Investor Meetings Keppel Land in China November/December 2006 1
Presentation Outline Introduction Market Update City Updates - Shanghai - Tianjin - Beijing - Wuxi - Chengdu Residential Township Development 2
3 Introduction
KLL s Steps in China Early 1990s Led Singapore consortium in development of Suzhou Industrial Park 1994 Jointly developed Spring City Lake & Golf Resort in Kunming 2000 Ventured into Shanghai market with land acquisition in Jingan District 2002 Acquired two sites in Beijing and Chengdu and launched One Park Avenue in phases 2003 Forayed into township development with acquisition of Chengdu site 2004 Acquired site in Xujing, Shanghai for villa development Launched 8 Park Avenue in Shanghai, The Seasons in Beijing and The Waterfront in Chengdu 20 Acquired sites for Tianjin villas and Wuxi township Launched and fully sold The Botanica Ph 1 (970 units) 2006 Increased stake in Dragon Land, now known as Evergro Properties, to 71% Joint acquisition of mixed development site in Jiangyin, Jiangsu Province Sold stakes in Dragon Land s subsidiary in Tianjin, Singapore Suzhou Industrial Holdings and Ocean Towers in Shanghai Launched The Botanica Ph 2 and received good sales 4
KLL in China s Residential Market Presence in 6 cities located in 3 mega-regions Development of condominiums, villas as well as township units Slightly more than 15% (about S$800 mil) of total assets invested in China Population GDP Year 20 (mil) (US$bil) Greater Beijing Economic Rim * 63 209 Yangtze River Delta 16 Cities 90 428 Western Region ** 39 68 * Includes Beijing, Tianjin, Tangshan and other 5 cities around Beijing area ** Chengdu and Chongqing only Figures exclude rural area Source : Municipal Bureaus of Statistics CHENGDU BEIJING JIANGYIN TIANJIN WUXI SHANGHAI 5
Key Data 20 Figures Shanghai Beijing Chengdu Tianjin Population (mil) 17.8 15.4 10.8 10.4 GDP Growth Rate (%) 11.1 11.1 13.5 14.5 GDP Per Capita (RMB) 51,428 44,969 20,185 35,457 Urban Per Capita Disposable Income (RMB) * 18,645 17,653 11,359 12,639 Growth of Disposable Income (%) 11.8 12.9 9.3 10.2 Mortgage Rate More than 5.81% for loans over five years Source : Municipal Statistics Bureaus * Urban Per Capita Disposable Income = Per Capita Household Income - Income Tax - Four Funds (Housing, Pension, Medical and Unemployment Funds) 6
7 Market Update
2004 Anti-Speculation Measures Mortgage payment cannot be over 50% of household income Resale of uncompleted properties disallowed 20 Mortgage rate hike from at least 5.31% to 5.51% (above 5 year term loans) Loan quantum reduced from 80% to 70% Sales and capital gain tax of 5% Repayment of mortgage before resale of properties 2006 Two mortgage hikes bring rate to 5.81% (above 5 year term loans) At least 70% of citywide GFA should comprise apartments of less than 90 sm in size Only foreigners who have lived for more than one year in China may buy properties for own occupation Sales and capital gain tax on housing sold within 5 years of purchases, up from 2 years previously Registered capital of foreign investments up from 40%* to 50% for investments of at least US$10 mil * For investments of US$10-30 mil. 33% capital requirement for investment of over US$30 mil 8
Impact on Keppel Land Projects continue to sell Steady sales in Beijing and Chengdu Good sales for township The Botanica Ph 2, similar to Ph 1 No significant impact on 2006 PATMI If price drops by 5-10%, PATMI will drop S$1-2 mil If volume drops by 5-10%, PATMI will drop about S$1 mil If price and volume drop by 5-10%, PATMI will drop S$2-3 mil No significant impact from restrictions on foreign buyers Bulk of buyers are locals * : 60-90% for condominium almost 100% for township Curb on villa land supply increases attraction of villa projects in Shanghai and Tianjin Continued expansion into growth secondary cities and development of residential townships Evergro Properties provides additional platform into secondary cities * Locals exclude HK residents and overseas Chinese 9
City Updates - Shanghai 10
Shanghai Residential Market Condominiums * Jan - Sep 06 sales : 12.6 mil sm or approximately 117,500 units Average price (Inside Inner Ring Road) : Above RMB 16,000 psm Villas ** (Inside Middle Ring Road) : Above RMB 11,000 psm Jan - Sep 06 sales : 900,000 sm or approximately 2,700 units Average price : RMB 14,000-1,9000 psm or * Exclude economic housing ** Exclude semi-detached houses Source : Shanghai Real Estate Exchange Centre RMB 5-7 mil per unit 11
Outlook for Shanghai Market Demand drivers :- Growing number of expatriates 4.4 mil expatriates and non-shanghai residents (25% of total residents) * Income growth Urban personal disposable income up 60% while savings tripled in last five years * Increasing cross-province and overseas investors World Expo 2010 New MRT lines before 2010 Mega projects Maglev train linking Shanghai to Hangzhou High speed train linking Shanghai to Beijing * Source : Shanghai Municipal Statistics Bureau 12
8 Park Avenue Top 10 Foreign Developers by Shanghai Real Estate Trade Association 946-unit condominium project in heart of Jingan District 5 blocks (456 units) launched and fully sold Latest achieved price : About RMB 22,000 psm 13
Villa Riviera 168-unit villa development in Xujing Town, Qingpu District targeted at local upper class and expatriate communities Soft launched on 10 Nov 2006 Some 14 units sold at average price of RMB 17,000 psm 14
City Updates - Beijing 15
Beijing Residential Market Jan- Sep 06 sales : 14.5 mil sm Average price : RMB 7,855 psm in Sep 2006, up 15.6% from six months ago Source : Beijing Statistics Bureau 16
Outlook for Beijing Market Demand drivers : Growing number of expatriates 3.6 mil expatriates and non-beijing residents (23% of total residents) Income growth Urban personal disposable income up 71%while savings nearly tripled in last five years Positive outlook in the lead up to 2008 Olympics Improvements of infrastructure and living environment, and creation of jobs Less housing supply approaching Olympics likely to boost prices Source : Municipal Statistics Bureau 17
The Seasons 20 Most Anticipated Project Award by An Jia magazine 1,859-unit condominium development near Wang Jing West MRT station Amenities including newly opened 2nd largest Ikea outlet globally with NLA of about 43,000 sm 1,672 units or 94% of 1,775 launched units sold to date Latest achieved price : About RMB 9,200 psm 18
City Updates - Chengdu 19
Background of Chengdu Capital of Sichuan province Fourth largest in population after Chongqing (31.4m), Shanghai (17.8m) and Beijing (15.4m) Rapid GDP growth at a CAGR of 12.5% during the past five years Key industries such as IT, automobile (First Automobile Works and Sichuan Toyota), aviation and pharmacy as main economic contributors First subway line to be completed before 2010, with Ph 1 of total length of 15.9 km and 15 stations Proposed giant new CBD with land area of 13,000-ha to drive city economy 20
Chengdu Residential Market Jan - Sep 06 sales : 5.7 mil sm, up 28.7% y-o-y Average price : RMB 4,335 psm in Sep 2006, up 12.7% y-o-y Figures for five urban districts Source : Chengdu Real Estate Information Centre 21
Outlook for Chengdu Market Demand drivers :- More people relocating from other cities and countries Low living cost and attractive lifestyle Easing of regulations for resident status High percentage of owner-occupation 85-90% buyers are end-users Affluent consumption Consumer-related businesses accounting for half of GDP Rising income Urban personal disposable income up 49%while savings surged 150% in last five years 22
The Waterfront 2006 Top 30 Most Valued Property Developments in Chengdu by Tianfu Morning Post and Chengdu Statistics Bureau 1,143-unit condominium development located in south-east Chengdu, within 10 minutes drive to city centre 1,010 units or 94% of 1,070 launched units sold to date Latest achieved price : About RMB 6,600 psm 23
City Updates - Tianjin 24
Background of Tianjin One of four autonomous cities in China Alongside Beijing, Shanghai and Chongqing Within Greater Beijing Economic Rim, and centre of Huan Bo Hai Economic Region An international harbour city, economic and logistic hub of northern China Growing Tianjin Economic Development Area (TEDA) Four key industries accounting for about 90% of annual industrial output Electronics and communications : Motorola, Samsung, Sanyo and Panasonic Machinery : Toyota, SEW and Emerson Pharmaceuticals : GSK and Novo Nordisk Food and beverage : Coca Cola and Nestle Return of 15% in past five years, highest in China s industrial park zones Recognised by Fortune magazine as China s Most Admired Industrial Park 25
Tianjin Residential Market Villas Estimated demand for 2006 : 500-600 units Average price : RMB 13,000-15,000 psm or RMB 4-6 mil per unit Condominiums Jan - Sep 06 sales : 5.9 mil sm Average price : RMB 4,847 psm Source : www.soufun.com 26
Outlook of Tianjin Market Demand drivers :- Urban personal disposable income up 55% in last five years Government s pledge of RMB 80 bil to expand city infrastructure, including :- MRT line (on trial operation since June 2006) Two highways to Beijing Expansion of international airport Faster access to Beijing (30 mins) Beijing-Tianjin high speed train to operate before Olympics Airbus to establish an aircraft assembly plant worth RMB 8 bil in Tianjin 27
The Arcadia 168-unit villa development Near Meijiang Area, a prestigious housing estate Within proximity of three economic and science development zones Launch in 2007 28
City Updates -Wuxi 29
Background of Wuxi Strategic located in prosperous Yangtze River Delta Region with close economic ties to Shanghai 20 GDP ranked 2nd * in Jiangsu Province and 4th ** in Yangtze River Delta Region 16 Cities WUXI Ranked 8th^ in 20 Top 10 China Cities in terms of GDP growth, city infrastructure and living standards Renowned tourist city, with Taihu Lake as a key attraction Yangtze River Delta Region * After Suzhou ** After Shanghai, Suzhou and Hangzhou ^ After Shanghai, Shenzhen, Guangzhou, Beijing, Hangzhou, Ningbo and Suzhou 30
Wuxi Residential Market Jan - Sep 06 sales : 2.5 mil sm Average price : RMB 4,800 psm in Sep 2006, up 17% from RMB 4,100 psm in 2Q06 Source : Wuxi Municipal Statistics Bureau, Wuxi Municipal Housing Bureau 31
Outlook of Wuxi Market Demand drivers :- Population to reach 3.6 mil in 2010, up from 3.06 mil in 20 Urbanisation rate to reach 83% in 2010, up from 73% in 20 Expected housing demand of 31 mil sm in 20-2010 Urban personal disposable income up 86% while savings surged 150% in last five years High level of local demand ideal for township development : About 85% local home buyers 32
Residential Township Development 33
Push for Township Opportunities Demand drivers :- Strong economic growth in secondary cities Wealth effect spreading to middle to lower-middle income groups Increasing mass market demand from rapid urbanisation New concept with promising prospects Substantial demand amid short supply of good quality housing Unaffected by government measures due to less speculation Provides long-term steady income stream 34
The Botanica 20 Most Reasonably Priced Project in Chengdu by Chengdu Residential Property and Real Estate Association Located in the southeast Chengdu, near Sichuan Normal University About 8,000 units of low- and high-rise apartments and commercial buildings Targeted at local middle-income group Launched and sold out Ph 1 (970 units) 811 units or 93% of launched 868 units in Ph 2 sold to date 35
Wuxi Residential Township 35-ha site in southeast Wuxi, as part of the Taihu New City, a proposed secondary city centre within the Binhu Economic Development Zone Close to Proposed municipal administrative office, a university town and a high-tech IT park About 5,000 units of low- and high-rise apartments, commercial buildings and amenities First phase to launch in 2007 36
37 Thank You
38 This presentation may contain statements which are subject to risks and uncertainties that could cause actual results to differ materially from such statements. You are cautioned not to place undue reliance on such statements, which are based on the current views of Management on future developments and events.
39 Additional Slides
Impact of Anti-Speculation Measures Price and volume recovered in Sep 06 in Shanghai Shanghai Primary Housing Market Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Area Sold ('000 sm) 1,572 855 1,859 2,390 2,507 1,694 1,542 1,748 1,928 Average Price (RMB psm) 6,019 7,583 8,204 8,645 8,644 9,330 8,670 7,350 8,024 ('000 sm) 3,000 Area Sold Average Price (RMB psm) 10,000 8,000 2,000 6,000 1,000 4,000 2,000 0 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- 06 Feb- 06 Mar- 06 Apr- 06 May- 06 Jun- 06 Jul- 06 Aug- 06 Sep- 06 0 Source : Shanghai Real Estate Trading Centre 40
Impact of Anti-Speculation Measures Price and volume stabilised in 3Q06 in Beijing Beijing Primary Housing Market Jan&Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Area Sold ('000 sm) 2,741 1,804 1,733 2,281 1,854 1,353 1,398 1,378 Average Price (RMB psm) 6,060 6,796 7,871 7,102 7,675 7,642 7,918 7,855 3,000 ('000 sm) Area Sold Average Price (RMB psm) 8,000 2,000 6,000 4,000 1,000 2,000 0 Jan&Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Source : Beijing Statistics Bureau 0 41
Impact of Anti-Speculation Measures Chengdu price on uptrend and volume remained stable in 2006 Housing Market in Five Urban Districts in Chengdu Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Area Sold ('000 sm) 615 470 651 684 632 644 700 675 656 Average Pirce (RMB psm) 3,977 3,932 4,001 4,8 4,167 4,392 4,339 4,336 4,335 ('000 sm) 1,000 Area Sold Average Price (RMB psm) 4,500 750 3,500 500 2,500 250 1,500 0 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- 06 Feb- 06 Mar- 06 Apr- 06 May- 06 Jun- 06 Jul- 06 Aug- 06 Sep- 06 500 Source : Chengdu Housing Bureau 42
KLL s Residential Landbank in China More than 2 mil sm of GFA for sale Site Location KLL's Stake Total Land Area Total GFA Remaining GFA Remaining Units (%) (sm) (sm) For Sale (sm) For Sale 8 Park Avenue ^ Shanghai 99% 33,432 133,393 78,256 490 Park Avenue Central Shanghai 99% 28,488 99,708 99,708 708 Villa Riviera Shanghai 99% 153,726 53,796 53,796 ^^ 154 The Arcadia Tianjin 100% 133,400 60,5 60,5 168 Wuxi Township Wuxi 50% 352,534 670,970 # 670,970 # 5,000 The Botanica ^ Chengdu 44% 419,775 1,049,438 # 842,000 # 6,418 Mixed development Jiangyin 39% 82,987 NA NA 2,100 Total 1,204,342 2,067,810 1,8,235 15,038 ^ Exclude area and units sold ^^Include area sold # Include commercial space 43
Market Outlook Demand drivers in China: Rising homeownership aspirations Underpinned by robust economic and income growths Increasing middle-class and expatriate community Huge young population Half population in age group 20-49 * Age 50-64 14% 65 and above 8% Age 0-19 30% Age 20-49 48% Source : UN Population Division Forecast 44
Market Outlook Demand drivers in China: China Urbanisation compared to other Asian countries Rapid urbanisation Urbanisation rate to reach 61% in 2030 Good urbanistion potential compared to Asian peers About 300 mil to relocate from rural to urban areas by 2020 Source : UN Population Division 45
Market Outlook Secondary cities to see better growth Faster urbanisation 2nd-tier cities 2001 2002 2003 2004 3-year CAGR Chongqing 21.4 22.3 23.2 24.1 4.5 Hefei 33.2 34.3 35.1 38.0 4.8 Chengdu 34.8 35.6 37.0 42.8 8.5 Changchun 41.6 42.7 43.2 43.5 2.4 Zhengzhou 55.5 55.9 57.0 58.0 3.0 Tianjin 58.6 58.9 59.4 59.6 1.3 Average of above 40.8 41.6 42.5 38.0 3.9 1st-tier cities 69.0 70.2 73.3 75.5 3.4 National 37.7 39.1 40.5 41.8 4.1 Source : CEIC, National Bureau of Statistics of China Economic growth spreading out to secondary cities Strong demand from resettlement Resettlement wave move to secondary cities Driven by city redevelopment and immigration Easier to get resident status compared to gateway cities Less affected by government measures Policy designed to retain end-user confidence Growth driven by affordable housing for owner-occupation 46