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This section contains information and statistics relating to the economy of and the property industry in which we operate. We have extracted and derived the information in the section below, in part, from various official government publications and a commissioned market research report from DTZ. Please refer to the paragraph headed “Sources of Information” below for more details. We believe that such sources are appropriate sources for the information and statistics below, including forward-looking information for future periods as identified, and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. The information has not been independently verified by us or the Sponsor, any of our or their respective affiliates or advisers, or any party involved in the Introduction and no representation is given as to its correctness, accuracy and completeness. Certain information and statistics included, including those excerpted from official and government publications and sources in China, may not be consistent with other information and statistics compiled within or outside China by third parties. Our Directors confirm that, after taking reasonable care, there is no adverse change in the market information since the date of the DTZ Report, which may qualify, contradict or have an impact on the information as disclosed in this section.

SOURCES OF INFORMATION

In connection with the [REDACTED], we commissioned a market research report from DTZ (which is the Office of Cushman & Wakefield) for use in part in this document to provide information relating to the economy of China, the property market in China, especially in specified areas in the Province, and the property industry in which we operate. DTZ has charged us a total fee of RMB480,000, for the preparation of the DTZ Report, which we believe is in line with the market rate for such report.

Cushman & Wakefield is a global real estate services firm, which offers a range of services including investment agency, leasing agency, property and facilities management, project and building consultancy, investment and asset management, research and valuation. Cushman & Wakefield has offices of 43,000 employees in more than 60 countries.

For the purpose of the [REDACTED], DTZ also serves as our property valuer. A property valuation report prepared by DTZ which relates to our property interests is included in Appendix III to this document. The preparation of the DTZ Report and the property valuation report was separately handled by two different DTZ business functions which are independent from each other. The DTZ Report was prepared primarily by the designated market research team of DTZ based on data from the PRC government, renowned research institutions and the proprietary databases of DTZ. In the course of research, DTZ conducted interviews with local industry professionals and Company’s management.

The following sets out the main reasons why DTZ adopted the above sources of information and considered them as reliable:

• it is general market practice to adopt official data and announcements from various Chinese government agencies;

• DTZ understands the data collection methodology and data source of the subscribed database from China Index Academy; and

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• the information obtained from interviews is for DTZ’s reference only and the findings in this report are not based on the results of these interviews. Nevertheless, DTZ has proven track records in providing market research studies to government and private clients in the regions where the DTZ Report cover, and the information obtained from those interviews are therefore considered reliable.

While preparing the DTZ Report, DTZ has relied on the assumptions listed below:

• there will be no political or administrative developments that will significantly impact general confidence in China, specifically in the studied areas, to the detriment of business activity, tourist arrivals and domestic travel;

• support infrastructure such as fresh water, sewage treatment, electricity and gas will be supplied and generated at a consistent and reliable level to maintain end-user satisfaction;

• the existing transportation system to, from and within the studied areas will be maintained and improved to meet the accessibility requirements of the cities; and

• the economies of the major trading, investor and tourist generating countries to the PRC, specifically the studied area, will not experience significant and sustained recession in the near future.

Our Directors confirm that after taking reasonable care, there is no adverse change in the market information since the date of the DTZ Report which may qualify, contradict or have an impact on the information set out in this section.

OVERVIEW OF THE PRC ECONOMY

Over the past few years, the PRC’s economy has been affected by the worldwide economic turmoil. However, under the influence of various macro-economic policies, the PRC’s GDP growth has remained strong, with a GDP growth from approximately RMB40,890 billion in 2010 to approximately RMB67,671 billion in 2015, representing a CAGR of approximately 10.6%.

The table below sets out the key economic and demographic indicators for the PRC for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015)

Nominal GDP (RMB Billion) . 40,890.3 48,412.4 53,412.3 58,801.9 63,646.3 67,670.8 10.6% Real GDP Growth Rate (%) . 10.6% 9.5% 7.7% 7.7% 7.4% 6.9% – GDP Per Capita ...... 30,567.0 36,018.0 39,544.0 43,320.0 46,531.0 – – Fixed Asset Investment (RMB Billion) ...... 25,168.4 31,148.5 37,469.5 44,629.4 51,276.1 55,159.0 17.0% Urban Disposable Income per capita (RMB) ..... 19,109.4 21,809.8 24,564.7 26,955.0 28,844.0 31,195.0 10.3% Permanent Population (Million Person)...... 1,340.9 1,347.4 1,354.0 1,360.7 1,367.8 1,374.6 0.5%

Source: China Statistical Yearbook

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OVERVIEW OF THE PROPERTY MARKET IN THE PRC

The PRC government has put in place certain policies that are intended to stabilise real estate prices and control real estate loans in the PRC. These policies primarily relate to, among others, control over purchasing properties for speculation and adjustment of the minimum capital ratio of fixed asset investment projects according to the economic situations and the necessity of macro-economic control.

The official borrowing and saving rates of the PBOC reached the peak in July 2011, and was then adjusted downward twice in 2012, once in November 2014 and in March 2015. As a result of this change in monetary policy, the financing costs to purchase properties are lowered. This is expected to improve the liquidity and stimulate the demand of the property market, and to maintain market growth at a steady rate.

Under the effects of domestic investment, consumption and rapid growth of the PRC economy, the PRC property market has been growing rapidly.

The table below sets out the key residential real estate indicators for the PRC for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015)

Residential Real Estate Investment (RMB billion) ...... 3,402.6 4,432.0 4,937.4 5,895.1 6,435.2 6,460.9 13.7% Total GFA of Residential Properties Completed (million sq.m.) ...... 634.4 743.2 790.4 787.4 808.7 737.8 3.1% Total GFA of Residential Properties Under Construction (million sq.m.) ...... 3,147.6 3,877.1 4,289.6 4,863.5 5,151.0 5,115.7 10.2% Total GFA of Residential Properties Sold (million sq.m.) ...... 933.8 965.3 984.7 1,157.2 1,051.9 1,124.5 3.8% Sales Revenue (RMB billion) ...... 4,412.1 4,819.8 5,346.7 6,769.5 6,241.1 7,277.1 10.5% Average Selling Price of Residential Properties (RMB/per sq.m.) ...... 4,725.0 4,993.2 5,429.9 5,850.0 5,933.0 6,471.4 6.5%

Source: China Statistical Yearbook

OVERVIEW OF THE TOURISM INDUSTRIES OF HAINAN PROVINCE AND SELECTED CITIES

The NDRC officially released the “2010-2020 Hainan International Tourism Island Development Planning Outline” (海南國際旅游島建設發展規劃綱要) in 2010. According to the goals described in the planning outline, Hainan will become a worldwide first-class island leisure resort by 2020. By then, value added from the tourism industry as a percentage of provincial GDP should exceed 12%, while the total contribution of tertiary industries should reach to 60%. Provincial urban and rural GDP, along with citizens’ living standards, should reach to national advanced level, while aggregate environmental quality should remain at a leading level nationally. The plan proposes that by 2020, the percentage of “clean energy” as part of primary energy consumption should be in the 50% proportion, while vehicle exhaust emissions will meet national advanced level standards.

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Tourism Market

Increase in revenues generated from tourism in Hainan correlates with the increase in number of travelers. The following table sets out the revenues from tourism in , and for the periods indicated.

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015) Number of travelers (in millions, except for CAGR) Hainan ...... 25.9 30.0 33.2 36.7 47.9 53.4 15.6% – Sanya ...... 8.8 10.2 11.0 12.3 13.5 10.3 3.2% – Haikou ...... 7.3 8.6 9.5 10.6 11.3 12.3 11.0% – Danzhou ...... 5.0 5.6 6.4 11.9 13.5 15.8 25.9% – Others ...... 4.8 5.6 6.3 1.9 9.6 15.0 25.6% Total tourism revenues (RMB in billions, except for CAGR) Hainan ...... 25.8 32.4 37.9 42.9 50.7 57.2 17.3% – Sanya ...... 14.0 16.1 19.2 23.3 27.0 22.1 9.6% – Haikou ...... 7.2 8.3 10.2 12.0 14.2 16.0 17.3% – Danzhou ...... 0.4 0.4 0.5 0.9 1.0 1.1 22.4% – Others ...... 4.2 7.6 8.0 6.7 8.5 18.0 33.8% As a percentage of GDP Hainan ...... 12.5% 12.9% 13.3% 13.6% 14.5% 15.5% 4.4% – Sanya ...... 60.6% 56.7% 58.0% 62.4% 66.7% 72.0% 3.5% – Haikou ...... 11.7% 11.3% 12.4% 13.3% 14.1% 14.0% 3.7% – Danzhou ...... 3.1% 2.9% 2.7% 4.5% 4.3% 4.8% 9.1% – Others ...... 2.0% 3.0% 2.8% 2.1% 2.4% 4.9% 19.6%

Source: China Statistic Bureau

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THE PROPERTY MARKETS OF HAINAN PROVINCE AND SELECTED CITIES

Hainan Province

Overview of the economy of Hainan Province

Hainan Province is an island located in the south of China with a total population of approximately 9.1 million by the end of 2015. The nominal GDP in 2015 was approximately RMB370.3 billion, with a real growth rate of 7.8% and a CAGR of 12.4% between 2010 to 2015. The ratio of contribution to the GDP of Hainan Province by the primary, secondary and tertiary industry has adjusted to 23.1:23.6:53.3 in 2015.

Beijing

Shanghai

Shenzhen

Danzhou Haikou Sanya

Hainan Province

Source: DTZ Valuation and Advisory Services ()

The table below sets out the key economic and demographic indicators for Hainan Province for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015) Nominal GDP (RMB Billion) . . . 206.5 251.5 285.5 314.6 350.1 370.3 12.4% Real GDP Growth Rate (%) . . . 15.8% 12.0% 9.1% 9.9% 8.5% 7.8% – GDP Per Capita ...... 23,831.0 28,797.0 32,374.0 35,317.0 38,924.0 40,818.0 11.4% Fixed Asset Investment (RMB Billion) ...... 133.1 161.1 214.5 269.8 304.0 336.0 20.3% Utilised Foreign Direct Investment (USD Million) . . . 1,522.8 1,581.0 1,641.0 1,811.0 1,920.0 2,470.0 10.2% Urban Disposable Income Per Capita (RMB) ...... 15,581.0 18,396.0 20,918.0 22,929.0 24,487.0 26,356.0 11.1% Urban Disposable Expenditure Per Capita (RMB) ...... 15,581.1 18,369.0 20,917.7 – – – – Average Household Income (RMB) ...... 16,929.6 20,094.2 22,809.9 – – – – Permanent Population (Million Person) ...... 8.7 8.8 8.9 9.0 9.0 9.1 0.9% Urbanisation (%) ...... 49.8% 50.5% 51.5% 52.7% 53.8% 55.1% 2.0%

Source: Hainan Statistical Bureau

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Overview of the property market in Hainan Province

With the rapid growth of the economy and the development of Hainan International Tourism Island, the major demand drivers of the Hainan real estate market are as below:

Upgrade of Provincial Urban Disposable Income Per Capita

It is expected that the per capita disposable income of urban households will increase steadily and smoothly in the near future. This can be attributed to a positive consumer power.

Improvement of Transportation Networks of Hainan Island

The completion of West Ring High-speed Rail will successfully solve the crucial traffic problem of the whole Hainan Island.

The steady, rational development of Hainan Tourism Market

According to the goals described in the “2010-2020 Hainan International Tourism Island Development Planning Outline”, Hainan will become a worldwide first-class island leisure resort by 2020.

The demand for residential properties in Hainan is mainly from non-local people. For the buyer characteristic for Hainan residential property market, tourists from the Northern China including Province, Province and Province and will still predominate the proportion of buyer groups. In Hainan residential market, lower density housings such as medium-rises and villas account for a large portion. Considering of its advantage on lower set price, high-rise apartments with small unit size was popular for buyers from outside the island. The future development outline of Hainan Province is maintaining to focus on north and south coastal area, especially defining Haikou and Sanya as the focal point of north area and south area respectively.

The table below sets out the key property market indicators for Hainan Province for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015) Real estate investment (2010-2015) (RMB billion) . . 46.8 65.1 88.7 119.7 143.2 170.4 29.5% Total GFA of commodity properties under construction (million sq.m.) ...... 44.9 62.6 78.1 78.2 95.2 83.2 13.1% Total GFA of commodity properties completed (million sq.m.) ...... 10.4 11.3 15.9 11.7 18.5 – – Total GFA of commodity properties sold (million sq.m.) ...... 8.5 8.7 9.3 11.9 10.0 10.5 4.3% Sales Revenue (RMB billion) . . 74.7 77.4 73.6 103.3 93.5 98.3 5.6% Average selling price of commodity properties (RMB/sq.m.)...... 8,735.0 8,943.5 7,893.8 8,669.0 9,315.0 9,339.2 1.3%

Source: China Statistical Bureau

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Overview of selected cities in Hainan Province

Sanya

Sanya is located at the southernmost part of the Hainan Island. The city’s total area is approximately 1,919.58 sq.km. with a total population of approximately 0.7 million by the end of 2015. It is a tropical coastal tourist city. Sanya possesses rich tourism resources, including good weather, beautiful landscapes of sea, beach, forest, hot springs, caves and garden, as well as culture. The economy of Sanya maintained a rapid growth with a CAGR of nominal GDP of approximately 13.5% from 2010 to 2015.

The nominal GDP of Hainan Province in 2015 was approximately RMB370.3 billion, with a real GDP growth rate of 7.8%. Sanya accounted for approximately 11.7% of the GDP of Hainan Province in 2015. The growth in fixed asset investment remained stable from 2010 to 2015. In 2015, Sanya per capita disposable income of urban residents was approximately RMB28,782.0, representing an increase of approximately 7.2% compared with that in 2014.

Land Price Trend

The supply of residential land was limited during the past 5 years in Sanya. Only 4 plots of land for residential use were transacted in 2015, with a total accumulated site area of 209,182 sq.m. However, due to the higher plot ratio, the total residential GFA of the 4 plots were planned to be 384,965 sq.m. The trend of the total transaction price shows fluctuation. The average accommodation value was at RMB3,255 per sq.m. as at 2015.

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015) No. of transactions ..... 3 5 76645.9% Land transfer price (RMB million) ...... 1,723 2,179 2,436 1,537 4,164 1,253 -6.2% Site area for construction (sq.m.) . . . 176,314 482,048 509,316 193,837 491,589 209,182 3.5% Planned GFA (sq.m.) .... 220,862 1,328,224 689,537 378,968 785,416 384,965 11.8% Average accommodation value (RMB per sq.m.) . 7,802 1,640 3,532 4,056 5,301 3,255 -16.0%

Source: CREIS

Residential properties

According to data released by the Sanya Statistics Bureau, based on the total GFA of residential properties already completed, the supply of residential properties increased from 1.1 million sq.m. in 2010 to 1.6 million sq.m. in 2015, representing a CAGR of 7.0%. Based on the total GFA of sold residential properties, the demand for residential properties decreased from approximately 1.41 million sq.m. in 2010 to approximately 1.05 million sq.m. in 2015. Demand kept increasing before 2013 but witnessed a drop in 2014 due to the control policy on residential land supply issued by the Government at the end of 2013. Average selling price of residential properties increased from RMB17,317 per sq.m. in 2010 to RMB17,997 per sq.m. in 2015.

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The table below sets out the key residential market indicators for Sanya for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015)

Stock of properties Total GFA of residences completed (000’ sq.m.) . . 1,106.7 746.6 1,422.6 348.1 2,800.5 1,553.0 7.0% Supply of properties Total GFA of residences under construction (000’ sq.m.) ...... 5,186.3 5,487.3 7,807.4 9,822.4 11,810.4 10,901.6 16.0% Demand of properties Total GFA of residences sold (000’ sq.m.) ...... 1,408.0 1,623.5 1,780.2 1,805.7 991.3 1,051.5 -5.7% Price level of properties Average selling price of residences (RMB per sq.m.) ...... 17,317.0 12,727.0 11,431.0 14,299.0 19,576.0 17,997 0.8%

Source: Sanya Statistical Bureau

Market landscape and competition

Building on its reinforced competitive strength year-over-year, Sanya has become a city that is highly sought after by an increasing number of famous developers. Well-known domestic developers including Vanke (萬科), Luneng Group (魯能集團) and China Railway Group (中鐵集團) have established their footholds in Sanya. Moreover, a couple of local housing enterprises in Hainan such as Luhuitou Group (鹿回頭集團) have been developing at a rapid pace.

Based on the total pre-sales amounts of the residential market in 2014 and 2015, we were the tenth largest property developer in Sanya in terms of sales for the years 2014 and 2015, while Sanya accounted for 21.1% and 20.7% of the market share of the property development industry of the Hainan Province for the relevant periods. The Hainan Province in turn accounted for 1.2% and 1.1%, respectively, of the market share in China’s real estate. Major real estate companies in Sanya are ranked as follows:

Corporate sales rankings in 2014 (based on pre-sales amount)

Sales Amount Approximate Rank Name of Enterprise (RMB million) Market Share 1 Luhuitou Group 5,177.6 27.4% 2 Luneng Group 1,270.3 6.7% 3 Vanke 1,148.6 6.1% 4 Hevol Real Estate 842.6 4.5% 5 Hongkun Real Estate 634.0 3.4% 6 Sanya Fenghuang Shuicheng Development 562.0 3.0% 7 China Railway Real Estate Group 512.8 2.7% 8 Runfeng Construction Co., Ltd 353.3 1.9% 9 Poly Group 346.3 1.8% 10 Our Group 330.3 1.7%

Source: CREIS

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Corporate sales rankings in 2015 (based on pre-sales amount)

Sales Amount Approximate Rank Name of Enterprise (RMB million) Market Share 1 Luhuitou Group 1,752.2 8.8% 2 Vanke 1,558.1 7.9% 3 Zhuoda Real Estate 1,118.4 5.6% 4 Luneng Group 957.9 4.8% 5 Raycom Real Estate 804.7 4.1% 6 Greenland 715.9 3.6% 7 China Railway Real Estate Group 685.3 3.5% 8 Hevol Real Estate 575.7 2.9% 9 Jialong Group 573.3 2.9% 10 Our Group 527.6 2.4%

Source: CREIS

Note: Apart from other records disclosed from CREIS, the pre-sales data of Hailan Holdings Limited was provided by the Company. We believe that the sources of this information are appropriate and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false of misleading. The information has not been independently verified by us, the Sole Sponsor, the Underwriters or any other party involved in the [REDACTED] and no representation is given as to its accuracy.

Hotel market

In Sanya, the hotel market supply has been increasing year after year whereas a steady increase can be witnessed in demand. In addition, resulting from factors such as the recovery of the external economic, the increase of residents’ per capita consumption and the increased visibility of Hainan International Tourism Island, the hotel operating environment has entered into a virtuous cycle.

Key Hotel Market Indicators

Average Average Room Rate Revenue Occupancy (RMB/Room/ per Room Year Rate (%) Night) (RMB) 2013 ...... 50.5% 579 292 2014 ...... 56.9% 570 324 2015 ...... 62.0% 575 357 Y-O-Y Growth Rate (2015/2014)...... 9.0% 0.9% 10.2% Annual Growth (2013-2015) ...... 10.8% -0.3% 10.6%

Source: STR Database

Note: 1. Statistics of Sanya’s hotel market in 2013-2015 captures data from January to December in 2013-2015 only and does not include CAGR.

Note: 2. The number of available room per night has witnessed a growing trend in Sanya high-end hotel market from 2013 Q1 to 2015 Q4. The increase was primarily due to the construction of large luxury hotels because of the opening of international tourism island. A large number of hotels in are currently under construction because of tourism planning in that area. This will increase the available rooms per night in the future once again.

*Note: The data in the above table shows the historical figures of about 15 hotels including the top 7 hotels in the market in Sanya.

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Market Outlook

We expect the current investment in real estate and tourism consumption momentum trends in Sanya to broadly continue for much of 2016. In the short time, Sanya residential market will keep on a steady, healthy and reasonable development while the price is foreseeable to increase steadily.

Haikou

Haikou is located in northern Hainan Province. The city’s total area is approximately 2,304.8 sq.km. The total population is approximately 2.2 million by the end of 2015. The air pollution index is only 28, and it is superior to the first grade of the country’s standard. It ranks the top among all the large-and medium-sized cities in the country in terms of air quality.

In 2015, Haikou achieved a nominal GDP of approximately RMB116.1 billion, which accounted for approximately 31.4% of Hainan Province’s total nominal GDP, with a real growth rate of 7.5%. In 2015, Haikou achieved GDP per capita of approximately RMB52,501. Haikou achieved fixed asset investment of approximately RMB101.2 billion in 2015, which increased by approximately 23.1% from 2014. In 2015, Haikou’s per capita disposable income of urban residents was approximately RMB28,535, representing an increase of approximately 7.6% from 2014.

Land Price Trend

The supply of residential land has been limited during the past 5 years in Haikou. Only 32 plots of land for residential use were transacted in 2015, with a total accumulated site area of approximately 1.29 million sq.m. However, due to the large scale of the land plot and the higher plot ratio, total residential GFA of the 32 plots was planned to be approximately 2.81 million sq.m. The trend of the total transaction price shows fluctuation. The average accommodation value was at RMB1,401 per sq.m., with an annual premium rate of only 9.6%.

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015) No. of transactions...... 10 7 36 10 14 32 26.2% Land transfer price (RMB million) ...... 2,797 586 4,710 1,677 4,027 3,941 7.1% Site area for construction (sq.m.) ...... 441,432 131,660 1,792,057 305,475 861,296 1,294,169 24.0% Planned GFA (sq.m.) ...... 1,294,130 318,916 3,637,921 830,833 2,234,990 2,811,771 16.8% Average accommodation value (RMB per sq.m.) ...... 2,161 1,838 1,294 2,017 1,801 1,401 -8.3% Average premium rate...... 100.2% 0.5% 2.1% 40.7% 0.5% 9.6% -37.4%

Source: CREIS

Residential properties

According to data released by the Haikou Statistics Bureau, based on the total GFA of residential properties that have already been completed, the supply of residential properties increased from 839,400 sq.m. in 2010 to 2,164,500 sq.m. in 2015, representing a CAGR of 20.9%. Total GFA of residences under construction increased from approximately 6.75 million sq.m. in 2010 to approximately 25.7 million sq.m. in 2015, representing a CAGR of 30.7%. Based on the total GFA of sold residential properties, the demand for residential properties increased from approximately 2.0 million sq.m. in 2010 to approximately 3.73 million sq.m. in 2015 representing a CAGR of 13.3%. The average selling price of residential properties decreased from RMB8,069.0 per sq.m. in 2010 to RMB7,636.0 per sq.m. in 2015 representing a CAGR of -1.1%.

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The table below sets out the key residential market indicators for Haikou for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2015 2015) Supply of properties Total GFA of residences completed (thousand sq.m.) ...... 839.4 455.7 2,284.4 1,476.1 3,261.1 2,164.5 20.9% Total GFA of residences under construction (thousand sq.m.) . . . 6,749.1 9,480.7 12,793.6 14,300.3 15,908.3 25,692.3 30.7% Demand for properties Total GFA of residences sold (thousand sq.m.) ...... 1,997.0 1,931.6 2,514.9 3,190.4 2,975.8 3,733.0 13.3% Price level of properties Average selling price of residences (RMB per sq.m.) ...... 8,069.0 6,641.3 6,512.0 7,341.8 7,472.9 7,636.0 -1.1%

Source: CREIS

Market landscape and competition

Building on its reinforced competitive strength year-over-year, Haikou has become a city that is highly sought after by an increasing number of famous developers. Well-known domestic developers such as Evergrande Group (恒大集團) and Greenland Group (綠地控股 集團) have established their footholds in Haikou. Moreover, a couple of local housing enterprises in Hainan such as HNA Group (海航集團) and Hainan Jiayuan (海南佳元) have been developing at a rapid pace.

Based on the total pre-sales amount of the residential market in 2014 and 2015, major real estate companies in Haikou are ranked as follows:

Haikou’s corporate sales rankings in 2014 (based on pre-sales amount)

Sales Amount Approximate Rank Name of Enterprise (RMB million) Market Share 1 HNA Group 1,293.6 5.8% 2 Guangwu Real Estate Group 985.7 4.4% 3 Haikou Urban Construction & Investment 698.5 3.1% 4 Greenland Group 495.4 2.2% 5 Hainan Jiayuan Real Estate 440.7 2.0%

Source: CREIS

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Haikou’s corporate sales rankings in 2015 (based on pre-sales amount)

Sales Amount Approximate Rank Name of Enterprise (RMB million) Market Share 1 HNA Group 1,453.6 5.1% 2 Evergrande Group 1,235.3 4.3% 3 Guangwu Real Estate Group 1,054.0 3.7% 4 R&F Properties 1,036.1 3.6% 5 New World China Land 714.3 2.5%

Source: CREIS Note: We believe that the sources of this information are appropriate and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false of misleading. The information has not been independently verified by us, the Sole Sponsor, the Underwriters or any other party involved in the [REDACTED] and no representation is given as to its accuracy.

Hotel Market

Haikou’s hotel market supply has been increasing year after year whereas a steady increase has taken place in demand. In addition, resulting from factors such as the recovery of the external economy, the increase of residents’ per capita consumption and the increased visibility of Hainan International Tourism Island, the hotel operating environment has entered into a virtuous cycle.

Key Hotel Market Indicators

Average Average Room Rate Revenue per Occupancy (RMB/Room/ Room Year Rate (%) Night) (RMB) 2013 ...... 37.9% 653 247 2014 ...... 47.6% 703 335 2015 ...... 46.6% 607 283 Y-O-Y Growth Rate (2015/2014)...... 23.0% -7.0% 14.4% Annual Growth (2013-2015) ...... 10.9% -3.6% 7.0%

Source: STR Database

*Note: Data in above table shows the historical figures of the top 7 hotels in the market in Haikou.

Market Outlook

Along with the rapid growth in Haikou’s infrastructural investment, the demand in the near future for residential properties in Haikou is expected to increase speedily as projected from the growth trend of Haikou travellers between 2010 and 2015, and unit sale price of commodity housing has reached RMB15,000 per sq m. From the supply aspect, the developable coastland of Haikou is very restricted, and high-rise buildings are not permitted to be developed along the seashore. The housing price is expected to maintain a stable increase in the short term as the services and improvement are gradually completed and the demand for investment has not been restrained yet.

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Danzhou

Danzhou is situated in the northwest part of the Hainan Province. Danzhou is China’s excellent tourist city, boasting abundant tourist resources. The total population is approximately 1.0 million in 2014. Danzhou City showed a rapid growth of economy with a CAGR of GDP of approximately 14.9% from 2010 to 2015.

In 2015, Danzhou achieved a nominal GDP of approximately RMB23.0 billion, which contributed approximately 6.2% of Hainan Province’s total nominal GDP, with a real GDP growth rate of 7.9%. In 2015, Danzhou achieved GDP per capita of approximately RMB25,813 and fixed asset investment of approximately RMB13.0 billion in 2015. In 2015, Danzhou per capita disposable income of urban residents was approximately RMB24,557.0, representing an increase of approximately 7.6% from 2014.

Land Price Trend

The supply of residential land was limited during the past 5 years in Danzhou. Only 5 plots of land for residential use were transacted during 2010-2015, with a total accumulated site area of 840,124 sq.m.. However, due to the higher plot ratio, the total residential GFA of the 5 plots was planned to be 2,003,900 sq.m.. The trend of the total transaction price shows fluctuation. The average accommodation value was at RMB344 per sq.m..

Residential properties

According to data released by the Danzhou Statistics Bureau, based on the total GFA of sold commodity properties, the demand for residential properties increased from 123.3 thousand sq.m. in 2010 to 640.6 thousand sq.m. in 2014, representing a CAGR of 51.0%. The average price of residential properties increased from RMB3,198 per sq.m. in 2010 to RMB3,419 per sq.m. in 2014, representing a CAGR of 1.7%.

The table below sets out the key real estate indicators for Danzhou City for the years indicated:

CAGR (2010- 2010 2011 2012 2013 2014 2014)

Real Estate Investment (RMB million)...... 590.0 1,904.3 2,366.4 3,207.6 4,376.4 65.0% Total GFA of commodity properties Sold (thousand sq.m.) ...... 146.0 314.0 339.9 620.8 645.8 45.0% Residential ...... 123.3 288.4 325.8 575.4 640.6 51.0% Total Sales Amount of commodity housing sold (RMB Million) ...... 492.1 1,568.9 1,648.8 2,727.6 2,232.6 45.9% Residential ...... 394.4 1,400.0 1,489.8 2,383.6 2,190.4 53.5% Average Selling Price of commodity properties (RMB/per sq.m.) ...... 3,371.0 4,997.0 4,851.0 4,394.0 3,457.0 0.6% Residential ...... 3,198.0 4,854.0 4,573.0 4,142.0 3,419.0 1.7%

*Note: Data for 2015 is not released yet and is therefore not available. As introduced by Danzhou Statistic Bureau, residential generally includes normal residential, villas and apartments. Houses for business use generally include retail shops, shopping malls, and hotels etc.

Source: Danzhou Statistic Bureau

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Market landscape and competition

In Danzhou, most residential developments are distributed in two areas, i.e. Yangpu Economic Development Zone (洋浦經濟開發區) and downtown area of Danzhou. In the Yangpu Economic Development Zone (洋浦經濟開發區), many residential areas have begun to build up and more well-recognized property developers built houses along the coastline, such as Zhongnan Group (中南集團) and Evergrande Group (恒大集團). Three residential development projects include West Coast (中南•西海岸), Lanbo Bay (博亞茲•瀾鉑灣) and Jin Bi World (恒大金碧天下), which will be nearly completed in the coming 2016-2017 around the (海南海花島), which is a well-known large complex project scheduled to be completed in 2018. The future supply of residential developments will pose a threat to the fierce price competition.

Market Outlook

According to the latest city planning of Danzhou, residential real estate in the site of the project will be in full flourish. Based on the establishment of the Ocean Flower Island (海南海 花島), the whole 12km coastline will attract investors from local buyers and other groups over the country. And as a large number of surrounding well-known residential developments launched, it will bring opportunities and competition to the subject project. What’s more, with the planning of Danzhou International Airport (儋州國際機場) to be built, Western Hainan High-speed Railway (西環高鐵) and the highway from Chengmai (澄邁) to (萬寧) put into operation, it will improve greatly the traffic network of the regional area and also stimulate the price growth.

HISTORICAL PRICE TRENDS OF BUILDING CONSTRUCTION SERVICES COSTS

According to the information on construction costs from the Ministry of Housing and Urban-Rural Development of the PRC, construction costs in 2015 showed an overall rising trend with fluctuations. The average construction cost of high-rise residences was RMB1,758 per sq.m. while medium-rise residences was RMB1,599 sq.m. and that of multi-storey residences was RMB1,366 per sq.m. till the second half of 2015.

Trend of the PRC construction and installation costs (2010-2015)

2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2

High-rise (RMB/sq.m.) . . . 1,547 1,595 1,633 1,700 1,730 1,774 1,811 1,835 1,839 1,817 1,791 1,758 Medium-rise (RMB/sq.m.) . 1,377 1,411 1,461 1,520 1,576 1,570 1,591 1,639 1,637 1,654 1,629 1,599 Multi-storey (RMB/sq.m.) . 1,053 1,096 1,177 1,233 1,256 1,284 1,281 1,339 1,350 1,362 1,354 1,366

Source: China Construction Engineering Costs Information Website

–95– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

COMPETITION IN THE PROPERTY MARKET IN THE PRC

The property market in Hainan Provinces and elsewhere in the PRC is fragmented and competitive notwithstanding high entry barrier such as large financial commitment. Our existing and potential competitors include both major national and regional property developers with extensive operations in the cities or markets in which we operate as well as local property developers. We believe that the major competitive factors in the residential and commercial property development industry include land acquisition, geographic location, management expertise, financial resources, access to transportation infrastructure, size of land reserves, product quality, brand recognition by customers, customer services and support, pricing and design quality. In recent years, the PRC Government has also issued policies to reduce the number of property development projects that involve redevelopment or relocation of existing occupants. These policies increase competition among property developers as the amount of land available for property development is reduced.

We believe that, with our established position in the property market in Hainan Province, our large scale quality properties, our effective cost control measures together with our experience and well-establish brand name, we are able to react quickly to challenges in the PRC property market. We will continue to enhance our brand recognition in Hainan Province and across the PRC, and plan to explore new property projects in Hainan. For details, please refer to the section headed “Business – Competition” in this document.

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