FAQs

1. What does China New Town Development do?

• The Company is a leading new town planner and developer in the PRC that focuses on large-scale township project.
• The Company currently has three major projects: Shanghai Luodian New Town Project, Wuxi Hongshan New Town Project and Shenyang Lixiang New Town Project.
• Our business activities/ operations include: design of master plan, relocation and resettlement of incumbent residents, clearing and preparation of land, installation of infrastructure.
• We also build and operate commercial properties, such as hotels, convention centers, as well as public amenities.

2. Tell us about the background of China New Town Development. How was the company started?

• The Company is a spun-off entity from SRE Group Limited, which is listed on the Stock Exchange of Hong Kong.
• The Company was first started in August 2002, when a JV was signed with Baoshan District government to jointly develop Luodian Project under the entity of Shanghai Golden Luodian Real Estate and Development ("SGLD"). SGLD was set-up under the leadership of Company's Executive Chairman Shi Jian.
• CNTD was incorporated in 2006 and became the parent company of SGLD after a restructuring exercise.
• CNTD secured rights to develop Wuxi project and Shenyang Project in February 2007.

3. Who are your major shareholders?

Other than some of our directors, our shareholders include SRE, Sinopower, Grand Wealth Resources Limited, Primemodern and affiliated funds from Och-Ziff Capital Management, Forum Asian Realty Income and Highbridge International.

4. How do you earn revenue?

We derive our revenue from two major activities:

• Development of Land Infrastructure
  Revenue consists of early stage land development revenue, a portion of the land premium from the proceeds of the sale of land use rights, and public utilities fees paid by relevant government authorities
• Operation of Commercial Properties
  Income generated from hotel room rentals, leasing of conference facilities, golf course operations, golf club membership fees, investment property leasing

5. What are your strengths/ competitive advantages?

Our strengths/competitive advantages are:

• One of the first privately-owned companies to plan and develop new towns in the PRC
• Exclusive development and management rights
• Unique business model
• Close relationships with local governments
• Well-diversified sources of revenue
• Experienced management team

6. What are your growth strategies?

• Enhance geographical diversity - expanding into inland provinces with high economic growth potential
• Improve profitability via improve economies of scale, more efficient cost control and utilising local resources to enhance project value.
• Adhere to international best practice
• Cooperate with leading international management companies

7. What are your expansion plans?

We aim to:

• Enhance geographical diversity - expanding into inland provinces with high economic growth potential
• Improve profitability via improve economies of scale, more efficient cost control and utilising local resources to enhance project value.
• Adhere to international best practice
• Cooperate with leading international management companies

8. What will be the dividend policy of CNTD going forward?

The declaration, amount and payment of future dividends on the Shares, if any, is discretionary and subject to the approval of our board of directors.

9. What is your view of China's economy in the next few years?

The economy of China has been growing rapidly in the past five years. Per capita gross domestic product has increased at an average annual growth rate of 8.8% during the period between 2001 and 2005.

The table below sets forth certain items of economic data of the PRC during the periods indicated:

	2001	2002	2003	2004	2005	2006*
Population (million)	1,276.3	1,284.5	1,292.3	1,299.9	1,307.6	1,314.5
GDP (RMB billion)	10,965.5	12,033.3	13,582.3	15,987.8	18,386.8*	20,940.7
Real GDP growth (%)	8.3	9.1	10.0	10.1	10.4*	10.7
Per capita GDP (RMB)	8,622	9,398	10,542	12,336	14,040	N/A
Urban population (million)	480.6	502.1	523.8	542.8	562.1	577.1
Urbanization rate (%)	37.7	39.1	40.5	41.8	43.0	43.9
Urban disposable income (RMB)	6,860	7,703	8,472	9,422	10,493	11,759
Real estate investment (RMB billion)	634.4	779.1	1,015.4	1,315.8	1,590.9	1,938.2

Source: China Statistical Yearbook
* Data extracted from National Economic and Social Development Statistical Report (2006)

According to the Eleventh Five-Year-Plan announced by the State Council of China in March 2006, the GDP and per capita GDP of China are expected to grow at average annual rates of 7.5% and 6.6% for the period between 2006 and 2010 respectively. Urban population has been growing rapidly in the last 20 years. Urban population was only 481 million in 2001, while it has already grown to 577 million in 2006. The urbanisation rate has dramatically increased from 37.7% in 2001 to 43.9% in 2006. The demand for real estate properties was therefore driven up.

10. What is your view of China's property market the next few years?

As a result of a favourable economic environment in the PRC, strong disposable income growth and an increasing demand for larger living space, real estate investment in urban areas of the PRC rose to RMB1,938.2 billion in 2006, as compared to RMB634.4 billion in 2001.

The average residential floor space occupied per capita in urban areas increased 25.5% to 26.1 sq.m. in 2005, as compared to 20.8 sq.m. in 2001.

Average capital values of commodity housing increased 14.0% in 2005, following a strong growth of 17.8% in 2004. Average capital values of office properties increased 37.0% in 2004 and 20.5% in 2005. Average capital values of residential properties increased 18.7% and 12.6% in 2004 and 2005, respectively.

The following table sets forth certain economic data with respect to each of Beijing, Guangzhou, Shanghai, Shenyang and Wuxi for the year ended December 31, 2006.

	Beijing	Guangzhou	Shanghai	Shenyang	Wuxi
Permanent population (million)	15.8	7.5	13.7	7.0	4.6
GDP (RMB billion)	772.0	606.8	1,036.6	248.3	330.1
Real GDP growth (%)	12.0	14.7	12.0	19.1	15.3
Per capita GDP in 2005 (RMB)	45,444	69,268	67,565	29,935	50,958
Per capita GDP in 2006 (RMB)	49,505	N/A	75,990	N/A	57,719
Urbanization rate (%)	74.5	69.3	85.8	71.4	N/A*
Urban disposable income (RMB)	19,978	19,581	20,668	11,651	18,189
Real estate investment (RMB billion)	172.0	55.7	127.6	53.8	27.7

Source: Beijing Statistical Bureau, Guangzhou Statistical Bureau, Shanghai Statistical Bureau, Shenyang Statistical Bureau, Wuxi Statistical Bureau
* 2006 numbers are not available.

Previous tightness in land supply has resulted in sky-rocketed property prices. The State Government has already expressed that land supply in the suburb will revive. In terms of pricing, we expect that the price of raw land in the cities that the company has presence in will not be at more than 50% discount from land prices in downtown area.