EQUITY RESEARCH

10 January 2012

SK YSCRAP ER IN D EX B ub b le b uild ing

Our Skyscraper Index continues to show an unhealthy correlation between construction of the next worlds tallest building and an impending financial crisis: New York 1930; Chicago 1974; Kuala Lumpar 1997 and Dubai 2010.

IN D U S T R Y U P D A T E H ong K ong P roperty D ev elopers 3 - N EG A T IV E Unc h ang ed H ong K ong P roperty D ev elopers And rew L aw renc e + 852 29 0 3 3 3 19 and rew .law renc e@ b arc ap .c o m B arc lays B ank , Ho ng K o ng Jo nath an Hs u + 852 29 0 3 473 2

Yet often the worlds tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction.

jo nath an.h s u@ b arc ap .c o m B arc lays B ank , Ho ng K o ng W end y L uo + 852 29 0 3 4673 w end y.luo @ b arc ap .c o m

Investors should therefore pay particular attention to China - todays biggest bubble builder with 53% of all the worlds skyscrapers under construction and India which with just two completed skyscrapers, now has 14 skyscrapers under construction.

B arc lays B ank , Ho ng K o ng V iv ien Ch an + 852 29 0 3 449 6 v iv ien.c h an@ b arc ap .c o m B arc lays B ank , Ho ng K o ng

Figure 1: China will expand its total number of skyscrapers by 87% to 141 by 2017E
150 13 0 110 90 70 50 30 10 -10 19 9 7 19 9 9 2001 2003 2005 2007 Tier 2 c ity 2009 2011 2013 2015 2017

Tier 1 c ity
So urc e: B arc lays Cap ital, w w w .s k ys c rap ernew s .c o m

Tier 3 c ity

B arc lays Cap ital d o es and s eek s to d o b us ines s w ith c o m p anies c o v ered in its res earc h rep o rts . As a res ult, inv es to rs s h o uld b e aw are th at th e firm m ay h av e a c o nflic t o f interes t th at c o uld affec t th e o b jec tiv ity o f th is rep o rt. Inv es to rs s h o uld c o ns id er th is rep o rt as o nly a s ing le fac to r in m ak ing th eir inv es tm ent d ec is io n. Th is res earc h rep o rt h as b een p rep ared in w h o le o r in p art b y res earc h analys ts b as ed o uts id e th e US w h o are no t reg is tered / q ualified as res earc h analys ts w ith F IN RA. P L EASE SEE AN AL YST( S) CERTIF ICATIO N ( S) AN D IM P O RTAN T D ISCL O SURES B EG IN N IN G O N P AG E 7.

Barclays Capital | Skyscraper Index

Barclays Capital | Skyscraper Index

SK Y SCR A P E R IN D E X
U S and E uro p e an e c o no m ic C ris is , e nd o f e x te nd e d P o s t- W ar b o o m s s p e c ulat io n in land and s to c k s , m o ne tary e x p ans io n fro m s t o c k s b o ug h t o n m arg in
U S and w o rld w id e e c o no m ic c ris is , A s ian e c o no m ic c ris is , c o llap s e o f B re tto n W o o d s and O P E C c urre nc y d e v aluat io n s p e c ulat io n in s to c k p ric e ris e s , s p e c ulatio n in s to c k s , and p ro p e rty, m o ne tary p ro p e rty, s h ip s and airc raft, e x p ans io n fro m fo re ig n m o ne tary e x p ans io n fro m th e le nd ing E uro d o llar m ark e t G re at R e c e s s io n, ro o te d in U S p ro p e rt y m ark e t and th e s ub p rim e le nd ing c ris is affe c te d t h e e ntire w o rld ; financ ial c ris is fo llo w e d w ith larg e b ank s ' c o llap s e 2 007 2 010 1973 1975 1997 1998 2 000 2 003 D o t - c o m b ub b le b urs ts c aus ing a s to c k m ark e t c ras h and th e lo s s o f U S $ 5 t rillio n m ark e t v alue

P e rv as iv e U S e c o no m ic re c e s s io n w ith b ank failure s , k no w n as L o ng D e p re s s io n 1910 192 9 1933

U S p anic m ark e d b y B rit is h b ank ing th e c o llap s e o f c ris is , p re c ip itate d railro ad o v e rb uild ing , b y th e ne ar a s e rie s o f b ank ins o lv e nc y o f B aring s B ank and a failure s , and a run o n g o ld w o rld re c e s s io n

U S s to c k m ark e t c ras h and p anic , th e firs t s t o c k m ark e t c ras h o n th e N e w Y o rk S to c k E x c h ang e

U S e c o no m ic c ris is , s p e c ulat io n in c o ffe e , U nio n P ac ific , m o ne tary e x p ans io n fro m t rus t c o m p anie s

1873

1878

1890

1893

1901

1907

1873 M etro po litan L ife N e w Y o rk 7 00 ft 5 0 S to rie s W o o lw o rth N e w Y o rk 7 9 2 ft 5 7 S to rie s 4 0 W all Street N e w Y o rk 9 27 ft 7 1 S to rie s Ch rysler N e w Y o rk 104 6 ft 7 7 S to rie s E m pire State N e w Y o rk 125 0 ft 102 S t o rie s
W o rld T rade Center N e w Y o rk 136 8 ft 110 S t o rie s Sears T o w er C h ic ag o 14 5 0 ft 110 S t o rie s P etro nas T o w ers K uala L um p ur 14 8 3 ft 8 8 S to rie s T aipei 1 0 1 T aip e i 1,6 7 1 ft 101 S t o rie s Bu rj K h alifa D ub ai 27 17 ft 16 2 S t o rie s

1889

1890

1894

1895

1899

1901 1909

1908

1913

192 9

1930

1931

1972 / 73 1974 1997 2 004

2 010

E q u itab le A u dito riu m L if e Bu ilding N e w Y o rk Bu ilding 26 9 ft N e w Y o rk 17 S to rie s 14 2 ft 8 S to rie s

N ew Y o rk M anh attan L ife W o rld Insu rance Bu ilding Bu ilding N e w Y o rk N e w Y o rk 309 ft 34 8 ft 20 S to rie s 18 S to rie s

M ilw au kee City H all M ilw auk e e 35 3 ft 15 S to rie s

P ark R o w Bu ilding N e w Y o rk 39 1 ft 30 S to rie s

P h iladelph ia City H all P h ilad e lp h ia 5 11 ft 9 S to rie s

Sing er Bu ilding N e w Y o rk 6 12 ft 4 7 S to rie s

N o te : S k ys c rap e r d iag ram s are c o p yrig h t b y S k ys c rap e r S o urc e M e d ia's SkyscraperP ag e.co m . A ll rig h ts re s e rv e d . S o urc e : S k ys c rap e r S o urc e M e d ia, B arc lays C ap ital

A s th e S k ys c rap e r Ind e x ( firs t p ub lis h e d in 19 9 9 ) s h o w s , th e link b e tw e e n c o ns truc tio n o f th e w o rld s talle s t b uild ing and an e c o no m ic c ris is h as p ro v e d re m ark ab ly ac c urate . It m ay h av e s tarte d w ith th e T o w e r o f B ab e l, b ut o v e r th e p as t 14 0 ye ars an unh e alth y c o rre latio n e x is ts b e tw e e n th e b uild ing o f w o rld s th e ne x t talle s t b uild ing and an im p e nd ing financ ial c ris is : N e w Y o rk 19 30, C h ic ag o 19 7 4 , K uala L um p ur 19 9 7 , D ub ai 2010.

T h e w o rld s firs t s k ys c rap e r, T h e E q uitab le L ife B uild ing in N e w Y o rk w as c o m p le te d in 18 7 3 at a h e ig h t to its ro o f o f 14 2ft. L ate r d e m o lis h e d in 19 12, th is firs t s k ys c rap e r c o inc id e d w ith a fiv e - ye ar re c e s s io n in th e U S and E uro p e th at s tarte d in 18 7 3 and is no w k no w n as th e L o ng D e p re s s io n.

S k ys c rap e r c o ns truc tio n h as b e e n c h arac te ris e d b y lo ng p e rio d s o f inac tiv ity inte rs e c te d b y s h o rt p e rio d s o f e rratic ally tim e d , inte ns e ac tiv ity typ ic ally c o inc id ing w ith e x c e s s iv e m o ne tary e x p ans io n in th e g lo b al e c o no m y. S k ys c rap e rs are p e rh ap s th e ultim ate arc h ite c ture o f c ap italis m .

T h e A ud ito rium B uild ing in C h ic ag o c o m p le te d in 18 8 9 and th e N e w Y o rk W o rld B uild ing , N e w Y o rk , c o m p le te d in 18 9 0, c o inc id e d w ith th e B ritis h b ank ing c ris is o f 18 9 0 and a w o rld re c e s s io n. T h e M as o nic T e m p le in C h ic ag o , c o m p le te d in 18 9 2, T h e M anh attan L ife Ins uranc e B uild ing in 18 9 4 and M ilw auk e e C ity H all, c o m p le te d in 18 9 5 , all c o inc id e d w ith th e U S p anic o f 18 9 3 m ark e d b y th e c o llap s e o f railro ad o v e rb uild ing , a s e rie s o f b ank failure s and a run o n g o ld . U ntil th e G re at D e p re s s io n o f th e 19 30s th is w as c o ns id e re d th e w o rs t d e p re s s io n th e U nite d S tate s h ad e v e r e x p e rie nc e d .
2 10 January 2012 3

10 January 2012

B arclays Capital | S kyscraper Index

Th e c o m p letio n o f th e P ark Ro w B uild ing , N ew Yo rk in 189 9 and P h ilad elp h ia City Hall in 19 01 fo reto ld th e US s to c k m ark et c ras h and p anic o f 19 01. Th e c o ns truc tio n o f th e Sing er B uild ing , c o m p leted in 19 08, and th e M etro p o litan L ife b uild ing , c o m p leted in 19 09 , b o th in N ew Yo rk , c o inc id ed w ith an ec o no m ic c ris is in th e United States w h ic h c o m m enc ed in O c to b er 19 07 reflec ting a m o netary exp ans io n b ro ug h t ab o ut b y th e es tab lis h m ent o f trus t c o m p anies . Th e W o o lw o rth B uild ing , N ew Yo rk , th at o p ened o n 24 Ap ril 19 13 c o inc id ed w ith th e 1Q13 p eak ing o f th e US ec o no m y and a fall in G D P th at las ted until 4Q14. Th e G reat D ep res s io n, m ark ing th e end o f th e extend ed p o s t-W o rld W ar I b o o m , w as m atc h ed b y th ree rec o rd b reak ing N ew Yo rk s k ys c rap ers : 40 W all Street in 19 29 ; Th e Ch rys ler B uild ing in 19 3 0 and th e Em p ire State B uild ing in 19 3 1. Th e c o m p letio n o f O ne W o rld Trad e Centre, N ew Yo rk in 19 72, Tw o W o rld Trad e Centre, N ew Yo rk in 19 73 and Th e Sears To w er, Ch ic ag o in 19 74 m ark ed a p erio d o f US c urrenc y s p ec ulatio n, th e c o llap s e o f th e B retto n W o o d s s ys tem and th e O P EC p ric e ris es w h ic h c aus ed an ec o no m ic c ris is ac ro s s th e w o rld . P erh ap s uns urp ris ing ly, th e firs t o f th e w o rld s talles t b uild ing s in th e las t 13 0 years to b e b uilt o uts id e th e US h erald ed its o w n reg io nal c ris is . Th e c o m p letio n o f P etro nas To w ers , K uala L um p ur in 19 9 7 w as fo llo w ed b y a reg io n-w id e ec o no m ic c ris is and th e c o llap s e o f As ian c urrenc ies . L ik ew is e in tec h no lo g y-c entric Taiw an, Taip ei 101, alth o ug h c o m p leted in 2004, s tart o f c o ns truc tio n in 19 9 9 w as w ell tim ed to c o inc id e w ith th e early 2000s rec es s io n and th e end o f th e tec h no lo g y b ub b le. Th e 2010 c o m p letio n o f th e c urrent talles t b uild ing in th e w o rld , th e B urj K h alifa ( p rev io us ly c alled th e B urj D ub ai) , h as c o inc id ed w ith th e c urrent g lo b al financ ial c ris is , es p ec ially w h en it is c o ns id ered th at th e b uild ing s h eig h t o v erto o k th at o f Taip ei 101s o n 21 July 2007. It is es tim ated to h av e c o s t th e d ev elo p er, Em aar, aro und US$ 4.1b n to b uild . Th ank fully fo r th e w o rld ec o no m y, th ere is no t c urrently a s k ys c rap er und er c o ns truc tio n th at is p lanned to o v ertak e th e h eig h t o f th e B urj K h alifa. Th is is p erh ap s uns urp ris ing g iv en th e s ig nific ant inc reas e in b uild ing h eig h t o f th e B urj K h alifa o v er th e p rev io us w o rld s talles t b uild ing , an inc reas e in h eig h t c o m p arab le to th at c reated b y th e 19 3 0s s k ys c rap ers o v er th eir p red ec es s o rs . All o f w h ic h s ug g es ts th at no t o nly m ay c o m p letio n o f th e w o rld s talles t b uild ing b e a g o o d ind ic ato r o f ec o no m ic exc es s , b ut th e rate o f inc reas e in h eig h t m ay als o reflec t th e extent o f th at ec o no m ic exc es s .

B ub b le b uild ing
Yet, w h ile c o m p letio n o f th e w o rld s talles t b uild ing m ig h t s ym b o lis e th e extent o f ec o no m ic exp ans io n and th e h eig h t o f h ub ris , in term s o f ec o no m ic o utlo o k it is im p o rtant to als o fo c us o n th e num b er o f s k ys c rap ers b eing b uilt. An analys is o f th e c o ns truc tio n o f s k ys c rap ers s h o w s a c lear c o nc entratio n o f b uild ing b o o m s o f g eo g rap h ic c o nc entratio n; th e w o rld s talles t b uild ing s rarely s tand alo ne. B as ed up o n Sk ys c rap er c o m p letio n d ates th e c h art b elo w s h o w s th e US b uild ing b o o m s o f th e 189 0s , th e 19 3 0s and 19 70s th at c o rres p o nd ed w ith th e c o m p letio n o f th eir rec o rd h o ld ing b uild ing s . Ho w ev er, it als o s h o w s th e late 19 80s b uild ing b o o m as s o c iated w ith th e US Sav ing s and L o an Cris is and a rec ent b uild ing b o o m th at c o rres p o nd s w ith th e c urrent financ ial c ris is .

10 January 2012

B arclays Capital | S kyscraper Index

Th e g ro w th o f As ia ex-Jap an c o ns truc tio n in th e 19 9 0s is c o ns is tent w ith th e reg io ns c o m p letio n o f th e w o rld s talles t b uild ing s and th e o ns et o f th e As ian financ ial c ris is . M o re rec ently, it h as b een th e M id d le Eas t, w h ic h no w h as th e w o rld s talles t b uild ing , w h ere th e rec ent c o nc entratio n o f s k ys c rap er b uild ing h as em erg ed .

Figure 2: U S building booms in the 189 0s, 19 10s, 19 3 0s, 19 70s

Heig h t ( m ) 500 450 400 3 50 3 00 250 200 150 100 50 1860
USA

Figure 3 : A sia building booms in 19 9 7- 9 8, and 2007- 2010

Heig h t ( m ) 550 500 450 400 3 50 3 00 250 200
As ia

1880

19 00

19 20

19 40

19 60

19 80

2000

D ate o f Co m p letio n
So urc e: w w w .s k ys c rap ernew s .c o m , B arc lays Cap ital

19 85 19 88 19 9 1 19 9 4 19 9 7 2000 2003 2006 2009 D ate o f Co m p letio n

So urc e: w w w .s k ys c rap ernew s .c o m , B arc lays Cap ital

Figure 4: M iddle East building booms in 2007- 12

Figure 5 : L ooking forward, China, and India building booms in 2013 - 17

Heig h t ( m )

Heig h t ( m ) 9 00 800 700 600 500 400 3 00 200 100 19 9 8 19 9 9

M id d le Eas t

800 700 600 500 400 3 00 200 19 9 0 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ch ina

2000

2001

2002

2004

2005

2006

2007

2008

2010

2011

2012

D ate o f Co m p letio n

2014

2003

2009

2013

D ate o f c o m p letio n

Ind ia

So urc e: w w w .s k ys c rap ernew s .c o m , B arc lays Cap ital

So urc e: w w w .s k ys c rap ernew s .c o m , B arc lays Cap ital

L o o k ing fo rw ard , us ing s k ys c rap ers und er c o ns truc tio n, it is ev id ent th at th e s k ys c rap er b o o m in Ch ina c o ntinues to g ro w . Ch ina w ill c o m p lete 53 % o f th e 124 s k ys c rap ers und er c o ns truc tio n o v er th e next s ix years , exp and ing th e num b er o f s k ys c rap ers in Ch ines e c ities b y a s tag g ering 87% . Ch inas s k ys c rap ers are no t o nly inc reas ing in num b er it no w h as 75 c o m p leted s k ys c rap ers ab o v e 240m in h eig h t - b ut th e av erag e h eig h t o f th e s k ys c rap ers th at it is b uild ing is als o inc reas ing as p as t liq uid ity fuels th e c o ns truc tio n b o o m .

10 January 2012

B arclays Capital | S kyscraper Index

Figure 6 : China skyscrapers are becoming ev er higher

Heig h t ( m ) 500 450 400 3 50 3 00 250 200
19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16
Av erag e Heig h t
So urc e: B arc lays Cap ital, w w w .s k ys c rap ernew s .c o m

( x) 30 25 20 15 10 5 0

Annual c o m p letio n num b er o f s k ys c rap ers

In ad d itio n, to th e inc reas e in s iz e and num b er o f Ch inas s k ys c rap ers , th eir g eo g rap h ic p ro file is als o c h ang ing . To d ay o v er 70% o f Ch inas s k ys c rap ers are uns urp ris ing ly c lus tered in th e m o re ec o no m ic ally ad v anc ed c o as tal areas o f th e P earl Riv er D elta and th e Yang tz e Riv er D elta. Yet b etw een no w and 2017 o v er 50% o f Ch inas s k ys c rap ers w ill b e b uilt inland as Ch inas b uild ing b o o m m o v es fro m firs t-tier c ities to s ec o nd - and th ird -tier c ities . O v er 50% o f Ch inas s k ys c rap ers are to d ay in tier 1 c ities , and b as ed up o n c urrent c o m p letio n p lans ab o ut 80% o f Ch inas new s k ys c rap ers w ill b e b uilt in tier 2 and 3 c ities o v er th e next s ix years - ev id enc e o f th e exp and ing b uild ing b ub b le. Figure 7: China will expand its total number of skyscrapers by 87% to 141 by 2017E
150 13 0 110 90 70 50 30 10 -10 19 9 7 19 9 9 2001 2003 2005 2007 Tier 2 c ity 2009 2011 2013 2015 2017

Tier 1 c ity
So urc e: B arc lays Cap ital, w w w .s k ys c rap ernew s .c o m

Tier 3 c ity

Yet Ch ina is no t alo ne in th e g ro w th o f its b uild ing b ub b le, Ind ia it s eem s is p laying c atc h up . To d ay Ind ia h as o nly tw o o f th e w o rld s 276 s k ys c rap ers o v er 240m in h eig h t, yet o v er th e next fiv e years it intend s to c o m p lete 14 new s k ys c rap ers , in w h at w ill p ro v e to b e its larg es t s k ys c rap er b uild ing b o o m . W o rrying ly as w ell, Ind ia is als o c o ns truc ting th e s ec o nd talles t b uild ing in th e w o rld , th e To w er o f Ind ia, w h ic h s h o uld c o m p lete b y 2016. Th e w riting , s o to s p eak , w o uld s eem to b e alread y o n th e g las s c urtain w alling . F o r if h is to ry p ro v es to b e rig h t, th is b uild ing b o o m in Ch ina and Ind ia c o uld s im p ly b e a reflec tio n o f a m is allo c atio n o f c ap ital, w h ic h m ay res ult in an ec o no m ic c o rrec tio n fo r tw o o f As ias larg es t ec o no m ies in th e next fiv e years .
10 January 2012 6

B arclays Capital | S kyscraper Index

A N A L Y S T ( S ) CER T IFICA T IO N ( S )
I, And rew L aw renc e, h ereb y c ertify ( 1) th at th e v iew s exp res s ed in th is res earc h rep o rt ac c urately reflec t m y p ers o nal v iew s ab o ut any o r all o f th e s ub jec t s ec urities o r is s uers referred to in th is res earc h rep o rt and ( 2) no p art o f m y c o m p ens atio n w as , is o r w ill b e d irec tly o r ind irec tly related to th e s p ec ific rec o m m end atio ns o r v iew s exp res s ed in th is res earc h rep o rt. To th e extent th at any o f th e c o nc lus io ns are b as ed o n a q uantitativ e m o d el, B arc lays Cap ital h ereb y c ertifies ( 1) th at th e v iew s exp res s ed in th is res earc h rep o rt ac c urately reflec t th e firm 's q uantitativ e res earc h m o d el and ( 2) no p art o f th e firm 's c o m p ens atio n w as , is o r w ill b e d irec tly o r ind irec tly related to th e s p ec ific rec o m m end atio ns o r v iew s exp res s ed in th is res earc h rep o rt.

IM P O R T A N T D IS CL O S U R ES CO N T IN U ED
F o r c urrent im p o rtant d is c lo s ures , inc lud ing , w h ere relev ant, p ric e targ et c h arts , reg ard ing c o m p anies th at are th e s ub jec t o f th is res earc h rep o rt, p leas e s end a w ritten req ues t to : B arc lays Cap ital Res earc h Co m p lianc e, 745 Sev enth Av enue, 17th F lo o r, N ew Yo rk , N Y 10019 o r refer to h ttp :/ / p ub lic res earc h .b arc ap .c o m o r c all 1-212-526-1072. Th e analys ts res p o ns ib le fo r p rep aring th is res earc h rep o rt h av e rec eiv ed c o m p ens atio n b as ed up o n v ario us fac to rs inc lud ing th e firm 's to tal rev enues , a p o rtio n o f w h ic h is g enerated b y inv es tm ent b ank ing ac tiv ities . Res earc h analys ts em p lo yed o uts id e th e US b y affiliates o f B arc lays Cap ital Inc . are no t reg is tered / q ualified as res earc h analys ts w ith F IN RA. Th es e analys ts m ay no t b e as s o c iated p ers o ns o f th e m em b er firm and th erefo re m ay no t b e s ub jec t to N ASD Rule 2711 and inc o rp o rated N YSE Rule 472 res tric tio ns o n c o m m unic atio ns w ith a s ub jec t c o m p any, p ub lic ap p earanc es and trad ing s ec urities h eld b y a res earc h analys ts ac c o unt. Analys ts reg ularly c o nd uc t s ite v is its to v iew th e m aterial o p eratio ns o f c o v ered c o m p anies , b ut B arc lays Cap ital p o lic y p ro h ib its th em ac c ep ting p aym ent o r reim b urs em ent b y any c o v ered c o m p any o f th e th eir trav el exp ens es fo r s uc h v is its . In o rd er to ac c es s B arc lays Cap ital's Statem ent reg ard ing Res earc h D is s em inatio n P o lic ies h ttp s :/ / liv e.b arc ap .c o m / p ub lic c p / RSR/ nyfip ub s / d is c laim er/ d is c laim er-res earc h -d is s em inatio n.h tm l. and fro m

P ro c ed ures , p leas e refer to

B arc lays Cap ital p ro d uc es a v ariety o f res earc h p ro d uc ts inc lud ing , b ut no t lim ited to , fund am ental analys is , eq uity-link ed analys is , q uantitativ e analys is , and trad e id eas . Rec o m m end atio ns c o ntained in o ne typ e o f res earc h p ro d uc t m ay d iffer fro m rec o m m end atio ns c o ntained in o th er typ es o f res earc h p ro d uc ts , w h eth er as a res ult o f d iffering tim e h o riz o ns , m eth o d o lo g ies , o r o th erw is e.
G uide to the B arclays Capital Fundamental Eq uity R esearch R ating S ystem:

O ur c o v erag e analys ts us e a relativ e rating s ys tem in w h ic h th ey rate s to c k s as 1-O v erw eig h t, 2-Eq ual W eig h t o r 3 -Und erw eig h t ( s ee d efinitio ns b elo w ) relativ e to o th er c o m p anies c o v ered b y th e analys t o r a team o f analys ts th at are d eem ed to b e in th e s am e ind us try s ec to r ( th e "s ec to r c o v erag e univ ers e") . In ad d itio n to th e s to c k rating , w e p ro v id e s ec to r v iew s w h ic h rate th e o utlo o k fo r th e s ec to r c o v erag e univ ers e as 1-P o s itiv e, 2-N eutral o r 3 N eg ativ e ( s ee d efinitio ns b elo w ) . A rating s ys tem us ing term s s uc h as b uy, h o ld and s ell is no t th e eq uiv alent o f o ur rating s ys tem . Inv es to rs s h o uld c arefully read th e entire res earc h rep o rt inc lud ing th e d efinitio ns o f all rating s and no t infer its c o ntents fro m rating s alo ne.
S tock R ating 1- O v erweight - Th e s to c k is exp ec ted to o utp erfo rm th e unw eig h ted exp ec ted to tal return o f th e s ec to r c o v erag e univ ers e o v er a 12-m o nth inv es tm ent h o riz o n. 2- Eq ual W eight - Th e s to c k is exp ec ted to p erfo rm in line w ith th e unw eig h ted exp ec ted to tal return o f th e s ec to r c o v erag e univ ers e o v er a 12m o nth inv es tm ent h o riz o n. 3 - U nderweight - Th e s to c k is exp ec ted to und erp erfo rm th e unw eig h ted exp ec ted to tal return o f th e s ec to r c o v erag e univ ers e o v er a 12-m o nth inv es tm ent h o riz o n. R S - R ating S uspended - Th e rating and targ et p ric e h av e b een s us p end ed tem p o rarily d ue to m ark et ev ents th at m ad e c o v erag e im p rac tic ab le o r to c o m p ly w ith ap p lic ab le reg ulatio ns and / o r firm p o lic ies in c ertain c irc um s tanc es inc lud ing w h en B arc lays Cap ital is ac ting in an ad v is o ry c ap ac ity in a m erg er o r s trateg ic trans ac tio n inv o lv ing th e c o m p any. S ector V iew 1- P ositiv e - s ec to r c o v erag e univ ers e fund am entals / v aluatio ns are im p ro v ing . 2- N eutral - s ec to r c o v erag e univ ers e fund am entals / v aluatio ns are s tead y, neith er im p ro v ing no r d eterio rating . 3 - N egativ e - s ec to r c o v erag e univ ers e fund am entals / v aluatio ns are d eterio rating .

B elo w is th e lis t o f c o m p anies th at c o ns titute th e "s ec to r c o v erag e univ ers e":

H ong Kong P roperty Developers

Ch eung K o ng ( Ho ld ing s ) ( 0001.HK ) Hend ers o n L and D ev elo p m ent ( 0012.HK ) N ew W o rld D ev elo p m ent ( 0017.HK )
D istribution of R atings:

Hang L ung G ro up ( 0010.HK ) K erry P ro p erties ( 0683 .HK ) Sino L and ( 0083 .HK )

Hang L ung P ro p erties ( 0101.HK ) M id land Ho ld ing s ( 1200.HK ) Sun Hung K ai P ro p erties ( 0016.HK )

10 January 2012

B arclays Capital | S kyscraper Index

IM P O R T A N T D IS CL O S U R ES CO N T IN U ED
B arc lays Cap ital Inc . Eq uity Res earc h h as 2149 c o m p anies und er c o v erag e. 44% h av e b een as s ig ned a 1-O v erw eig h t rating w h ic h , fo r p urp o s es o f m and ato ry reg ulato ry d is c lo s ures , is c las s ified as a B uy rating ; 54% c o m p anies w ith th is rating are inv es tm ent b ank ing c lients o f th e F irm . of

41% h av e b een as s ig ned a 2-Eq ual W eig h t rating w h ic h , fo r p urp o s es o f m and ato ry reg ulato ry d is c lo s ures , is c las s ified as a Ho ld rating ; 49 % o f c o m p anies w ith th is rating are inv es tm ent b ank ing c lients o f th e F irm . 13 % h av e b een as s ig ned a 3 -Und erw eig h t rating w h ic h , fo r p urp o s es o f m and ato ry reg ulato ry d is c lo s ures , is c las s ified as a Sell rating ; 3 9 % o f c o m p anies w ith th is rating are inv es tm ent b ank ing c lients o f th e F irm .
G uide to the B arclays Capital P rice T arget:

Eac h analys t h as a s ing le p ric e targ et o n th e s to c k s th at th ey c o v er. Th e p ric e targ et rep res ents th at analys t's exp ec tatio n o f w h ere th e s to c k w ill trad e in th e next 12 m o nth s . Up s id e/ d o w ns id e s c enario s , w h ere p ro v id ed , rep res ent p o tential up s id e/ p o tential d o w ns id e to eac h analys t's p ric e targ et o v er th e s am e 12-m o nth p erio d .
B arclays Capital offices inv olv ed in the production of eq uity research:

L o nd o n B arc lays Cap ital, th e inv es tm ent b ank ing d iv is io n o f B arc lays B ank P L C ( B arc lays Cap ital, L o nd o n) N ew Yo rk B arc lays Cap ital Inc . ( B CI, N ew Yo rk ) To k yo B arc lays Cap ital Jap an L im ited ( B CJL , To k yo ) S o P aulo B anc o B arc lays S.A. ( B B SA, S o P aulo ) Ho ng K o ng B arc lays B ank P L C, Ho ng K o ng b ranc h ( B arc lays B ank , Ho ng K o ng ) To ro nto B arc lays Cap ital Canad a Inc . ( B CC, To ro nto ) Jo h annes b urg Ab s a Cap ital, a d iv is io n o f Ab s a B ank L im ited ( Ab s a Cap ital, Jo h annes b urg ) M exic o City B arc lays B ank M exic o , S.A. ( B B M X , M exic o City) Taiw an B arc lays Cap ital Sec urities Taiw an L im ited ( B CSTW , Taiw an) Seo ul B arc lays Cap ital Sec urities L im ited ( B CSL , Seo ul) M um b ai B arc lays Sec urities ( Ind ia) P riv ate L im ited ( B SIP L , M um b ai) Sing ap o re B arc lays B ank P L C, Sing ap o re b ranc h ( B arc lays B ank , Sing ap o re)

10 January 2012

D IS CL A IM ER :

Th is p ub lic atio n h as b een p rep ared b y B arc lays Cap ital, th e inv es tm ent b ank ing d iv is io n o f B arc lays B ank P L C, and / o r o ne o r m o re o f its affiliates as p ro v id ed b elo w . It is p ro v id ed to o ur c lients fo r info rm atio n p urp o s es o nly, and B arc lays Cap ital m ak es no exp res s o r im p lied w arranties , and exp res s ly d is c laim s all w arranties o f m erc h antab ility o r fitnes s fo r a p artic ular p urp o s e o r us e w ith res p ec t to any d ata inc lud ed in th is p ub lic atio n. B arc lays Cap ital w ill no t treat unauth o riz ed rec ip ients o f th is rep o rt as its c lients . P ric es s h o w n are ind ic ativ e and B arc lays Cap ital is no t o ffering to b uy o r s ell o r s o lic iting o ffers to b uy o r s ell any financ ial ins trum ent. W ith o ut lim iting any o f th e fo reg o ing and to th e extent p erm itted b y law , in no ev ent s h all B arc lays Cap ital, no r any affiliate, no r any o f th eir res p ec tiv e o ffic ers , d irec to rs , p artners , o r em p lo yees h av e any liab ility fo r (a) any s p ec ial, p unitiv e, ind irec t, o r c o ns eq uential d am ag es ; o r (b ) any lo s t p ro fits , lo s t rev enue, lo s s o f antic ip ated s av ing s o r lo s s o f o p p o rtunity o r o th er financ ial lo s s , ev en if no tified o f th e p o s s ib ility o f s uc h d am ag es , aris ing fro m any us e o f th is p ub lic atio n o r its c o ntents . O th er th an d is c lo s ures relating to B arc lays Cap ital, th e info rm atio n c o ntained in th is p ub lic atio n h as b een o b tained fro m s o urc es th at B arc lays Cap ital b eliev es to b e reliab le, b ut B arc lays Cap ital d o es no t rep res ent o r w arrant th at it is ac c urate o r c o m p lete. Th e v iew s in th is p ub lic atio n are th o s e o f B arc lays Cap ital and are s ub jec t to c h ang e, and B arc lays Cap ital h as no o b lig atio n to up d ate its o p inio ns o r th e info rm atio n in th is p ub lic atio n. Th e analys t rec o m m end atio ns in th is p ub lic atio n reflec t s o lely and exc lus iv ely th o s e o f th e auth o r(s ), and s uc h o p inio ns w ere p rep ared ind ep end ently o f any o th er interes ts , inc lud ing th o s e o f B arc lays Cap ital and / o r its affiliates . Th is p ub lic atio n d o es no t c o ns titute p ers o nal inv es tm ent ad v ic e o r tak e into ac c o unt th e ind iv id ual financ ial c irc um s tanc es o r o b jec tiv es o f th e c lients w h o rec eiv e it. Th e s ec urities d is c us s ed h erein m ay no t b e s uitab le fo r all inv es to rs . B arc lays Cap ital rec o m m end s th at inv es to rs ind ep end ently ev aluate eac h is s uer, s ec urity o r ins trum ent d is c us s ed h erein and c o ns ult any ind ep end ent ad v is o rs th ey b eliev e nec es s ary. Th e v alue o f and inc o m e fro m any inv es tm ent m ay fluc tuate fro m d ay to d ay as a res ult o f c h ang es in relev ant ec o no m ic m ark ets (inc lud ing c h ang es in m ark et liq uid ity). Th e info rm atio n h erein is no t intend ed to p red ic t ac tual res ults , w h ic h m ay d iffer s ub s tantially fro m th o s e reflec ted . P as t p erfo rm anc e is no t nec es s arily ind ic ativ e o f future res ults . Th is c o m m unic atio n is b eing m ad e av ailab le in th e UK and Euro p e p rim arily to p ers o ns w h o are inv es tm ent p ro fes s io nals as th at term is d efined in Artic le 19 o f th e F inanc ial Serv ic es and M ark ets Ac t 2000 (F inanc ial P ro m o tio n O rd er) 2005. It is d irec ted at, and th erefo re s h o uld o nly b e relied up o n b y, p ers o ns w h o h av e p ro fes s io nal exp erienc e in m atters relating to inv es tm ents . Th e inv es tm ents to w h ic h it relates are av ailab le o nly to s uc h p ers o ns and w ill b e entered into o nly w ith s uc h p ers o ns . B arc lays Cap ital is auth o riz ed and reg ulated b y th e F inanc ial Serv ic es Auth o rity ('F SA') and m em b er o f th e L o nd o n Sto c k Exc h ang e. B arc lays Cap ital Inc ., U.S. reg is tered b ro k er/ d ealer and m em b er o f F IN RA (w w w .finra.o rg ), is d is trib uting th is m aterial in th e United States and , in c o nnec tio n th erew ith ac c ep ts res p o ns ib ility fo r its c o ntents . Any U.S. p ers o n w is h ing to effec t a trans ac tio n in any s ec urity d is c us s ed h erein s h o uld d o s o o nly b y c o ntac ting a rep res entativ e o f B arc lays Cap ital Inc . in th e U.S. at 745 Sev enth Av enue, N ew Yo rk , N ew Yo rk 10019 . N o n-U.S. p ers o ns s h o uld c o ntac t and exec ute trans ac tio ns th ro ug h a B arc lays B ank P L C b ranc h o r affiliate in th eir h o m e juris d ic tio n unles s lo c al reg ulatio ns p erm it o th erw is e. Th is m aterial is d is trib uted in Canad a b y B arc lays Cap ital Canad a Inc ., a reg is tered inv es tm ent d ealer and m em b er o f IIRO C (w w w .iiro c .c a). Sub jec t to th e c o nd itio ns o f th is p ub lic atio n as s et o ut ab o v e, Ab s a Cap ital, th e Inv es tm ent B ank ing D iv is io n o f Ab s a B ank L im ited , an auth o ris ed financ ial s erv ic es p ro v id er (Reg is tratio n N o .: 19 86/ 00479 4/ 06), is d is trib uting th is m aterial in So uth Afric a. Ab s a B ank L im ited is reg ulated b y th e So uth Afric an Res erv e B ank . Th is p ub lic atio n is no t, no r is it intend ed to b e, ad v ic e as d efined and / o r c o ntem p lated in th e (So uth Afric an) F inanc ial Ad v is o ry and Interm ed iary Serv ic es Ac t, 3 7 o f 2002, o r any o th er financ ial, inv es tm ent, trad ing , tax, leg al, ac c o unting , retirem ent, ac tuarial o r o th er p ro fes s io nal ad v ic e o r s erv ic e w h ats o ev er. Any So uth Afric an p ers o n o r entity w is h ing to effec t a trans ac tio n in any s ec urity d is c us s ed h erein s h o uld d o s o o nly b y c o ntac ting a rep res entativ e o f Ab s a Cap ital in So uth Afric a, 15 Alic e L ane, Sand to n, Jo h annes b urg , G auteng 219 6. Ab s a Cap ital is an affiliate o f B arc lays Cap ital. In Jap an, fo reig n exc h ang e res earc h rep o rts are p rep ared and d is trib uted b y B arc lays B ank P L C To k yo B ranc h . O th er res earc h rep o rts are d is trib uted to ins titutio nal inv es to rs in Jap an b y B arc lays Cap ital Jap an L im ited . B arc lays Cap ital Jap an L im ited is a jo int-s to c k c o m p any inc o rp o rated in Jap an w ith reg is tered o ffic e o f 6-10-1 Ro p p o ng i, M inato -k u, To k yo 106-613 1, Jap an. It is a s ub s id iary o f B arc lays B ank P L C and a reg is tered financ ial ins trum ents firm reg ulated b y th e F inanc ial Serv ic es Ag enc y o f Jap an. Reg is tered N um b er: K anto Z aim uk yo k uc h o (k ins h o ) N o . 143 . B arc lays B ank P L C, Ho ng K o ng B ranc h is d is trib uting th is m aterial in Ho ng K o ng as an auth o ris ed ins titutio n reg ulated b y th e Ho ng K o ng M o netary Auth o rity. Reg is tered O ffic e: 41/ F , Ch eung K o ng Center, 2 Queen's Ro ad Central, Ho ng K o ng . Th is m aterial is is s ued in Taiw an b y B arc lays Cap ital Sec urities Taiw an L im ited . Th is m aterial o n s ec urities no t trad ed in Taiw an is no t to b e c o ns trued as 'rec o m m end atio n' in Taiw an. B arc lays Cap ital Sec urities Taiw an L im ited d o es no t ac c ep t o rd ers fro m c lients to trad e in s uc h s ec urities . Th is m aterial m ay no t b e d is trib uted to th e p ub lic m ed ia o r us ed b y th e p ub lic m ed ia w ith o ut p rio r w ritten c o ns ent o f B arc lays Cap ital. Th is m aterial is d is trib uted in So uth K o rea b y B arc lays Cap ital Sec urities L im ited , Seo ul B ranc h . All eq uity res earc h m aterial is d is trib uted in Ind ia b y B arc lays Sec urities (Ind ia) P riv ate L im ited (SEB I Reg is tratio n N o : IN B / IN F 23 129 273 2 (N SE), IN B / IN F 01129 273 8 (B SE), Reg is tered O ffic e: 208 | Ceejay Ho us e | D r. Annie B es ant Ro ad | Sh iv s ag ar Es tate | W o rli | M um b ai - 400 018 | Ind ia, P h o ne: + 9 1 22 6719 63 63 ). O th er res earc h rep o rts are d is trib uted in Ind ia b y B arc lays B ank P L C, Ind ia B ranc h . B arc lays B ank P L C F rank furt B ranc h d is trib utes th is m aterial in G erm any und er th e s up erv is io n o f B und es ans talt f r F inanz d iens tleis tung s aufs ic h t (B aF in). Th is m aterial is d is trib uted in M alays ia b y B arc lays Cap ital M ark ets M alays ia Sd n B h d . Th is m aterial is d is trib uted in B raz il b y B anc o B arc lays S.A. Th is m aterial is d is trib uted in M exic o b y B arc lays B ank M exic o , S.A. B arc lays B ank P L C in th e D ub ai Internatio nal F inanc ial Centre (Reg is tered N o . 0060) is reg ulated b y th e D ub ai F inanc ial Serv ic es Auth o rity (D F SA). B arc lays B ank P L CD IF C B ranc h , m ay o nly und ertak e th e financ ial s erv ic es ac tiv ities th at fall w ith in th e s c o p e o f its exis ting D F SA lic enc e. B arc lays B ank P L C in th e UAE is reg ulated b y th e Central B ank o f th e UAE and is lic ens ed to c o nd uc t b us ines s ac tiv ities as a b ranc h o f a c o m m erc ial b ank inc o rp o rated o uts id e th e UAE in D ub ai (L ic enc e N o .: 13 / 1844/ 2008, Reg is tered O ffic e: B uild ing N o . 6, B urj D ub ai B us ines s Hub , Sh eik h Z ayed Ro ad , D ub ai City) and Ab u D h ab i (L ic enc e N o .: 13 / 9 52/ 2008, Reg is tered O ffic e: Al Jaz ira To w ers , Ham d an Street, P O B o x 273 4, Ab u D h ab i). B arc lays B ank P L C in th e Qatar F inanc ial Centre (Reg is tered N o . 00018) is auth o ris ed b y th e Qatar F inanc ial Centre Reg ulato ry Auth o rity (QF CRA). B arc lays B ank P L CQF C B ranc h m ay o nly und ertak e th e reg ulated ac tiv ities th at fall w ith in th e s c o p e o f its exis ting QF CRA lic enc e. P rinc ip al p lac e o f b us ines s in Qatar: Qatar F inanc ial Centre, O ffic e 1002, 10th F lo o r, QF C To w er, D ip lo m atic Area, W es t B ay, P O B o x 1589 1, D o h a, Qatar. Th is m aterial is d is trib uted in D ub ai, th e UAE and Qatar b y B arc lays B ank P L C. Related financ ial p ro d uc ts o r s erv ic es are o nly av ailab le to P ro fes s io nal Clients as d efined b y th e D F SA, and B us ines s Cus to m ers as d efined b y th e QF CRA. Th is m aterial is d is trib uted in Saud i Arab ia b y B arc lays Saud i Arab ia ('B SA'). It is no t th e intentio n o f th e P ub lic atio n to b e us ed o r d eem ed as rec o m m end atio n, o p tio n o r

ad v ic e fo r any ac tio n (s ) th at m ay tak e p lac e in future. B arc lays Saud i Arab ia is a Clo s ed Jo int Sto c k Co m p any, (CM A L ic ens e N o . 09 141-3 7). Reg is tered o ffic e Al F ais aliah To w er | L ev el 18 | Riyad h 113 11 | K ing d o m o f Saud i Arab ia. Auth o ris ed and reg ulated b y th e Cap ital M ark et Auth o rity, Co m m erc ial Reg is tratio n N um b er: 1010283 024. Th is m aterial is d is trib uted in Rus s ia b y O O O B arc lays Cap ital, affiliated c o m p any o f B arc lays B ank P L C, reg is tered and reg ulated in Rus s ia b y th e F SF M . B ro k er L ic ens e # 177-11850-100000; D ealer L ic ens e # 177-11855-010000. Reg is tered ad d res s in Rus s ia: 125047 M o s c o w , 1s t Tv ers k aya-Yam s k aya s tr. 21. Th is m aterial is d is trib uted in Sing ap o re b y th e Sing ap o re b ranc h o f B arc lays B ank P L C, a b ank lic ens ed in Sing ap o re b y th e M o netary Auth o rity o f Sing ap o re. F o r m atters in c o nnec tio n w ith th is rep o rt, rec ip ients in Sing ap o re m ay c o ntac t th e Sing ap o re b ranc h o f B arc lays B ank P L C, w h o s e reg is tered ad d res s is O ne Raffles Quay L ev el 28, So uth To w er, Sing ap o re 048583 . B arc lays B ank P L C, Aus tralia B ranc h (ARB N 062 449 585, AF SL 246617) is d is trib uting th is m aterial in Aus tralia. It is d irec ted at 'w h o les ale c lients ' as d efined b y Aus tralian Co rp o ratio ns Ac t 2001. IRS Circ ular 23 0 P rep ared M aterials D is c laim er: B arc lays Cap ital and its affiliates d o no t p ro v id e tax ad v ic e and no th ing c o ntained h erein s h o uld b e c o ns trued to b e tax ad v ic e. P leas e b e ad v is ed th at any d is c us s io n o f U.S. tax m atters c o ntained h erein (inc lud ing any attac h m ents ) (i) is no t intend ed o r w ritten to b e us ed , and c anno t b e us ed , b y yo u fo r th e p urp o s e o f av o id ing U.S. tax-related p enalties ; and (ii) w as w ritten to s up p o rt th e p ro m o tio n o r m ark eting o f th e trans ac tio ns o r o th er m atters ad d res s ed h erein. Ac c o rd ing ly, yo u s h o uld s eek ad v ic e b as ed o n yo ur p artic ular c irc um s tanc es fro m an ind ep end ent tax ad v is o r. B arc lays Cap ital is no t res p o ns ib le fo r, and m ak es no w arranties w h ats o ev er as to , th e c o ntent o f any th ird -p arty w eb s ite ac c es s ed v ia a h yp erlink in th is p ub lic atio n and s uc h info rm atio n is no t inc o rp o rated b y referenc e. Co p yrig h t B arc lays B ank P L C (2012). All rig h ts res erv ed . N o p art o f th is p ub lic atio n m ay b e rep ro d uc ed in any m anner w ith o ut th e p rio r w ritten p erm is s io n o f B arc lays Cap ital o r any o f its affiliates . B arc lays B ank P L C is reg is tered in Eng land N o . 1026167. Reg is tered o ffic e 1 Ch urc h ill P lac e, L o nd o n, E14 5HP . Ad d itio nal info rm atio n reg ard ing th is p ub lic atio n w ill b e furnis h ed up o n req ues t.

US08-000001