Vanke Group Cooperates with Shenzhen Metro to Promote the "Metro + Property" Mode throughout the Country

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Vanke Group and SZMC jointheld the "2016 High-end Forum for Rail Transit and Urban Development"in Shenzhen on June 12, 2016. Vanke Group, Shenzhen Metro and Chongqing CityTransportation Development & Investment Group Co., Ltd., DongguanIndustrial Investment Holding Group, China Metro Group (中轨集团) and other enterprisessigned four memorandums to deepen the strategic cooperation on Phase IV Metronetwork between Vanke Group and Shenzhen Metro, explore the new mode of PPP forurban rail construction and further achieve consensus regarding promotion ofthe "metro + property" mode throughout the country.

Vanke Group and SZMC Signeda Strategic Cooperation Memorandum

Nearly 300 leaders, experts, scholars and entrepreneurs from thefollowing units contributed their ideas regarding the theme of rail transit andurban sustainable development: China Association of Metros, Shenzhen RailTransit Command, Shenzhen Assets Supervision and Administration Commission,Shenzhen Municipal Development and Reform Commission, Shenzhen Bureau ofHousing and Urban, Dongguan Urban and Rural Planning bureau, Dongguan AssetsSupervision and Administration Commission, Tongji University, China DevelopmentInstitute, Chongqing City Transportation Development & Investment GroupCo., Ltd., Chongqing Metro Group, Dongguan Industrial Investment Holding Group,China Metro Group, World Union Properties, China Railway Construction &Investment Group Co., Ltd., Power China Construction South Co., Ltd., ChinaConstruction South Co., Ltd., China Construction Fourth Engineering DivisionCo., Ltd., China Railway Construction South Co., Ltd., Shenzhen Metro Commandunder China Communications Construction. Co., Ltd., China Vanke Co., Ltd., SZMCand other units.

High-end Forum Site

Build Metro, Build City

Lin Maode, Chairmanof SZMC delivered a welcome speech for the high-end forum. Mr. Lin firstexpressed warm welcome and sincere thanks to friends, colleagues, experts andmedia reporters in all areas in China that present at the high-end forum. ThenMr. Lin introduced the current construction situation and long-term developmentplan of Shenzhen rail transit by delivering a speech themed "rail transitand urban development". In the speech, Mr. Lin said that Shenzhen is anadvocator who implemented the public transport-guided TOD development mode atan earlier stage and put forward the concept of "build metro, buildcity". SZMC, the main enterprise responsible for the construction andoperation of urban rail transit in Shenzhen, implemented the developmentstrategy integrating the "investment and financing, construction,operation and resources and property development" as a whole. SZMC adheresto the "metro + property" innovative development mode and activelyexplores the "TOD" mode that is more suitable for the development ofShenzhen City. Therefore, SZMC realized the coordinated development amongurban, traffics and environment.

During the "13th Five-Year" period, SZMC will continueto unswervingly implement the "metro + property" mode, promote therelevant supporting policies and laws and regulations to be solidified andstabilized and drive synchronous planning, design and implementation forproperties along metro and metro superstructures, underground spaces and railtransit to really achieve "build metro, build city". By continuingactive exploration of the "PPP+TOD" mode, introducing investment andconstruction enterprises with strengths by leveraging a strong market momentum,and participating in metro construction and property development, SZMC promotesthe win-win between the government and enterprise, comprehensively improves thequality of rail transit services and the benefits of urban publicinfrastructure. SZMC will continue to do its level best to speed up the railtransit construction. On the basis of ensuring project safety and quality, SZMCwill speed up the implementation of the "Look East Strategy" made byShenzhen municipal government, strengthen the rail planning and construction inthe eastern region, and increase metro coverage to provide more qualityservices for regional development and public travel.

Lin Maode, Chairman of SZMCwas delivering a welcome speech.

The"Metro + Property" Mode Being Promoted throughout the Country

Li Fumin, the Director of Shenzhen Rail Transit Command, statedthat construction of urban rail transit in China has entered a golden period ofrapid development. According to the current planning, after the phase III railtransit and its adjustment projects are completed, rail transit mileage inShenzhen City is expected to be up to 425 kilometers by 2020 and a modern railtransit network of a total mileage of more than 1000 kilometers will be builtin future. Not only can form a dense rail network in all regions in ShenzhenCity, but also the link between Shenzhen and its surrounding cities will becloser. SZMC is the main enterprise responsible for the construction andoperation of urban rail transit in Shenzhen. Vanke Group actively supports SZMCto continue to actively explore various modes to keep innovation, including the"metro + property", the "PPP+TOD" and other modes. We supportsSZMC to cooperate with investment and construction enterprises with strengths,so as to comprehensively improves the speed and quality of rail transitconstruction, enhance the ability of sustainable development of metroenterprises, as well as provide high-quality urban rail transit services to thegeneral public and boost the internationalization and modernization developmentof Shenzhen city.

Li Fumin, the Director ofShenzhen Rail Transit Command, was delivering a speech.

The Land competition incore cities recently was increasingly fierce, not only the land pricerepeatedly refreshed the record, but also flour was more expensive than bread.Obtaining sufficient land resources at a reasonable price in core cities iscrucial for the sustainable development of the leading real estate enterprises.The development experience in some advanced cities shows that the "metro +property" mode is not only conducive to the efficiency of urban publictransportation, but also conducive to more intensive use of urban landdevelopment resources. SZMC is the pioneer of the "metro + property"mode in China, with strong profitability, not only has many land resources inthe core area in Shenzhen, but also actively expands the "metro +property" mode in other cities in China and overseas.

introduced the concrete practice for the "metro +property" mode of Shenzhen metro. SZMC, as an innovator for "quasimarket operation, sustainable development" and a pusher for the"metro + property" mode, always under the support of the government activelyexplores the "metro + property" mode to alleviate the short supply ofland resources in urban development, reduce the pressure suffered by thegovernment finance on investment in the metro construction, effectivelysupplement rail transit construction funds, seek a way for self-reform and selfsustainable development for metro enterprises.

Xiao Min, General Managerof SZMC was delivering a speech

The benefits from the appreciation of metro superstructures andalong-metro properties will supplement the rail transit construction andoperation, boosting the urban development and achieve sustainable developmentof rail transit at the same time. SZMC now has more than 10 propertydevelopment projects under construction with a planning construction area ofabout 3.8 million square meters, among which 6 projects are sold in the market,achieving a cumulative sale of over RMB 18 billion and wining a good socialrecognition. At the same time, SZMC, as an agent for construction, hascompleted 22,400 indemnificatory housings of 1.83 million square meters, whichhas been transferred in full to the government to meet the living needs oflow-income people in Shenzhen. Here are six car depots in seven new lines forthe first project for Metro Line IV in planning. It is probable to buildsuperstructures in these six car depots and the expected property developmentarea will be more than 4 million square meters.

Metro property and ordinary property have obvious difference, sothe overall planning and design on and under the ground, completion timematching with the metro construction, safety construction and other issues arerequired to be taken into consideration upon development. SZMC, after years ofpractice, summarized some experience and apply it to the development andpractice. Simultaneously, external cooperation channels must be expanded toachieve high quality and efficiency metro property development. SZMC and VankeGroup reached strategic cooperation to give full play to their respectiveprofessional advantages. On the one hand, SZMC can focus more on theconstruction of urban rail transit to serve the society and effectively enhancethe metro real estate brand. On the other hand, the cooperation will help VankeGroup to further increase its core business operating results and speed uptransforming itself to be a city supporting service provider.

Seizethe Strategic Opportunity in the Urban Circle to Provide a Silver-age Solution

Chen Jianguo, Vice President of the China Association of Metrosexpressed that when attending the forum: A total of 26 cities in mainland Chinaopened rail transit operations, with a total of 116 lines and a total operatinglength of 3618 km. Operating lines of 445 km increased in 2015, a Y-o-Yincrease of 14%; and about 13.8 billion passenger trips was completed in theyear, a Y-o-Y increase of 9.5%. In 2015, national rail transit investmentamounted to RMB 368.3 billion a Y-o-Y increase of 27%; lines under constructionamounted to 4,448 km and investment by approval of feasibility studies amountedto RMB 2633.7 billion. Up to the first quarter of 2016, a total of 44 urbanrail transit plans were approved, with a planning scale of 4,705 km. It isexpected that during the "13th Five-Year" period, total investment inurban rail construction will be over RMB 2 trillion, among which rail transitinvestment in mega cities will be over one hundred billion. With the continuousincrease of the scale of the urban rail transit line, promotion of interconnectionand interworking demonstration projects, construction progress of urban railtransit network will be further accelerated, network level be graduallyenriched with improved line network structures and continuously expandingcoverage areas. These will be bound to bring fundamental changes in the way ofdaily travel of urban residents and the role of urban rail transit in theprocess of urbanization in China will be more significant.

Chen Jianguo, VicePresident of the China Association of Metros, was delivering a speech

It is understood that China's current urbanization rate is 56%,equivalent to the level in 40's in United States or the level of 50's in Japan.International experience shows that urban economic circle is the core contentof the second stage of urbanization and the development modes similar to thatin three metropolitan areas in Japan, metropolitan areas in New York andeconomic circles in Seoul are appearing in more and more regions in China.

Shenzhen achieved brilliant results in terms of citytransformation, industrial upgrading and economic innovation in recent years.With respect of driving the development of neighboring economies, formingindustrial echelon structure and playing regional radiation force, Shenzhen hasbecome the core city in city circle. The experience of advanced countries showsthat rail transit network is the link to connect city circle. In the trend of "LookEast Strategy" and regional integration, interconnection of Shenzhen andits surrounding areas will be greatly accelerated. This means futurecooperation between SZMC and Vanke Group will not only be confined to Shenzhen.

Mr. Wang Shi, Chairman of the Board of Directors of Vanke Group,said in his speech that: in the next 10 years, China is expected to add 0.17billion urban population, so the main locations for accommodating these newimmigrants may no longer be a super-huge city, but satellite towns locatedwithin the range of developed cities. Rail transit is an important link toconnect urban economic circles, therefore, convenient rail transit system will,while effectively ease the population pressure in the central area of largecities, also promote the development of new cities and inject new vitality intothe suburbs and the surrounding towns.

Mr. Wang Shi, Chairman of the Board of Directors of Vanke Group,was delivering a speech.

Vanke Group entered into the real estate industry in 1988. In2008, residential sales of Vanke Group for the first time exceeded our UnitedStates counterparts and therefore, Vanke Group became the world's largestresidential development enterprise. If the biggest factor for Vanke Group'ssuccess in the past 20 years was seizing the historic opportunity of China'srapid urbanization and the rise of urban white-collar class, then Vanke Groupneed to firmly grasp the development opportunities brought by the formation ofChina's urban economic circle in the silver age to help millions of newcitizens to realize the dream of living in cities.

The "Metro + property" mode established by SZMC matchperfectly with Vanke Group's strategy of providing city supporting servicesaround metro. Both parties play their respective advantages to carry outstrategic cooperation, which will bring long-term development opportunities toVanke Group. With the extension of the rail lines, Vanke Group will have theopportunity to get a steady stream of high-quality project resources along themetro lines at a reasonable price. Therefore, both parties can jointly buildthe "metro + property" mode, which is also expected to be replicatedand promoted in more cities, in the whole country and even overseas. As aresult, Vanke Group's all shareholders can share the economic dividends in themetro era.

Chen Jinsong, Chairman of the board of Shenzhen Worldunion realestate Consultancy Co., Ltd., analyzed the real estate situation under thebackground of Shenzhen-Dongguan-Huizhou Integration. From the general law ofthe development of the world cities, metropolitan areas are the engines of thenational economy and also engines for world economic growth. The global economyis mainly concentrated in more than 20 major metropolitan areas. Economicoutputs in these metropolitan areas are equal to the national economy aggregateof top developed countries, or even higher than economic aggregate of othercountries. So China's urbanization in the future will not only be confined todeveloping small towns, but to develop metropolitan areas. With the gradualincrease of housing prices in metropolitan areas, urban residents will in atrend flow to other surrounding cities owing convenient traffic, no matter theyare city headquarters or innovation centers

Chen Jinsong, Chairman ofthe board of Shenzhen Worldunion real estate Consultancy Co., Ltd., wasdelivering a speech.

Professor Guo Wanda, Executive Vice President of ChinaDevelopment Institute, interpreted the "Look East Strategy" inShenzhen. West Shenzhen has a high economic density while East Shenzhen has alow economic density. There are more investments in West Shenzhen as comparedto East Shenzhen. As for population density, West Shenzhen exceeds EastShenzhen. Shenzhen will build itself as an innovative city, which requiresgathering service industry and extending functions. This means that serviceindustry will be highly concentrated in the core area of the city and themanufacturing industry will be in the extension area of the city. From theperspective of the population dimension and the dimension of public service,"Look East Strategy" in Shenzhen requires infrastructures, especiallyrail transit, to promote the formation of metropolitan areas, break theadministrative barriers, promote factor flow and drive "organicgrowth" in the city.

Professor Guo Wanda,Executive Vice President of China Development Institute, was delivering aspeech.

Professor Sun Zhang, former vice president of Tongji Universityand the Editor in Chief of the journal of "Urban Mass Transit",shared the frontier empirical study of urban rail transit and regionalintegration. According to the master plan, Pearl River Delta region will have atotal of 15 intercity rail lines, with a total mileage of 1,430 km. These lineswill eventually form a "three rings and eight radiation" intercityrail transit network, which is a convenient, fast, safe and efficient intercityrail transit network with Guangzhou, Shenzhen and Zhuhai as the main hubs,covering main towns in the area. Developed and integrated transport network andperfect and integrated transport system is the link to maintain the urbanagglomerations, while rail transit will further guide the optimization of urbanlayout structure.

Professor Sun Zhang, formervice president of Tongji University and the Editor in Chief of the journal of"Urban Mass Transit", was delivering a speech.

MultipleParties Made Joint Efforts to Establish the New Benchmark for the PPP Mode

At this forum, Vanke Group and SZMC(as both parties); VankeGroup, Chongqing City Transportation Development & Investment Group Co.,Ltd. and SZMC (as three parties); Vanke Group, Dongguan Industrial InvestmentHolding Group and SZMC (as three parties); and Vanke Group, SZMC and ChinaMetro Group (as three parties) respectively signed a memorandum of cooperation.Each party agreed to follow the principle of "resource sharing,complementing each other's advantages, equality and mutual benefit and marketleading" to establish and consolidate the strategic partnership, realizepowerful alliances and jointly explore new PPP mode.

Vanke Group and SZMC planned to innovate the cooperation modewhile constructing Phase IV metro network and developing lands along the metro,and follow the market rules to participate in the construction of Shenzhen railtransit and the metro superstructures by way of the "metro +property" mode.

Vanke Group and SZMC Signeda Memorandum of Cooperation

Vanke Group, Chongqing City Transportation Development &Investment Group Co., Ltd. and SZMC (as three parties) planned to innovate thecooperation mode while constructing rail transit and developing lands along themetro in Shenzhen and Chongqing. In accordance with the principle of territory,rail PPP projects in Shenzhen will be led by SZMC while rail PPP projects inChongqing will be led by Chongqing City Transportation Development &Investment Group Co., Ltd. A two sides or three sides cooperation manner willbe adopted.

Vanke Group, Chongqing CityTransportation Development & Investment Group Co., Ltd. and SZMC Signed aMemorandum of Cooperation

Vanke Group, Dongguan Industrial Investment Holding Group andSZMC planned to strengthen cooperation in the Phase IV of Shenzhen metronetwork and the PPP project of Dongguan rail transit. In accordance with theprinciple of territory, rail PPP projects in Shenzhen will be led by SZMC whilerail PPP projects in Dongguan will be led by Dongguan Rail Transit. A two sidesor three sides cooperation manner will be adopted. All parties will follow themarket rules to participate in the construction of rail transit and the metrosuperstructures by way of the "metro + property" mode.

Vanke Group, Dongguan Industrial Investment Holding Group andSZMC Signed a Memorandum of Cooperation

Vanke Group, SZMC and China Metro Group planned to innovate thePPP mode while constructing domestic rail transit and developing lands alongmetros, cooperate with advanced construction enterprises and long-termfinancing platforms, jointly search for investment opportunities for theconstruction, administration and operation of domestic rail transit lines,cooperate to obtain land above or surrounded rail projects and participate inland renovations and agent constructions for renewal projects in cities alongmetro lines.

Vanke Group, SZMC and China Metro Group Signed a Memorandum ofCooperation

All parties have achieved a consensus that they will introduceappropriate industrial investors and financial investors according to theactual situation of projects and the implementation of specific projects willfollow the procedures required by relevant laws and regulations. Projects willonly be started as far as the last step of respective internal approval processis performed.

By signing the memorandum, a consensus with respect toconstructing metros using the PPP new mode in related cities and replicationand promotion of the "metro + property" mode to the whole country, isfurther achieved among all parties.


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