10:18     SHIMAO CHINA<00649> - Announcement & Resumption (9)                 

    -      Macro-economic adjustment measures have affected                   
    the availability of financing: The PRC government has                     
    recently taken number of economic adjustment measures                     
    to prevent the PRC economy from overheating. Among                        
    these measures are policy initiatives in the                              
    financial sector issued in September 2004 to further                      
    tighten the lending requirements for real estate                          
    developers originally issued in June 2003. The                            
    measure that has had a particular impact on the                           
    ability of smaller developers to participate in                           
    development projects is the restriction on using bank                     
    loans to pay land costs. Under applicable PRC                             
    regulations, bank loans must be applied towards                           
    construction costs. In addition, the requirement on                       
    property developers to pay a prescribed percentage                        
    of the total value of a real estate project up front                      
    has increased from 30% to 35%. These requirements have                    
    raised the barriers to entry for property developers                      
    and have made it more difficult financially for                           
    smaller developers to undertake larger-scale or                           
    higher-end development projects, let alone to                             
    undertake a number of projects at the same time. Other                    
    measures announced by the PRC government over the past                    
    two years designed to slow the rapid economic growth                      
    of the PRC's economy to a more sustainable level                          
    include, among other things, curbing certain high                         
    growth sectors, including the property market. The                        
    measures specific to the property market include                          
    limiting the monthly repayment amount under an                            
    individual's mortgage loan to 50% of the individual's                     
    monthly income and all debt repayments of the                             
    individual to 55% of the individual's monthly income.                     
    In addition, the People's Bank of China raised both                       
    its benchmark lending and deposit interest rates in                       
    October 2004. Policies and measures introduced and                        
    which may be introduced by the PRC Government                             
    including those described above may lead to changes                       
    in market conditions, including price instability and                     
    an imbalance between supply of, and demand for,                           
    properties in the PRC.                                                    
                                                                              
    The Group's current only property development project                     
    in Mainland China is Shimao Lakeside Garden, the site                     
    of which was paid for partly through bank loans. The                      
    Group's investment in the project company of the                          
    Shimao Lakeside Garden project was financed out of                        
    the proceeds of a rights issue undertaken in 2002.                        
    At that time, the regulations requiring that land use                     
    rights for residential property development be sold                       
    by public tender, auctions or bidding had not been                        
    implemented and therefore the Group was able to secure                    
    the site at a reasonable cost. As the Group currently                     
    has no property development projects in Mainland                          
    China in the pipeline and does not have a land bank                       
    to draw from, the above macro-economic factors would                      
    mean that it would be increasingly difficult                              
    financially for smaller developers such as the Group                      
    to do the following in Mainland China: (a) acquire                        
    sites in premium locations such as sites with                             
    riverside views and those located in central business                     
    districts; (b) acquire and develop large scale                            
    projects, and (c) obtain reasonable returns. And                          
    given that the Group's "Shimao" brand has been                            
    synonymous with large scale quality and luxury                            
    developments in premium locations, the Group has had                      
    to look elsewhere for more opportunities that are more                    
    suitable for smaller developers. The Company has                          
    noted official statements from the PRC government                         
    regarding the strengthening of the macro-economic                         
    adjustment measures during 2005. Notwithstanding                          
    that the Group could have continued to pursue                             
    appropriate opportunities in the Mainland China                           
    market, the Board believes that there are many