China Property Investment Update

We expect the Lushan earthquake in Sichuan to lower sales volume (GFA) in Chengdu by 25-30% over the coming months but have only a minor impact on Chongqing based on a comparison study we conducted using the more catastrophic Wen Chuan Earthquake of May 2008. Developers with heavy exposure to Sichuan will see a drop off in sales, particularly with respect to luxury products and the high-end market in general, both of which are likely to be affected for the long term. Meanwhile, central and local governments continue to mull over the implementation of new tax initiatives designed to cool down the property market.