The document discusses emerging city winners in China and opportunities for real estate investment. It analyzes 30 Chinese cities and classifies them into categories based on their growth stage and investment opportunities. Key drivers of growth for tier 2 and 3 cities include industrial heritage, proximity to major cities, focus on high-tech and R&D, and transportation infrastructure projects. The document also examines trends in logistics, retail, and the expansion of multinational companies to secondary cities in China.

1. World Winning Cities World Winning Cities Programme China: Emerging City Winners

3. World Winning Cities in China

5. Changing Perceptions Some things you may know about China…. … ..and some things you probably didn't

8. But China has come far: The History of Property Investment 1988 1989 1990 1991 1997 2005 2006 P&G enter Market/ Land lease system established Shanghai Centre - First real property project Macquarie GPA deal kicks off hard asset investment 1988 1990 2005 The property market since open policy 2003 Asian Financial crisis scares investors away 1997-8

13. Foreign Investors in China

14. 2005 ‘Prime’ Real Estate Investment in China Total > US$ 5.5bn Beijing Tianjin Shanghai Hangzhou Nanjing Other Guangzhou/ Guangdong

15. China - Yield Convergence?

17. China’s Cities Hierarchy Shanghai, Beijing, Hong Kong Guangzhou, Shenzhen, Macau Chongqing, Chengdu, Tianjin Wuhan, Xi’an, Qingdao, Suzhou Shenyang, Hangzhou, Nanjing, Dalian, Dongguan, Xiamen Harbin, Zhengzhou, Fuzhou Nanning, Wuxi, Changsha Kunming, Jinan, Ningbo, Nanchang Hefei, Changzhou, Changchun II III III II I

20. Dongguan Qingdao Shenyang Xiamen Suzhou Nanjing Shenzhen Tianjin Dalian Chengdu Xi’an Guangzhou Wuhan Hangzhou Chongqing Shanghai Beijing Hong Kong Macau Tier I and II Cities: GDP Growth Tier I Tier II % 2005 Strongest Economic Growth in Tier II cities II III

21. Foreign Investors Move Across China The Beginning: Hong Kong Wave One: Beijing, Shanghai Guangzhou Wave Two: Chengdu, Chongqing, Dalian, Hangzhou, Harbin, Jinan, Macau, Shenyang, Suzhou, Tianjin, Wuhan, Wuxi, Xian, Xiamen

22. Real Estate Capital Flows move to Tier II cities

23. Signals of Change: Retailer Expansion

24. Wal-Mart’s Presence - Over 60 Stores across China Dalian Qingdao Beijing Tianjin Shanghai Shenyang Xiamen Shenzhen Shantou Dongguan Chongqing Kunming Fuzhou Changsha Wuhan Nanchang Changchun Harbin Jinan Nanjing Nanning Guiyang Taiyuan Source: Wal Mart Website

25. Macquarie Shopping Mall Portfolio Jinan Harbin Dalian Tianjin Shenyang Nanjing Nanning Changsha Wuhan Beijing Shanghai Guangzhou

26. Signals of Change: Bank Expansion

27. Signals of Change: High Tech Expansion

28. The Investors’ Geography Taiwan Japan Korea MNCs Xiamen Dalian Qingdao Yangtze River Delta Xiamen II III

29. China 30: City Evolution Curve

30. China 30: City Evolution Curve Ningbo Wuxi Fuzhou Jinan Harbin Changchun Zhengzhou Changsha Maturing Shanghai Beijing Zhuhai Wenzhou Lanzhou Urumqi Kunming Hefei Nanchang Nanning Changzhou Growth Early Adopters Watch List Dormant Guangzhou Shenzhen Chengdu Hangzhou Tianjin Chongqing Suzhou Wuhan Nanjing Dalian Shenyang Qingdao Xi’an Xiamen Dongguan Short Term Winners Medium Term Winners Longer Term Winners

46. China’s 20 Logistics Hotspots

47. Source: Jones Lang LaSalle Research China’s 20 Logistics Hotspots

48. Bohai Bay 21% Yangtze River Delta 43% Pearl River Delta 21% Other 15% Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 China Warehousing Facilities: Current Activity

49. China Warehousing Uses Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 Storage 25% Trans-Shipment 20% Industry Operations 9% Value-Added Services 20% Reverse Logistics 7% Consolidation 18% Current Warehousing Uses

50. Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 Value-Added Logistics Consolidation Trans-Shipment Industry Operations Reverse Logistics Storage Score China Warehousing Uses – Growth Prospects

51. Source: Ministry of Communications of PRC, November 2006 China’s Future Expressway Network

52. Source: Ministry of Communications of PRC, November 2006 China’s Existing Rail Network

53. Mainland China’s Major Ports Network

55. Beijing 13% Tianjin 5% Shanghai 32% Suzhou 7% Guangzhou 12% Shenzhen 9% Chengdu 6% Xiamen 3% Greater Bohai Bay 21% Yangtze River Delta 43% Pearl River Delta 21% Other 15% Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 Region City Warehousing Facilities: Current Presence

56. Greater Bohai Bay 23% Yangtze River Delta 27% Pearl River Delta 35% Other 15% Beijing 13% Tianjin 8% Shanghai 23% Suzhou 2% Guangzhou 19% Shenzhen 15% Chengdu 12% Region City Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 China Warehousing Facilities: Plans for Next 2 Years

57. Source: Jones Lang LaSalle, 2006 US$/sq m/year Warehousing Rental Ranges

59. China: Retail Futures China’s Consumer Groups The Lost Generation The Emerging Middle Classes The Girls of the Economic Miracle The Little Emperors The New Elite and Super Rich The Vibrant Youth

60. World Largest Shopping Malls China South China Mall, Dongguan Golden Resources Mall, Beijing Panda Mall, Chengdu Grandview Mall, Guangzhou Oriental Plaza, Foshan Mall of China, Qingdao Triple 5 Mall, Wenzhou North America West Edmonton Mall, Alberta South Coast Plaza, Orange County Sawgrass Mills, Ft Lauderdale Mall of America, Minnesota Del Amo Fashion Center, LA Source: New York Times

62. Beijing City Cobweb: Beijing

63. Shanghai City Cobweb: Shanghai

64. Guangzhou City Cobweb: Guangzhou

65. Shenzhen City Cobweb: Shenzhen

66. Chongqing City Cobweb: Chongqing

67. Chengdu City Cobweb: Chengdu

68. Tianjin City Cobweb: Tianjin

69. Wuhan City Cobweb: Wuhan

70. Xi'an City Cobweb: Xi’an

71. Hangzhou City Cobweb: Hangzhou

72. Suzhou City Cobweb: Suzhou

73. Nanjing City Cobweb: Nanjing

74. Dalian City Cobweb: Dalian

75. Xiamen City Cobweb: Xiamen