China HGS Receives Government Qualification to Expand Real-Estate Development into Other Provinces

HANZHONG, China, November 2, 2011 /PRNewswire-Asia-FirstCall/ -- China HGS Real Estate Inc. (NASDAQ:HGSH) ("China HGS" or "the Company"), one of the largest residential and commercial property developers in China's southern Shaanxi province, today announced it has been qualified to expand its real-estate development operations beyond Shaanxi province into new regional real-estate markets in China.

This significant new growth opportunity stems from the receipt of the National Grade-I real-estate development qualification, which was awarded to its operating entity in China, the Guangsha Group, by the Ministry of Housing and Urban-Rural Development of the People's Republic of China ("MOHURD").

"The National Grade-I qualification is a major milestone in China HGS' development which will allow us to pursue new regional real-estate growth opportunities, while continuing our leadership in Shaanxi province," stated Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS Real Estate Inc. He added, "This important advance would not be possible without contributions from all China HGS employees, and we are most grateful for their diligent efforts."

Strict Criteria

The Grade-I real-estate development qualification is the highest qualification for domestic real-estate developers in China and requires meeting several strict criteria, including:

• Registered capital of at least RMB 50 million (approximately $7.9 million);
• At least five years of experience in real estate development and operation;
• The completion of construction of a total over 300,000 sq. m. of ground floor area (GFA) within the last three years and, in the most recent year, developed real estate projects of at least 150,000 square meters; and
• A property qualification rate of 100% in each of the past five years; and an established, comprehensive qualification guarantee system

The Guangsha Group received the National Grade-II real-estate development qualification in 2000 and has since experienced continued healthy business growth. Following its strict application and review process, MOHURD officially granted the Guangsha Group the National Grade-I real-estate development qualification on October 12, 2011, making the Guangsha Group the first National Grade-I real estate developer in Hanzhong as well as in the southern Shaanxi region.

About China HGS Real Estate Inc.

China HGS Real Estate Inc., through its wholly owned subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd., has specialized since 1995 in real estate development in China's third-tier and fourth-tier cities. The Company's real estate properties include multi-layer, sub-high-rise, and high-rise apartment buildings. The Company possesses the national Grade-II and most recently the Grade-I real estate qualification and was ranked as the No. 1 property developer in Hanzhong, Shaanxi Province in terms of market share in 2007, 2008, 2009, and 2010 successively.

Forward-looking Statements:

This press release contains certain statements that may include 'forward-looking statements'. All statements other than statements of historical fact included herein are 'forward-looking statements'. These forward looking statements are often identified by the use of forward-looking terminology such as 'believes,' 'expects' or similar expressions, involve known and unknown risks and uncertainties. These statements relate, but are not limited to, demand for property in Hanzhong and its surrounding areas, legislation affecting real estate on the national and local level, and property pricing. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.