% 600,000 Wuhan SM vacancy 16% 9% 14% 2.0 8% 500,000 7% 12% 400,000 1.5 6% 10% 5% 300,000 8% 1.0 4% 6% 3% 200,000 0.5 2% 4% 100,000 1% 2% - 0% -

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q08 (100,000) -2% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 233: Key projects opened at high vacancy rates Open Current Project Submarket Completion Format Retail GFA vacancy vacancy Wuhan Mall 武汉摩尔 Hanyang 2Q10 SM 180,000 18% 10% Optics Valley International Plaza 光谷国际广场 Wuchang Guanggu 2Q11 SM 60,000 18% 7% West Garden 西园商业街 Hankou Jiefang Rd 3Q11 SM 40,000 20% 50% Wuhan International Plaza Ph.2 武汉国际广场二期 Hankou Jiefang Rd 3Q11 SM 270,000 20% 6% Note: West Garden has been under project renovation and repositioning since 2Q12 so the current vacancy went up to 50%. Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Pipeline and rental Wuhan’s retail space pipeline totals 3.88 mn sq m, 132% of the current total supply of 2.94 mn sq m. We believe Hangkou Jiefang Rd, Jianghan, and Wuhan Guanggu will face more oversupply pressure in the future.

China Retail Property Chart Book 86 26 November 2012

Figure 234: Wuhan pipeline—breakdown by year Figure 235: Wuhan pipeline—breakdown by submarket - 0.50 1.00 1.50 2.00 2.50 - 0.2 0.4 0.6 0.8 1.0 1.2 (mn sqm) (mn sqm) Hankou Jianghan Rd Before 2011 Hankou Jiefang Rd

2011 Hankou Others

Hankou Qingnian Rd 2012 Wuchang Guanggu

2013 Wuchang Wuluo Rd

Wuchang Xudong 2014 Wuchang Others

2015 forward Hanyang Wuhan pipeline - DS and others Wuhan pipeline - SM Wuhan retail space existing stock Wuhan retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Actual retail space completion in 2009/2010/2011 was 84%/127%/110% of the planned area, respectively.

Figure 236: Planned and actual retail space completion Figure 237: Ground floor rental trend (sqm) Wuhan planned completion Wuhan actual completion (1Q2005=100) Wuhan effective prime rent 900,000 110% 250 800,000

700,000 200

600,000 150 500,000 127% 400,000 100 300,000 84% 200,000 50

100,000 - -

2009 2010 2011

3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 238: Forecast completion versus actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Wuhan Tiandi Phase 3 29,000 Xihui Life-style Plaza 50,000 Bund One (Phase 2) 150,000 Guanggu World City Ph2 - Spanish Style Pedestrian 35,000 East Hankou Shopping Park Phase I 50,000 FRP 20,000 Wuhan Tiandi Phase 3 29,000 Grand Ocean Department Store - Hanyang 47,000 K11 11,000 Total 229,000 Total 192,000 2010 Wuhan Mall 170,000 Optics Valley International Plaza 60,000 CapitalMall 27,000 Wuhan Mall 180,000 East Hankou Shopping Park Phase II 50,000 Wanda Plaza Lingjiaohu 94,600 Hanshang Yinzuo 50,000 Lotte World 42,300 Total 297,000 Total 376,900 2011 Bund One 128,000 Nanhu City Square 36,000 Hanshang Yinzuo 60,000 West Garden 40,000 CapitalMall 27,000 Wuhan International Plaza Ph.2 270,000 Wanda Plaza - Jiyuqiao 106,000 Future City 40,000 Wanda Plaza - EDZ 160,000 Han Jie Wanda Pedestrian Street 180,000 Huas Intl Plaza Shopping Centre 100,000 Bund One Mall 128,000 Wushang Mall Project 101,600 Zhongxin Dept. Store 30,000 Intime Department Store - Hankou 90,000 Guanggu Tiandi 80,000 Sone Park 47,000 Total 772,600 Total 851,000 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 87 26 November 2012

Submarket analysis There are seven major submarkets in Wuhan, on Jiefang Road, Jianghan Road, Qingnian Road, Hangyang, Wuluo Road, Guanggu, and Xudong. Details are as below:

Figure 239: A summary of Wuhan submarkets DS SM Retail Emergence GFA GFA Submarkets year (000 sq m) (000 sq m) Major Developers and Operators, Existing and Future Jiefang Road 2000 210 405 Wushang Group, Sogo, New World, CapitaLand Rongzelihua Jianghan Road 2001 90 185 New World, Wanda, Ping’an, Century Huayu, Hutchison Wampoa, Hang Lung, Wangfujing Qingnian Road 2011 60 95 New World, Huas, Wanda, Wuhan Sanjin, China Oceanwide Hangyang 1998 130 320 Hanshang Group, Lotte, New World Wuluo Road 2003 290 40 Zhongjiang, Wushang, New World, Lotte, Poly Group, Intime Guanggu 2008 0 380 Lijia Property, Wuhan Dongsheng, New World Xudong 2009 30 380 Zhongshang Group, New World, Wanda, Putijin Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 240: Wuhan submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1 - Wuchang Guanggu Currently, Guanggu submarket’s major retail venues’ total GFA stands at about 599,610 sq m. All of these are in the form of shopping malls. Guanggu is a typical new emerging commercial zone in Wuhan. Its rapid development was kick-started in 2008 when Guanggu Pedestrian Road opened. Following which, the retail facilities have quickly developed with the entry of major department stores (such as Grand Ocean), supermarkets (such as Carrefour) and movie theatres. We believe Guanggu’s retail and real estate markets will be bolstered by several universities congregated around this area, the expected completion of M2 subway and the East Lake natural scenery attraction.

China Retail Property Chart Book 88 26 November 2012

By 2014, around 125,000 sq m new shopping mall area is expected to be completed in this region, or 21% of the existing retail space. The entire pipeline is in the form of shopping malls.

Figure 241: Wuchang Guanggu submarket Retail GFA Label Type Project Project Completion (sq m) Operator A SM Guanggu World City Ph1 光谷世界城一期 2Q08 113,800 Lijia Property A SM Guanggu World City Ph2 光谷世界城二期 3Q09 35,000 Lijia Property B SM Optics Valley International Plaza 光谷国际广场 1Q10 60,000 Wuhan Dongsheng C SM Bund One Mall 沿江一号 4Q11 128,000 Shengtang Group D SM Guanggu Tiandi 光谷天地 4Q11 80,000 Hubei Changcheng E SM New Luxiang Plaza 新鲁巷广场 4Q12 113,810 Wuhan Guanshan and Economic Group A SM Guanggu World City Plaza 光谷世界城广场 4Q12 69,000 Lijia Property B SM Optics Valley Int'l Plaza Phase 2 光谷国际广场二期 2013 70,000 Wuhan Dongsheng F SM Guanggu New World Shopping Mall 光谷新世界购物中心 2014 55,000 New World Source: Jones Lang LaSalle, Credit Suisse estimates

Figure 242: Wuchang Guanggu submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 89 26 November 2012

Figure 243: Wuchang Guanggu submarket pipeline (mn sqm) Wuchang Guanggu submarket pipeline - DS and others Wuchang Guanggu submarket pipeline - SM 0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Submarket study 2 - Wuchang Wuluo At present, there are seven department stores with total retail GFA of around 291,950 sq m and one shopping mall with total retail GFA of around 40,000 sq m in the Wuluo submarket. The core of Wuluo submarket is the Jiedaokou (街道口) commercial zone, which has a heavy presence of major department store operators such as New World Department Store, Chicony and Lotte, besides an Intime flagship in the pipeline. By 2015, over 470,000 sq m of new retail area is expected to be completed in the Hubin district, nearly 142% of the existing retail space. The new additions will mainly be in the form of shopping malls.

Figure 244: Wuchang Wuluo submarket Label Type Project 项目名称 Completion Retail GFA (sqm) Operator A DS Zhongshang Plaza DS 中商广场 3Q97 30,000 Zhongjiang Real Estate B DS Zhongnan Commercial Plaza 中南商业大楼 2Q01 50,000 Zhongshang Group C DS Wushang Group Asia Trade Plaza 武商亚贸广场购物中心 3Q02 60,000 Wushang D DS Chicony Department Store 群光广场 3Q03 57,000 Blue Sky Group (Taiwan) E DS Intime Department Store 世纪中商广场(银泰百货) 2Q04 30,000 Zhongshang Group F DS New World Department Store 新世界百货武昌店 4Q05 22,650 New World Development G DS Lotte World 乐天城购物中心 4Q10 42,300 Lotte H SM Future City 未来城 3Q11 40,000 Hubei Fucheng Property Dev. DS Zhongnan International Building 中南国际城(二期） 4Q12 16,000 Zhongnan Group DS Intime-Jiedaokou 银泰百货(街道口) 4Q12 150,000 Intime Group SM Wuhan Poly Plaza 保利文化广场 4Q12 40,000 Poly Group SM Zhongnan Int'l Financial Plaza 中南国际金融广场 2013 64,000 SM Wuchang Mall 武昌摩尔 2015 200,000 Wushang Group Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 90 26 November 2012

Figure 245: Wuchang Wuluo submarket

Source: Google map, Credit Suisse

Figure 246: Wuchang Wuluo submarket (mn sqm) Wuchang Wuluo Rd submarket pipeline - DS and others Wuchang Wuluo Rd submarket pipeline - SM 0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 91 26 November 2012 Wuxi Wuxi, as one of the key and more affluent tier 3 cities in Jiangsu province, has a total population of 6.4 mn. Wuxi’s GDP was Rmb688 bn in 2011, at a real growth rate of 12% YoY. In 2011, Wuxi’s urban disposable income was Rmb31,638 per capita, surpassing tier 1 city Chongqing and growing 8% YoY. Its 2011 retail sales amounted to Rmb214 bn, up 17% YoY. Wuxi’s traditional retail venues are concentrated in the Chong’an submarket. Submarket Taihu Square is emerging as a second core, while Binhu and Beitang submarkets also growing in significance. Shopping malls dominate the pipeline in Wuxi, due to the recent boom in land sales by the local government. Supply and demand Wuxi’s shopping mall supply has been accelerating since 2009. Shopping mall supply as of 2Q12 totalled 0.31 mn sq m, 2.8 times of that in 2008. By the end of 2Q12, shopping malls accounted for 48% of total retail space supply.

Figure 247: Retail sales of consumer goods Figure 248: Urban disposable income per capita (Rmb bn) Wuxi retail sales of consumer goods (Rmb per person) Wuxi urban disposable Income per capita 250 Wuxi retail sales of consumer goods YoY (RHS) 45% 35,000 Wuxi urban disposable Income per capita YoY (RHS) 20% 40% 18% 30,000 200 35% 16% 25,000 14% 30% 150 12% 25% 20,000 10% 20% 100 15,000 8% 15% 10,000 6% 10% 50 4% 5,000 5% 2% - 0% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 249: Total supply (mn sqm) Wuxi shopping mall supply Wuxi department store supply 0.8 Wuxi shopping mall supply / Total retail space supply 100%

0.7 90% 80% 0.6 70% 0.5 60% 0.4 50%

0.3 40% 30% 0.2 20% 0.1 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 92 26 November 2012

Figure 250: Retail sales of consumer goods / retail space Figure 251: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Wuxi’s vacancy is one of the lowest among the 13 cities – 1.5% as of 2Q12. Unlike most other cities, Wuxi’s vacancy rate decreased as supply increased. Shopping malls that opened in the past few years have had a healthy occupancy rate, thanks to relatively low existing supply base and strong demand.

Figure 252: Shopping mall—total supply and vacancy Figure 253:Shopping mall—new supply, absorption and vacancy (mn sqm) Wuxi total SM supply Wuxi vacancy rate (RHS) (sqm) Wuxi net new SM supply Wuxi net new SM absorption 0.4 40% 120,000 Wuxi SM vacancy 60% 35% 0.3 100,000 50% 30% 0.3 80,000 40% 25% 0.2 60,000 30% 20% 0.2 15% 40,000 20% 0.1 10% 20,000 10% 0.1 5% - 0% - 0%

(20,000) -10%

1Q08 1Q10 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 2Q08

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Pipeline and rental Wuxi’s retail space pipeline totals 0.80 mn sq m, 103% of current total supply of 0.77 mn sq m. We are not concerned about Chong’an district, as it is a city-level shopping cluster with strong demand. We are more concerned about Taihu Square and Binhu District in the short term as the current population is still not sufficient to support the upcoming supply.

Figure 254: Pipeline—breakdown by year Figure 255: Pipeline—breakdown by submarket - 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 - 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 ( mn sqm) (mn sqm) Before 2011 Chong'an

2011

Taihu Square 2012

2013 Beitang

2014

Binghu 2015 forward Wuxi pipeline - DS and others Wuxi pipeline - SM Wuxi retail space existing stock Wuxi retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 93 26 November 2012

Actual retail space completion in 2009/2010/2011 was 44%/73%/9% of the planned area, respectively.

Figure 256: Planned and actual retail space completion Figure 257: Ground floor rental trend (sqm) Wuxi planned completion Wuxi actual completion (1Q2005=100) Wuxi effective prime rent 300,000 140

120 250,000 100 200,000 73% 80

150,000 60

100,000 44% 40 20 50,000 9% -

1Q10 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 3Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 258: Forecast completion vs actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Wuxi Yaohan Department Store 40,000 International Jintaihu City Phase 1 80,000 Far Eastern Department Store 42,000 Maoye Department Store Phase II 40,000 Maoye Department Store Phase III 60,000 Total 182,000 Total 80,000 2010 Far Eastern Department Store 42,000 Far Eastern Department Store (Hodo International Plaza) 42,000 Knightsbridge Department Store 20,000 Knightsbridge Department Store 20,000 Wanda Project 113,000 Wuxi Binhu Wanda Plaza 113,000 Taihu International Community Phase I 64,500 Total 239,500 Total 175,000 2011 XSD 30,000 Xishuidong 11,700 Maoye Shopping Mall Phase II 100,000 Total 130,000 Total 11,700 Source: Jones Lang LaSalle, Credit Suisse Research Submarket analysis There are four major submarkets in Wuxi: Chong’an CBD, Taihu Square, Binhu, Hangyang and Beitang.

Figure 259: Wuxi submarket summary Retail Emergence DS GFA SM GFA submarkets year (‘000 sq m) (‘000 sq m) Major developers and operators, existing and future Chong’an CBD 1995 280 110 Juneyao Group, Hodo Group, Springland Group, Parkson Taihu Square 2007 70 10 Maoye Group, SPG Land Binhu 2010 0 110 Wanda Group Beitang 2009 0 80 Wuxi Jintaihu Real Estate Ltd Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 94 26 November 2012

Figure 260: Wuxi submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1 - Chong’an Currently, there are 12 department stores with total retail GFA of around 335,765 sq m and two shopping malls of GFA 110,000 sq m in Chong’an submarket. There were supply surges in this submarket during 2008 and 2010. In late 2008, a major project, Yaohan Department Store Bldg B of GFA 40,000 sq m), was completed. In 2010, Far Eastern Department Store (Hodo International Plaza) commenced operation, adding 42,000 sq m retail space in this area. Chong’an offers a wide range of department stores, from high to low end. It is the only luxury retail destination for the city at the moment. Wuxi Commercial Plaza houses brands such as Gucci, FENDI, Bvlgari, Burberry, Hermes, Cartier, Armani and Versace. Going forward, no additional department store space will be added to the Chong’an submarket. Growth should be in all forms of shopping malls. Growth in supply is expected to peak out in 2013, attributable to the expected completion of Suning Plaza (GFA 100,000

China Retail Property Chart Book 95 26 November 2012 sq m) and Center 66 Phase I by Hang Lung (GFA 118,500 sq m). Center 66 is positioned as a luxury mall and aims at introducing top-tier international brands such as LV and Prada.

Figure 261: Chong’an submarket Label Type Project Project Completion Retail GFA (sq m) Operator A DS Wuxi Commercial Plaza Bldg A 商业大厦 A 座 1995 33,000 大东方百货 B DS New World Department Store 新世界百货 1996 18,600 C DS Yaohan Department Store Bldg A 无锡八百伴 A 座 1996 47,000 D DS Parkson Department Store 三阳百盛 1999 28,000 E DS Hot Mart 好买得 1999 10,000 F SM Baoli Shopping Park 保利广场 2002 80,000 G DS Grand Ocean Department Store 大洋百货 2003 23,000 H DS Oriental Commercial Plaza 东方商厦 3Q05 30,000 A DS Wuxi Commercial Plaza Bldg B 商业大厦 B 座 4Q07 32,000 I SM Huijin Plaza 汇金广场 3Q08 30,000 DS Parkson Department Store Extension 百盛扩展 4Q08 12,165 C DS Yaohan Department Store Bldg B 无锡八百伴 B 座 4Q08 40,000 J DS Far Eastern Department Store 远东百货 2Q10 42,000 无锡红豆置业 DS Knightsbridge Department Store 英武百货 3Q10 20,000 新加坡百乐零售集团 SM Suning Plaza 苏宁广场 2Q13 100,000 苏宁置业 SM Center 66 Phase I 恒隆广场 1 期 3Q13 118,500 香港恒隆地产 SM Yinhui Project 银辉项目 2014 66,000 银辉 SM 1 Sheng Li Men (Maoye) 茂业胜利门 1 号 2014 70,000 茂业 SM Polytec Square 保利达广场 2015 15,600 保利达地产 SM Center 66 Phase II 恒隆广场 2 期 2016 TBC 香港恒隆地产 Source: Jones Lang LaSalle, Credit Suisse Research

Figure 262: Chong’an submarket

Source: Google map, Credit Suisse estimates

China Retail Property Chart Book 96 26 November 2012

Figure 263: Chong’an submarket (mn sqm) Chong'an submarket pipeline - DS and others Chong'an submarket pipeline - SM 0.50

0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Case Study: Wuxi Yaohan (Springland 1700 HK) Prime location + continuous upgrading = good long ride on local demand upgrade: Wuxi Yaohan was acquired in 2006 by Springland. Owing to local management team’s proactive and continuous upgrading initiatives since 2007 and 2008, Wuxi Yaohan Store is still enjoying healthy growth, despite having been in operation for over 15 years. Through such upgrading and capitalising on its prime location, Wuxi Yaohan Store has successfully expanded its brand portfolio and re-positioned itself as a high-end department store that properly fits in with local demand from a broader range of customers, thereby resulting in a sustainable growth in profitability. Today, it carries a sizeable range of name brands (mid-and-high ends) as listed below:

Figure 264: Tenants list at Wuxi Yaohan Department Store Lease date Area leased (sq m) Tenant Location 4Q08 80 Dior Cosmetics 1Q09 610 LV 1Q09 300 Salvatore Ferragamo 1Q09 200 Bally 1Q09 150 Dunhill 2Q09 60 Alexandre de Paris 4Q09 300 Cartier 3Q10 100 D&G 1/F 2Q11 800 小南国 7/F 4Q11 80 Mockler 1/F 4Q11 25 Chapod 1/F 4Q11 25 Patrizia Pepe 1/F 4Q11 25 TSL/谢瑞麟 2/F 4Q11 25 ENC 4/F Source: Jones Lang LaSalle Dual engine format to drive sales synergy: Springland is differentiated from peers by adopting a dual engine format, namely, combination of asset-heavy department store business with fast-growing asset-light supermarket chain. For its department store segment, it relies on solid on-the-ground operational experience and premium brand perception. For its supermarket, it relies on established logistics and direct sourcing platforms. Fresh food produce is its focus going forward, as it will effectively attract footfalls and benefit the department store at the same time.

China Retail Property Chart Book 97 26 November 2012

Figure 265: Wuxi Yaohan Department Store exterior

Source: Company data

Figure 266: Wuxi Yaohan Department Store operating performance 2010 2011 1H11 1H12 GSP Rmb mn 1,264 1,495 742 784 Ticket size Rmb 1,017 982 1070 GSP per GFA* ‘000 RMB/sqm /year 22 26 14 14 * GFA here refers to operational GFA. The above is only department store data, and excludes supermarket. Source: Company data

Figure 267: Wuxi Yaohan Department Store operational data 1,600 20% 1,400 18% 16% 1,200 14% 1,000 12% 800 10% 600 8% 6% 400 4% 200 2% 0 0% 2010 2011 1H12

GSP (Rmb mn) SSSG Note: The above is only department store data, and excludes supermarkets. Source: Company data

China Retail Property Chart Book 98 26 November 2012

Figure 268: Wuxi Yaohan Figure 269: Wuxi Yaohan

Source: Company data Source: Company data Submarket study 2 - Taihu Square Currently, there is one major department store (Wuxi Maoye Department Store, Qingyang Branch) with a total retail GFA of around 70,350 sq m in the Taihu Square submarket. It is expected that there will be three new shopping malls with total GFA of around 192,685 sq m retail space to be completed in this region by 2014. Among these, Maoye Complex has a GFA of 155,000 sq m and is due to be completed by the end of 2012. Upon completion, Maoye will likely have secured a lion’s share in this market, as it will in total have 225,350 sq m between its existing Qingyang Branch (GFA 70,350 sqm) and the coming Maoye Complex. The fast emergence of Taihu is attributable to the booming land sales last year.

Figure 270: Taihu Square submarket Label Type Project Project Completion Retail GFA (sqm) Operator A DS Wuxi Maoye DS (Qingyang) 茂业百货无锡清扬店 4Q07 70,350 B SM Wuxi Xintiandi 新天地休闲广场 B 地块 4Q08 3,000 无锡市中住房地产开发有限公司 C SM Xishuidong 西水东 4Q11 11,700 盛高置地 A SM Maoye Complex SM 茂业天地购物中心 4Q12 155,000 茂业 D SM Wuxi World Trade Center 无锡世贸中心 4Q13 15,000 龙元建设集团 E SM Wharf Holdings Project 九龙仓项目 2014 22,685 九龙仓地产 DS Yansha International SC 燕莎国际购物中心 2015 30,000 无锡凯燕房地产 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 99 26 November 2012

Figure 271: Taihu Square submarket

Source: Google map, Credit Suisse estimates

Figure 272: Taihu Square submarket (mn sqm) Taihu Square submarket pipeline - DS and others Taihu Square submarket pipeline - SM 0.18

0.16

0.14

0.12

0.10

0.08

0.06

0.04

0.02

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 100 26 November 2012 Xi’an Robust consumption power growth: Xi’an, as one of the central municipality cities, recorded stellar GDP growth of 13.8%, reaching Rmb386 bn in 2011. In 2011, Xi’an’s urban disposable income was Rmb21,239/capita. Total sales of consumer goods totalled Rmb194 bn, +18% YoY. New CBD flourishing: Beilin CBD is a core traditional retail submarket in Xi’an, which hosts over 40% of retail GFA (counting on major retail venues) in Xi’an. But in the next three-four years, growth will be more focused on the new CBDs in areas that were previously viewed as more of peripheral zones of Xi’an. High-tech zone and Qujiang are the two prominent examples. High fashion and fast fashion both embracing Xi’an: Previously, a hinterland for foreign brand, Xi’an’s fast emergence as a retail centre and the allure it holds among the new riches in adjacent cities and even in neighbouring provinces have made it a hot entry spot for western fashion brands. Apart from the recent forays by Zara, Mango, H&M, Uniqlo and Gap are also eyeing opportunities here. In high fashion, a small assortment of brands has started to take root in Xi’an; these include Fendi, MaxMara and Bvlgari. Supply and demand Xi’an’s shopping mall supply has been accelerating since 2008. Shopping mall supply as of 2Q12 totalled 1.0 mn sq m, 7.1 times of that in 2007. As of end-2Q12, shopping malls accounted for 51% of total retail space supply.

Figure 273: Retail sales of consumer goods Figure 274: Urban disposable income per capita (Rmb bn) Xi'an retail sales of consumer goods (Rmb per person) Xi'an urban disposable Income per capita 250 Xi'an retail sales of consumer goods YoY (RHS) 35% 25,000 Xi'an urban disposable Income per capita YoY (RHS) 30%

30% 25% 200 20,000 20% 25% 15% 150 20% 15,000 10% 15% 100 10,000 5% 10% 0% 50 5,000 5% -5%

- 0% - -10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 275: Total supply (mn sqm) Xi'an shopping mall supply Xi'an department store supply 2.5 Xi'an shopping mall supply / Total retail space supply 100% 90% 2.0 80% 70% 1.5 60% 50% 1.0 40% 30% 0.5 20% 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 101 26 November 2012

Figure 276: Retail sales of consumer goods / retail space Figure 277: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Xi’an’s vacancy rate was 5.2% as of 1Q12 (2Q12 data is not available as Jones Lang LaSalle updates Xi’an data on a half yearly basis in 1Q and 3Q). Some malls opened at high vacancy rates, pushed up the city’s vacancy rates in 4Q09, 1Q10 and 3Q11. In 4Q09, Wanda Plaza-Minleyuan (万达广场-民乐园) opened at 30% vacancy rate. In 1Q10, Happy Mall (新乐汇) opened at 50% vacancy rate. In 3Q11, Vivo City (怡丰城) opened at 50% vacancy rate.

Figure 278: Shopping malls—total supply and vacancy Figure 279:Shopping malls—new supply, absorption and vacancy (mn sqm) Xi'an total SM supply Xi'an vacancy rate (RHS) (sqm) Xi'an net new SM supply Xi'an net new SM absorption 1.2 20% 400,000 Xi'an SM vacancy 24% 18% 1.0 350,000 21% 16% 14% 300,000 18% 0.8 12% 250,000 15% 0.6 10% 200,000 12% 8% 0.4 150,000 9% 6% 4% 100,000 6% 0.2 2% 50,000 3% - 0%

- 0%

1Q10 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q08 (50,000) -3% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 280: Key projects opened at high vacancy rates Project Submarket Completion Format Retail GFA Open vacancy Current vacancy Wanda Plaza-Minleyuan 万达广场-民乐园 Xincheng 4Q09 SM 264,000 30% 10% Happy Mall 新乐汇 Qujiang 1Q10 SM 137,632 50% 20% Vivo City 怡丰城 Yanta 3Q11 SM 60,000 50% 10% Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Xi’an’s pipeline totals 2.19 mn sq m, 107% of current total supply of 2.04 mn sq m.

China Retail Property Chart Book 102 26 November 2012

Figure 281: Pipeline—breakdown by year Figure 282: Pipeline—breakdown by submarket - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 (mn sqm) (mn sqm) Before 2011 Beilin

Weiyang 2011

Xincheng 2012 Lianhu 2013 Yanta 2014 Qujiang

2015 forward High-tech Xi'an pipeline - DS and others Xi'an pipeline - SM Xi'an retail space existing stock Xi'an retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Actual retail space completion in 2009/ 2010/ 2011 was 121%/54%/85% of planned amount, respectively.

Figure 283: Planned and actual retail space completion Figure 284: Ground floor rental trend (sqm) Xi'an planned completion Xi'an actual completion (1Q2005=100) Xi'an effective prime rent 600,000 180 160 500,000 140 121% 400,000 120 100 54% 300,000 85% 80 60 200,000 40

100,000 20 -

3Q05 1Q08 3Q10 1Q06 3Q06 1Q07 3Q07 3Q08 1Q09 3Q09 1Q10 1Q11 3Q11 1Q12 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 285: Forecast completion vs actual completion Planned completion GFA (sqm) Actual completion GFA (sqm) 2009 Centuryginwa 50,000 Minsheng Department Store-Luomashi 86,000 Tang King Market Phase I 100,000 Grand Ocean 50,000 Minsheng Department Store 20,000 Wanda Plaza-Minleyuan 264,000 Time Square 20,000 Van International City 30,000 Chang'an International II 45,000 Minsheng Department Store 65,000 Total 330,000 Total 400,000 2010 Van International City 30,000 Happy Mall 137,632 Chang'an International II 45,000 New-Mart Shopping Mall 70,000 Kaiyuan Plaza 24,000 Saigao International Shopping Mall 77,000 Wanda Plaza 150,000 Tang King Market Phase II 147,000 Xingfu 100,000 Century Ginwa 30,000 Total 526,000 Total 284,632 2011 Wanda Plaza 45,000 Kaiyuan Shopping Mall 62,000 Xindi City 60,000 Vivo City 60,000 Time Square 80,000 Minsheng Department Store-North Street 65,000 Minsheng Department Store 65,000 Intime City 76,000 Xian Yifeng City Shopping Center 60,000 Total 310,000 Total 263,000 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 103 26 November 2012

Submarket analysis There are seven major submarkets in Xi’an, at: Bell Tower, Jiefang Road, Xiaozhai, XDZ, Second Ring Road, Qujiang and EDZ.

Figure 286: Xi'an submarket summary Retail Emergence DS GFA SM GFA Submarkets Year (000 sqm) (000 sqm) Major developers and operators, existing and future Bell Tower 1996 320 20 Xi’an Kaiyuan Holdings, Xi’an Xinzhengyuan Group, Century Ginwa, Grand Ocean, Shaanxi Zhongda International Jiefang Road 1990s 190 265 Xi’an Minsheng Department Store, Wanda Group, Parkson, Dalian Dashang Group Xiaozhai 1999 50 0 Golden Eagle, Shaanxi Tianbao XDZ 2005 55 0 Century Ginwa, Tande, Golden Eagle Second Ring Road 2007 105 530 Mapletree, Wanda Group, Lucky King Group Qujiang 2010 0 140 Qujiang Warburg Pincus Property Investment EDZ 2010 0 80 Shaanxi Xinye Property Management Source: Jones Lang LaSalle, Credit Suisse Research

Figure 287: Xi’an submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1 - Beilin Currently, there are seven department stores with total retail GFA of around 412,800 sq m and three shopping malls with total retail GFA of around 491,190 sq m in Beilin submarket. There were supply surges in this submarket during 2008–09. A major project, Wanda Plaza - Lijiacun (shopping mall 345,700 sq m), was completed in 2Q08. This was Wanda’s first major project in Xi’an.

China Retail Property Chart Book 104 26 November 2012

Despite the emergence of shopping malls, the local department store players have known to be well entrenched, the most notable operator being Century Ginwa, which is positioned in the mid- to high-end level and has favourable locations. Around 680,000 sq m new shopping mall area and 280,000 sq m department store area is expected to be completed in Beilin by 2013; this compares with the current total retail GFA of 903,990 sq m. The West Market (shopping mall of 620,000 sq m) mega project, to be competed in 2013, should take the lion’s share of the pipeline.

Figure 288: Beilin submarket Label Type Project Project Completion Retail GFA (sqm) Operator A DS Kaiyuan Shopping Mall 开元商城 1996 103,000 Xi’an Kaiyuan Holdings B DS Times Parkson 时代百盛 1998 70,000 Xi’an Xinrun Property Co.Ltd (Local) C SM Zhongda International 中大国际 2000 19,490 Shanxi Zhongda International Co Ltd D DS Plaza Printempts 巴黎春天 3Q06 28,800 ShaanXi Chang’an Construction Dev E DS Minsheng DS-West Street 民生百货-西大街 2Q07 24,000 Xi’an Pulin Real Estate Development F SM Lucky King International SC 立丰国际购物广场 4Q07 126,000 Lucky King Real Estate Development G DS Century Ginwa (South Street) 世纪金花-南大街店 1Q08 51,000 Shaanxi Hai Da Industrial Co.Ltd (Local) H SM Wanda Plaza (Lijiacun) 万达广场-李家村 2Q08 345,700 Wanda Group I DS INTIME 银泰百货 4Q08 50,000 Xi’an Xinyu Property Development J DS Minsheng DS-Luomashi 民生百货-骡马市店 3Q09 86,000 Xi’an Xingzhengyuan Group D DS Chang'an International Center II 巴黎春天二期 2013 50,000 Changan Construction Development K SM Vanke New City 万科新地城 2013 60,000 Shanxi Hualian Real Estate L DS Time Square 珠江时代广场 2013 80,000 Xian Time Square Investment Group M SM The West Market 大唐西市二期 2013 620,000 Tang King Market Investment Company N DS Zhongmao Plaza 中贸广场 2013 150,000 Zhongmao Group Source: Jones Lang LaSalle, Credit Suisse estimates

China Retail Property Chart Book 105 26 November 2012

Figure 289: Beilin submarket

Source: Google map, Credit Suisse

Figure 290: Beilin submarket pipeline

(mn sqm) Beilin submarket pipeline - DS and others Beilin submarket pipeline - SM 1.20

1.00

0.80

0.60

0.40

0.20

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Case Study – Intime City (Intime 1833 HK) Intime City is located in Qujiang district in the south eastern quarter of Xi’an. The building is adjacent to Tang Paradise, a 165-acre cultural and entertainment theme park made up of music halls, theatre, cinema, galleries, and square, featuring modern reconstructions of ancient architectural and garden styles.

China Retail Property Chart Book 106 26 November 2012

Intime City commenced operation on December 31, 2011, with total GFA of nearly 60k sq m, two floors underground and four above the ground. It strives to provide a one-stop shopping and entertainment experience, positioned at the mid-to-high end. It is complete with dining (a wide suite of fast dining options and high-end full service restaurants), movie theatre, gaming arcade, KTV facility. At the same time, it offers a wide range of mid-to- high end apparel brands such as CERRUTI1881, Tommy Hilfiger，Kent &Curwen ， Gieves & Hawkes, as well as fast fashions, cosmetics and electronics, such as Zara, Sephora, Apple. The good occupancy rate of Intime City spoke for the strong demand in Xi’an. During 4Q11 when Intime City and another large capacity retail center, North Street Minsheng Department Store opened, vacancy rate jumped from 5% in 3Q11 to 9%, according to Jones Lang LaSalle. However, the rate lowered to 5.2% in 1Q12 when tenants up-take ramped up quickly.

Figure 291: Intime City near Tang Paradise in Xi’an

Source: Company data Submarket study 2 - Qujiang & High-tech Both submarkets are located in the southern edges of Xi’an and have emerged as booming commercial and industrial (in the case of high-tech submarket) centres. At present, there are three department stores with total retail GFA of around 131,476 sq m and two shopping malls with total retail GFA of around 283,632 sq m in the Qujiang submarket. In 2010–12, Qujiang had two major shopping mall developments. In 1Q10, a new shopping mall, Happy Mall (新乐汇), commenced operations, adding around 137,632 sq m GFA in this submarket. Subsequently, in 2Q12, Qin Han Tang (秦汉唐国际文化广场) was completed, adding another 146,000 sq m. Intime City was completed in 4Q11, which, although categorised as a department store in this report, is in fact more of a multi- functional one-stop shopping complex. High-tech zone is poised to be a focus of retail supply build-out in Xi’an. A new department store (Century Ginwa Plaza) and a shopping mall (Greenland Central of 60,000 sq m) are under construction and due to be completed by 2015. Additionally, two more department stores (Minsheng Department Store and Saigao Wangfujing) and one shopping mall (Longemont) are proposed and expected for completion by 2015, adding at least another

China Retail Property Chart Book 107 26 November 2012

140,000 sq m in the pipeline. Based on the current constructions and known proposals, 2015 should be a supply peak.

Figure 292: Qujiang and high-tech submarkets Retail Label Type Project 项目名称 Completion GFA (sqm) Operator A DS Century Ginwa (High-tech Zone) 世纪金花-高新店 2Q05 30,000 Tande B DS Golden Eagle (High-tech Zone) 金鹰-高新店 2Q06 25,476 Xi'an Haixin Real Estate Co.Ltd C SM Happy Mall 新乐汇 1Q10 137,632 Qujiang Datang Buyecheng Commercial D DS Intime City 银泰城 4Q11 76,000 Intime Group E SM Qin Han Tang 秦汉唐国际文化广场 2Q12 146,000 Xian Wanye Real Estate F DS Minsheng DS (High-tech Zone) 民生百货-高新店 2015 20,000 Xi’an Minsheng Department Store Co.Ltd G DS Century Ginwa Plaza 世纪金花大厦 2015 TBC Ginwa H SM Greenland Central Plaza 绿地中央广场 2015 60,000 Greenland SM Longemont 龙之梦 2015 TBC DS Saigao Wangfujing DS 赛高王府井百货 2015 120,000 Saigao & Wangfujing Department Store Source: Jones Lang LaSalle, Credit Suisse Research

Figure 293: Qujiang and high-tech submarkets

Source: Google map, Credit Suisse

China Retail Property Chart Book 108 26 November 2012

Figure 294: Qujiang and high-tech submarkets’ pipeline (mn sqm) Qujiang & High-tech submarket pipeline - DS and others Qujiang & High-tech submarket pipeline - SM 0.25

0.20

0.15

0.10

0.05

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 109 26 November 2012 Zhengzhou Zhengzhou is the capital city of Henan Province. As of 2011, its population stood at 8.9 mn (city population 4.4 mn) and GDP at Rmb491 bn. Zhengzhou’s spending level is lower than that of other tier 2 cities: its total retail sales of consumer goods stood at only Rmb199 bn in 2011. The retail space supply has spiked from 2007, a very low base. Currently, the city is showing signs of oversupply (vacancy rate is around 20%). We expect the urban rail system of six lines that is under development to help increase foot traffic and facilitate future retail market development. Zhengzhou’s vacancy was one of the highest among the 13 cities, showing signs of oversupply. Zhengzhou’s retail space pipeline stands at 2.09 mn sq m, 117% of current total supply of 1.79 mn sq m, putting high pressure on occupancy rate and rental in the future. Supply and demand Zhengzhou’s shopping mall supply has been accelerating since 2007. Shopping mall supply as of 2Q12 totalled 1.0 mn sq m, compared to none in 2006. By the end of 2Q12, shopping mall took 60% of total retail space supply.

Figure 295: Retail sales of consumer goods Figure 296: Urban disposable income per capita (Rmb bn) Zhengzhou retail sales of consumer goods (Rmb per person) Zhengzhou urban disposable Income per capita 250 Zhengzhou retail sales of consumer goods YoY (RHS) 30% 25,000 Zhengzhou urban disposable Income per capita YoY (RHS) 25%

25% 200 20,000 20%

20% 150 15,000 15% 15% 100 10,000 10% 10%

50 5% 5,000 5%

Figure 297: Total supply (mn sqm) Zhengzhou shopping mall supply Zhengzhou department store supply 1.8 Zhengzhou shopping mall supply / Total retail space supply 100% 1.6 90%

1.4 80% 70% 1.2 60% 1.0 50% 0.8 40% 0.6 30% 0.4 20% 0.2 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 110 26 November 2012

Figure 298: Retail sales of consumer goods / retail space Figure 299: Disposable income / retail space (Rmb/sqm) (Rmb/sqm) 400,000 450,000 350,000 400,000 oversupply 350,000 300,000 oversupply 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000

- -

Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Vacancy rate Zhengzhou’s vacancy was one of the highest among the 13 cities. Some shopping malls opened at high vacancy rates, pushing up the vacancy for the city; this happened in 1Q09 and 4Q10. In 1Q09, Manhattan 5th Avenue (曼哈顿广场) opened at a 25% vacancy rate. In 4Q10, Dennis CBD Pedestrian Street (CBD 丹尼斯七天地) opened at a 70% vacancy rate. As the leasing situation has improved for these projects in the recent years, the city’s vacancy also declined from 31.8% in 4Q10 to 20.7% in 2Q12, but still the highest among the 13 cities.

Figure 300: Shopping malls—total supply and vacancy Figure 301:Shopping malls—new supply, absorption and vacancy (mn sqm) Zhengzhou total SM supply Zhengzhou vacancy rate (RHS) (sqm) Zhengzhou net new SM supply Zhengzhou net new SM absorption 1.2 35% 300,000 Zhengzhou SM vacancy 36%

30% 1.0 250,000 30% 25% 0.8 200,000 24% 20% 0.6 150,000 18% 15% 0.4 100,000 12% 10%

0.2 5% 50,000 6%

- 0% - 0%

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 1Q08 (50,000) -6% Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 302: Key projects opened at high vacancy rate Open Current Project Submarket Completion Format Retail GFA vacancy vacancy Manhattan 5th Avenue 曼哈顿广场 Zhengdong New District 1Q09 SM 160,000 25% 9% Dennis CBD Pedestrian Street CBD 丹尼斯七天地 Zhengdong New District 4Q10 SM 265,351 70% 30% Source: Jones Lang LaSalle, Credit Suisse Research. (vacancy rates are based on site visits, retail GFA is based on Jones Lang LaSalle best estimates) Zhengzhou’s pipeline totals 2.09 mn sq m, 117% of current total supply of 1.79 mn sq m. Er’qi Road has a huge pipeline, but it also has strong demand. It is the most mature submarkets in Zhengzhou due to its great transportation links and large cluster of retail facilities. Most of the existing supplies are quite dated, and this submarket will be upgraded by the new malls that are currently under development. We expect this region to stay popular in the future, but some department store or shopping malls may fail given the fierce competition. Western District is not a traditional shopping destination in Zhengzhou, but Wanda Square proved that high-quality retail project can perform well in this area. Future supply is also

China Retail Property Chart Book 111 26 November 2012 big in this area, and we expect the malls’ performance to largely depend on their quality and management ability. Zhengdong New District is the new developing CBD and may still need years to mature. Currently, it mainly serves people who live or work in the surrounding neighbourhood. We expect fierce competition among mall operators in this area.

Figure 303: Pipeline—breakdown by year Figure 304: Pipeline—breakdown by submarket - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 (mn sqm) (mn sqm) Before 2011 Western District

Huayuan Road 2011

Er'qi Road 2012 Jinshui Road 2013 Zhengdong New District 2014 Bishagang

2015 forward Zijingshan Road Zhengzhou pipeline - DS and others Zhengzhoupipeline - SM Zhengzhou retail space existing stock Zhengzhou retail space pipeline Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research Actual retail space completion in 2009/2010/2011 was 47%/83%/102% of the planned amount, respectively.

Figure 305: Planned and actual retail space completion Figure 306: Ground floor rental trend (sqm) Zhengzhou planned completion Zhengzhou actual completion (1Q2005=100) Zhengzhou effective prime rent 600,000 250

500,000 200

400,000 150 83% 300,000 47% 102% 100

200,000 50 100,000 -

1Q12 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 2009 2010 2011 1Q05 Source: Jones Lang LaSalle, Credit Suisse Research Source: Jones Lang LaSalle, Credit Suisse Research

Figure 307: Forecast completion vs actual completion Planned completion GFA (sq m) Actual completion GFA (sq m) 2009 Manhattan 5th Avenue 160,000 Manhattan Plaza 160,000 IN CITY Plaza 43,000 In City Plaza 72,529 New World Department Store 43,000 Dennis CBD Pedestrian Street 250,000 Total 496,000 Total 232,529 2010 New World Department Store 43,000 International Trade 360 Plaza 20,000 Dennis CBD Pedestrian Street 250,000 Dennis CBD Pedestrian Street 265,351 Capitaland Project 50,000 Total 343,000 Total 285,351 2011 Capitaland Project 50,000 Capitaland Plaza 54,165 New World Department Store 43,000 New World Department Store 43,000 Wanda Square 150,000 Wanda Square 150,000 Total 243,000 Total 247,165 Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 112 26 November 2012

Submarket analysis There are five major submarkets in Zhengzhou: Er’qi Road, Huayuan Road, Western District, Jinshui Road and Zhengdong New District.

Figure 308: Zhengzhou submarket summary Retail Emergence DS GFA SM GFA Submarkets Year (‘000 sq m) (‘000 sq m) Major developers and operators, existing and future Er’qi Road 1983 435 170 Dennis Group, Dashang Group, Capita Retail China Trust Huayuan Road 2008 190 20 Dennis Group, Dashang Group, Yutian Real Estate Western District 1999 20 150 Wanda Group, Yuda Group Jinshui Road 2009 0 215 Henan Shenglong Corporation, CapitaLand, Central China Group Zhengdong New District 2007 0 465 Powerlong Group, Dennis Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 309: Zhengzhou submarkets

Source: Jones Lang LaSalle Retail Intelligence: China City Profiles 2012, Credit Suisse Research Submarket study 1 - Er'qi Road Er’qi Road is the located next to Zhengzhou Railway Station and will have access to future Metro Lines 1 and 2. Thanks to its great transportation convenience, Er’qi Road has become the shopping destination for the whole city and also other cities in the Henan Province. Currently, there are six department stores with total retail GFA of around 433,856 sq m and two shopping malls with total retail GFA of around 172,529 sq m in Er'qi Road submarket. Going forward, there will be two department stores with total retail GFA of 150,000 sq m, and five shopping malls with total retail GFA of 940,000 sq m. Many existing malls in this area are old and the new shopping malls in the pipeline may have advantages in the future.

China Retail Property Chart Book 113 26 November 2012

Figure 310: Er'qi Road submarket Retail Lable Type Project 项目名称 Completion GFA (sq m) Operator A DS Zijinshan Department Store 紫荆山百货 1983 40,000 Singapore Time Watch B DS Zendo Garden Shopping Department 正道花园商厦 1990 23,000 Zhengzhou Zhengdao Industry C DS Newmart Shopping Center (Kingbird) 大商新玛特 3Q97 151,500 Dashang Group Newmart D DS Dennis Department Store (Renmin Road ) 丹尼斯百货 4Q97 45,000 Dennis Group E DS Zhengzhou Mall (Beijing Hualian DS) 北京华联 3Q02 92,356 CapitaRetail China Trust F DS Parkson Department Store (Huilong City) 百盛购物中心 4Q02 82,000 Shanghai Home Value Holdings H SM Grand Shanghai City 大上海城 2Q07 100,000 N\A I SM In City Plaza 印象城购物中心 4Q09 72,529 Simon Property & MS & SZITIC SM Dennis Dream Mall 丹尼斯梦幻城 1Q13 230,000 Dennis Group SM Er'qi Times Square 二七时代广场 2013 40,000 Yutian Real Estate SM The MIXc 万象城 2014 210,000 China Resources Land DS Phase II of Newmart Shopping Center 大商新玛特二期 2015 50,000 Dashang Group DS Intime Department Store 银泰百货 2015 100,000 Intime SM Hanglung Plaza 恒隆广场 2016 260,000 Hanglung Property SM Yurun Project 雨润集团 2016 200,000 Yurun Group Source: Jones Lang LaSalle, Credit Suisse Research

Figure 311: Er'qi Road submarket

Source: Google map, Credit Suisse

China Retail Property Chart Book 114 26 November 2012

Figure 312: Er'qi Road submarket pipeline (mn sqm) Er'qi Road submarket pipeline - DS and others Er'qi Road submarket pipeline - SM 0.70

0.60

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0.40

0.30

0.20

0.10

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Submarket study 2 - Zhengdong New District Zhengdong New District is the new developing CBD and may still need few more years to mature. At present, it mainly serves people who live or work in the surrounding neighbourhood. Currently, there are three shopping malls with total retail GFA of 625,755 sq m. In the pipeline are one department store with total retail GFA of 130,000 sq m and four shopping malls with total retail GFA of more than 190,000 sq m. As a newly developing CBD, Zhengdong New District may take years for the local demand to absorb the existing and upcoming retail space supply.

Figure 313: Zhengdong New District submarket completion summary Lable Type Project 项目名称 Completion Retail GFA (sqm) Operator A SC Powerlong Plaza 宝龙城市广场 4Q07 200,424 Powerlong Group B SC Manhattan Plaza 曼哈顿广场 1Q09 160,000 Henan Shenglong Corporation C SC Dennis CBD Pedestrian Street CBD 丹尼斯七天地 4Q10 265,351 Dennis Group D SC Orient Center 东方商业广场 1Q13 110,000 Xinao Real Estate 郑州新澳置业 E SC Millennium Royal Plaza 千玺广场 2013 50,000 Green Land 绿地集团 F SC Shenglong Plaza 升龙站前广场 2014 30,000 Shenglong Group 升龙集团 G DS Vancouver Plaza 温哥华广场 2015 130,000 N\A H SC Greenland New City 绿地新都会 TBC TBC Green Land Source: Jones Lang LaSalle, Credit Suisse Research

China Retail Property Chart Book 115 26 November 2012

Figure 314: Zhengdong New District submarket

Source: Google map, Credit Suisse

Figure 315: Zhengdong New District submarket pipeline (mn sqm) Zhengdong New District submarket pipeline - DS and others Zhengdong New District submarket pipeline - SM 0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00 Before 2011 2011 2012 2013 2014 2015 forward Source: Jones Lang LaSalle, Credit Suisse Research Case study - Capitaland Plaza (CapitaMalls Asia CMAL.SI) Capitaland Plaza is located in the Jinshui Road submarket. Jinshui Road is located near the city centre in a densely populated area. This area has high foot traffic, and the mall is positioned as a low-end to mid-end one. This shopping mall was opened in 2Q11 with total GFA of about 54,165 and the rentable GFA of around 36,070 sq m, which is one of the largest retail centres in Jinsui Road submarket. Capitaland Plaza currently has over 200 branded shops and one large supermarket.

China Retail Property Chart Book 116 26 November 2012

Figure 316: Zhengzhou Capitaland Plaza

Source: Company data

Figure 317: Major branded stores in Capitaland Plaza Lease start Lease Area Brand 2Q11 1,500 BHG 2Q11 200 Tudali Korean Food 2Q11 100 Watsons 2Q11 400 Westlake Spring 2Q11 200 Nike Discount 2Q11 500 Haidilao Hot Pot 4Q11 3,000 Dongfang KTV 4Q11 300 Boshiwa 2Q12 1,000 KTV (Unknown) 2Q12 500 Wine Club (Unknown) Source: Company data, Credit Suisse estimates

China Retail Property Chart Book 117 26 November 2012 Retail definitions Jones Lang LaSalle retail data covers prime retails, which must fulfil the following criteria.

Figure 318: Prime retail definition  Within geographic boundaries of a central area as defined locally by each market  Located within a busy and popular shopping area, such as People’s Square in Shanghai  Popular and well-known in the city  Mainstream, high-end or luxury tenant mix Source: Jones Lang LaSalle

Figure 319: Different forms of retail properties Format Definition Department Stores (DS) A standalone department store: This is where the property is not part of a shopping centre. A property with centralised payment, coordinated marketing and promotion, and booths arranged according to product type. Shopping Malls (SM) Physical format: Buildings or a set of buildings that contain/s a collection of shops that have interconnected walkways (may or may not be enclosed) that allows shopper to walk shop to shop with minimum interference from vehicle traffic.  Operation: Each store operates independently of the landlord.  Minimum size: 10,000 sq m minimum in Tier 1 cities. For REIS China cities, retail podiums larger than 10,000 sq m may qualify since they function as more than simply supporting tenants in the building and should be included in the supply pipeline.  Development: Planned/developed, built and managed by a single entity as a single property. A good proxy could be seeing if there’s common area (fees & services), shared parking support on- or near- the sites, etc.  Ownership: can be strata-titled or under single ownership  Rental structure: Any combination of fixed, turnover, base/turnover whichever is higher, or base plus turnover.  Trade mix: Wide and diverse mix of products  Anchors: Can be anchored by a department store, furniture mall, IT mall, electronics store, or any other item as long as one single anchor does not comprise more than 80% of the area of the shopping centre. Therefore “hyper malls” in which you have a few thousand sq m of retail attached to a hypermarket do not qualify.  Theme: An F&B dominated mall is included if the property has a leisure-based theme. A leisure-based project may include any combination of multiplex cinema, restaurants, bars, health/fitness and other leisure concepts. Shopping Malls (Podiums)  Small retail podiums or supporting retail: A typical retail podium is the first few floors of a prime grade office, hotel or residential tower, converted for retail use. It must meet the minimum size criteria of 10,000 sq m. o Office building retail: Supporting retail of a Grade A office building, not Grade B, if it is considered to be significant in the market and serves as a destination for people working in the area. Mixture of F&B and services. o Hotel shopping arcade: Adjoining retail of a luxury hotel. Typically includes a large portion of fashion retailers. o Residential supporting retail: Enclosed shopping area adjoined to luxury resi development (not just any high-end development), or street-side shops with high-end brands attached to luxury resi development. Others This is introduced into select markets on an as-needed basis. This category is meant to capture other things that are important to the market but are not shopping malls or department stores. There is considerable local discretion in how this is applied.  Flagship stores: These are large, typically multi-level street-side shops which serve a promotion and marketing purpose for brands; only capture large-sized flagship stores with multi floors e.g. over 500 sqm.  Other high-profile multi-level street-side shops: Has internal lifts and connectivity. May be restaurants or entertainment. Can be included if the property is on a high street, is high-profile, and stands out. Example: Shimao Shangdu on the north side of People’s Square next to Chong Hing Center in Shanghai. Other cases of this which are not on high streets are not included.  Small shopping malls or leisure centres that don’t meet the size requirement. Source: Jones Lang LaSalle

China Retail Property Chart Book 118 26 November 2012

Companies Mentioned (Price as of 22-Nov-2012) COFCO Property (000031.SZ, Rmb3.76) Cheung Kong Holdings (0001.HK, HK$116.2) Wharf Holdings (0004.HK, HK$55.6) Financial Street Holding (000402.SZ, Rmb5.65) Hualian Dep (000882.SZ, Rmb2.84) GZ Friendship (000987.SZ, Rmb10.3) Henderson Land Dev (0012.HK, HK$54.0) Hutchison Whampoa (0013.HK, HK$78.15) Sun Hung Kai Properties (0016.HK, HK$112.8) Suning Appliance (002024.SZ, Rmb6.14) Shangri-la Asia (0069.HK, HK$15.0) Hang Lung Properties (0101.HK, HK$27.0) Poly Property Group Co., Ltd (0119.HK, HK$4.94) Yuexiu Property (0123.HK, HK$2.3) Lippo (0226.HK, HK$3.28) South China H (0265.HK, HK$0.35) Shui On Land (0272.HK, HK$3.38) SPG Land (0337.HK, HK$1.96) SOHO China (0410.HK, HK$5.61) Kin Yat Holdings (0638.HK, HK$0.92) Shanghai Zendai (0755.HK, HK$0.138) Shimao Property Holdings Ltd (0813.HK, HK$15.38) Franshion Properties (China) Limited (0817.HK, HK$2.43) Maoye Intl Hldg (0848.HK, HK$1.53) Longfor (0960.HK, HK$13.5) China Yurun (1068.HK, HK$4.79) China Resources Land Ltd (1109.HK, HK$19.64) Coastal Green (1124.HK, HK$0.345) Lifestyle International Holdings Ltd (1212.HK, HK$16.68) Powerlong (1238.HK, HK$1.38) Kaisa Group (1638.HK, HK$1.74) Springland International Holdings Limited (1700.HK, HK$3.82) Intime Department Store Group Company Ltd (1833.HK, HK$9.01) China Properties (1838.HK, HK$2.33) Chow Tai Fook Jewellery Group Limited (1929.HK, HK$10.46) Swire Properties Limited (1972.HK, HK$25.15) Ping An (2318.HK, HK$58.8) Guangzhou R&F Properties Co Ltd (2777.HK, HK$10.88) Golden Eagle Retail Group Ltd. (3308.HK, HK$17.9) Parkson Retail Group Ltd. (3368.HK, HK$5.81) Greentown China Holdings Ltd (3900.HK, HK$11.02) Citic Securities Co., Ltd. (600030.SS, Rmb10.68) Poly Real Estate Group (600048.SS, Rmb11.46) HXDQ (600060.SS, Rmb8.28) HJBG (600814.SS, Rmb6.14) Shanghai Shimao Co Ltd (600823.SS, Rmb9.81) Wanfujing (600859.SS, Rmb21.6) Capitaland (CATL.SI, S$3.37) Mapletree Commercial Trust (MACT.SI, S$1.21) Mapletree Logistics Trust (MAPL.SI, S$1.1)

Disclosure Appendix Important Global Disclosures Jinsong Du, Wenhan Chen, Kevin Yin, Vivian Zhao, each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of October 2, 2012 Analysts’ stock rating are defined as follows : Outperform (O) :The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% or more, (depending on perceived risk) over the next 12 months. Neutral (N) :The stock's total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months. Underperform (U) :The stock's total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months. *Relevant benchmark by region: As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American, Japanese, and non -Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return

China Retail Property Chart Book 119 26 November 2012 potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Restricted (R) :In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V]:A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts' sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:: Overweight:The analyst's expectation for the sector's fundamentals and/or valuation is favorable over the next 12 months. Market Weight:The analyst's expectation for the sector's fundamentals and/or valuation is neutral over the next 12 months. Underweight:The analyst's expectation for the sector's fundamentals and/or valuation is cautious over the next 12 months. *An analyst's coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

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Global Ratings Distribution Rating Versus universe(%) Of which banking clients (%) Outperform/Buy* 42% (52% banking clients) Neutral/Hold* 40% (48% banking clients) Underperform/Sell* 15% (41% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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See the Companies Mentioned section for full company names The subject company (0001.HK, 1109.HK, 0817.HK, 0101.HK, 0012.HK, 0013.HK, 1638.HK, 0119.HK, 0016.HK, 0004.HK, CATL.SI, 1929.HK, 600030.SS, 2777.HK, 3308.HK, MAPL.SI, MACT.SI, 3368.HK, 600048.SS, 2318.HK) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (1638.HK, CATL.SI, 1929.HK, 600030.SS, 3308.HK, MACT.SI) within the past 12 months. Credit Suisse provided non-investment banking services to the subject company (0001.HK, 0101.HK, 0012.HK, 1638.HK, 0016.HK, CATL.SI, 2777.HK, 2318.HK) within the past 12 months Credit Suisse has managed or co-managed a public offering of securities for the subject company (1929.HK) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (1638.HK, CATL.SI, 1929.HK, 600030.SS, 3308.HK, MACT.SI) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (0001.HK, 1109.HK, 0817.HK, 0101.HK, 0012.HK, 0013.HK, 1638.HK, 0119.HK, 0016.HK, 0004.HK, CATL.SI, 1929.HK, 600030.SS, 3308.HK, MAPL.SI, MACT.SI, 3368.HK, 600048.SS, 2318.HK) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (0001.HK, 0101.HK, 0012.HK, 1638.HK, 0016.HK, CATL.SI, 2777.HK, 2318.HK) within the past 12 months As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (1638.HK, 0004.HK, 2318.HK).

China Retail Property Chart Book 120 26 November 2012

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China Retail Property Chart Book 121 26 November 2012

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