MARKET SNAPSHOT:

RESIDENTIAL PROPERTY

POST: PHONE:MY GERMAN PROPERTY LIMITED USA TOLL FREE: 1855-810-6781CAPITAL OFFICE, KEMP HOUSE 152-160, UK: (+44) 020 376 91179

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A MY GERMAN PROPERTY FACTSHEET

INVESTOR SERIES

HISTORICAL MARKET TRENDS FOR RESIDENTIAL

PROPERTY IN EAST GERMAN CITIES

INTRODUCTION

THIS INFORMATION BOOKLET IS DESIGNED FOR INVESTORS CONSIDERING PURCHASING PROPERTY IN GERMANY FOR

COMMERCIAL PORTFOLIOS AND CONTAINS LARGE AMOUNTS OF MARKET DATA AND TRENDS. IF YOU ARE SIMPLY

PURCHASING A PROPERTY FOR A HOLIDAY HOME/RETIREMENT YOU MAY FIND THE INFORMATION CONTAINED HEREIN OF LITTLE

VALUE.

Property investors always find themselves confronted with the pertinent question of which locations in Germanyoffer a stable and secure playing field in the long term.

To give an overview of the market, My German Property LTD publish data of established investment locations inconvenient 'snapshots' to allow you to consider property type and locations quickly at a glance.

This introduction page and the following 2 pages are repeated across the different property type informationleaflets; if you have already it once simply skip this segment overview and head to the main informationstarting on page 5

INTRODUCTION

GERMANY: AN OVERVIEW

Compared with other European markets, the German market is considered to be a safe haven forinvestment in offce, retail and residential properties. Germany now has a strong position in the commercial realestate segment, ranking second behind the UK. In 2012, around € 25 billion were invested in German

commercial real estate, second only to the UK, with just under €41 billion. France ranked third in 2012 at around

€14 billion. Germany’s second ranking in commercial transaction volume clearly shows the attractiveness of do-mestic real estate. At the same time, increasingly higher multipliers also point to a shortage of prime propertiesin the large German cities. As premium properties account for only a small slice of the overall market, demandin other locations will inevitably increase. Germany’s polycentric structure – which stands in total contrast to themonocentric structure in France, for example – represents a significant investment advantage in this context. Inaddition to Germany’s seven large cities, there are 73 smaller cities in Germany with more than 100,000inhabitants that offer interesting investment opportunities. These regional conurbations take on importantfunctions for their surrounding district with respect to health and education, among other things, which inturn attracts new residents and businesses.

EAST GERMANY REGIONAL OVERVIEW

A pattern of densely populated growth areas are now emerging in eastern Germany – these are areasthat have developed their own sustainable and dynamic economic base. While eastern German regionalcentres still lag behind western Germany in terms of absolute economic performance or wealth indicatorssuch as purchasing power and GDP, they have been catching up fast over the past few years. According to the2012 City Ranking, published by the Initiative for a New Social Market Economy (INSM) andWirtschaftsWoche (WiWo – a prominent German financial publication), six eastern German cities rankamong the top 10 most dynamic business locations in Germany, with Magdeburg in first place followed byRostock and Leipzig in fourth and fifth place respectively. Moreover, the improvement in key indicatorsshows that domestic and foreign property investors consider selected cities and regions in eastern Germany to bean alternative to more established German cities. Key indicators include lower unemployment rates in manylocations, increases in per capita economic output, positive net migration and a growth in visitors’ overnightstays.

The upward trend of recent years has been mainly driven by the densely populated cities and regional centreswhich can rely on a sustainable economic base. These include Berlin and Potsdam, the Middle German regionaround Leipzig and Halle, Saxony’s capital Dresden, Thuringia’s Erfurt and Jena, plus the university and touristcentres on the Baltic coast around Rostock. These have developed into regions with considerable appeal andhave become attractive investment destinations – not only due to risk-return considerations, but also thanks togrowing populations, decreasing unemployment, modern infrastructure and sustainable research andproduction networks. The positive momentum of recent years has had a significant long-term impact on realestate markets. As a result, rents have stabilised or increased, and the recent high vacancy rates have fallen inmany locations, with Berlin, in particular, being one of the main beneficiaries. The growth in population andthe economy is particularly noticeable here, while unemployment and vacancy rates have beensignificantly lowered, and selected regions are fast becoming a real alternative to other locations inGermany.

INTRODUCTION

MICRO ECONOMIC VIEW OF INDIVIDUAL EASTERN GERM AN STATES

Saxony:With BMW, Porsche and Siemens opening production facilities, Leipzig has enhanced its standing as anindustrial location. In addition, Saxony’s largest city has become an important logistics hub. DHL, forexample, uses the Halle/Leipzig airport as its European cargo hub. Such corporate decisions helped to boost thenumber of people in employment in Leipzig by 9.6% in the period from 2006 to 2011, which was significantlyhigher than the average for the 50 most populous cities in Germany (+4.%) Similar to Leipzig, Dresden, hasestablished itself as a thriving business location and has made a name for itself as the heart of microelectronicsin Europe. Dresden’s microelectronic segment is made up of more than 48,000 employees working for some1,500 businesses. Dresden’s success in attracting such businesses to set up operations here is evident from therecent decision of the world’s largest supplier of automotive components, Bosch, to open a new developmentcentre in the city. Bosch has added Dresden to its global development network with centres in Reutlingen,Munich, Shanghai and Bangalore. At 8.8%, Dresden’s unemployment rate is comparably low and a refectionof the city’s strong economic performance.

Thuringia:Besides Leipzig, Erfurt is also an emerging logistics locations in Germany. Over the past three years, foodretailers such as Norma and Netto and the electronics company Panasonic, have set up major logistics centres inThuringia’s provincial capital. Since 2012, major firms such as Koch, Neff & Volckmar (KNV), Redcoon, plusthe shoe wholesaler Zalando all decided to set up their own logistics centres in Erfurt. With its €150 million in-vestment, the book wholesaler KNV created more than 1,000 jobs here. Similar to Leipzig, Erfurt was able tosignificantly improve its position in the local labour market. As a result, the unemployment rate in Thuringia’sprovincial capital dropped by 5.9 % from 2006 to 2011. This was greater than the average recorded in the mostpopulous German cities (-3.9 %)

Saxony-Anhalt:According to the INSM / WiWo 2012 City Ranking, the provincial capital, Magdeburg, recorded the highesteconomic growth. Since 2009, the city has seen continuous improvement in its job market and wealth creation.Magdeburg’s excellent position is due to a number of factors, including geographical location on goodtrans-port routes, its role as the provincial capital, plus a 150-year tradition of mechanical engineering. Today,the largest industrial employer is the wind turbine manufacturer Enercon. In addition, a network of researchand development institutions have formed around the Otto-von-Guericke University, with companies fromthe fields of neuroscience, medicine and medical technology. The sharp decline in the unemployment ratebetween 2006 and 2011 is indicative of the successful structural changes that have taken place in Magdeburg.Among the 50 most populous cities in Germany, Saxony-Anhalt’s state capital saw the steepest dropin the unemployment rate, with joblessness decreasing from 18.8 to 11.6 %.

Mecklenburg-Western Pomerania: Rostock, the state’s most populated city, is considered to be one of Mecklenburg- Western Pomerania’smost attractive growth centres. In the INSM/WiWo ranking of the 50 largest German cities, theHanseatic city ranks fourth in terms of dynamic performance. Rostock’s good ranking is mainly due to thesignificant improvement of its labour market indicators. The 11.9 % increase in the number of employees duringthe period between 2006 and 2011, and the decrease in the unemployment rate by 5% over the same period,are mainly attributable to the city’s success in attracting businesses to relocate or expand here. The plant ex-pansion in the port area of Rostock carried out by the crane manufacturer Liebherr is a good example. This€150 million investment alone has created around 700 jobs in the city. While the unemployment rate in Rostock– at 11.6 % – remains above the eastern German and national average, unemployment fell again by 0.7 % in2012 compared with 2011.

Brandenburg: Potsdam is the most attractive regional centre for investment potential in Berlin’s immediate surroundings.The appeal of this provincial capital as a business centre has been on the increase, and it has becomeone of the most sought-after locations, especially for companies in the healthcare, media, and informationand communications technology industries. In 2010, Potsdam succeeded in attracting one of the largestpublishing companies for print and electronic media, Tandem Verlag, to locate in the city. In addition, thesoftware company SAP is currently building its new Innovation Centre in Brandenburg’s provincial capital.After completion, which is planned for 2013, it will provide jobs for 100 new employees. Potsdam’ssuccessful settlement policy has resulted in a relatively low unemployment rate of 7.2 % .

RESIDENTIAL PROPERTIES- MARKET SUMMARY

RESIDENTIAL PROPERTY MARKET: STEADY GROWTH IN RENTS AND PRICES

The most expensive places to buy a home are Potsdam, Dresden and Leipzig Investment in residential property is currently in high demand due to the recent Euro debt crisis and the

associated inflation fears. This, combined with low interest rates, has moved many private investors whohad not previously considered buying a property, to now enter the market.

The market for privately owned houses and apartments experienced a similar development with stable orrising prices. The most expensive cities here are still Potsdam, Dresden and Leipzig, as well as Jena, Erfurt andRostock. According to a study by Wüest & Partners (2012) on investment opportunities in German medium-sized cities, Jena and Rostock have a particularly attractive risk return profile for residential properties. Interms of risk, both regional centres are on a par with Cologne, Düsseldorf and Hamburg while delivering asignificantly higher return. Compared with the large cities of Berlin, Frankfurt and Munich, their risk level islower at a higher rate of return.

Rents for apartments in modernised old buildings and new buildings remained stable or increased in 2012,which is a reflection of the positive demographic trend in many eastern German regional centres. In three ofthe 22 eastern German cities – Potsdam, Stralsund and Wismar – rents increased for both modernised oldbuildings as well as new build properties.

Accordingly, prices of newly built apartments increased last year in 10 of the 22 analysed eastern German cities At up to €3,600 per square metre, sale prices for apartments in modernised old buildings in Dresden and

Leipzig are already in the upper price range. The price of newly built apartments here ranges between €4,000and €4,500 per square metre.

With the exception of Erfurt and Greifswald, prices in all 22 analysed cities have remained stable or increasedwhen compared with the previous year.

Due to increasing demand, sale prices of detached houses rose in 10 of the 22 analysed locations and in 11 cities,prices remained stable whereas in Brandenburg an der Havel they declined slightly. Potsdam, Dresden andLeipzig are again leading the table of cities with the highest property prices, ranging from € 490,000(Leipzig) to € 610,000 (Potsdam).

While sale prices in Potsdam stagnated recently, prices in the two booming cities of Dresden and Leipzig roseyear on year. Even in the Thuringian cities of Jena and Erfurt, as well as in Rostock, buyers are expected to payat least €400,000 for a detached house. The BBSR expects the population and the number of households inthese cities to increase.

Weimar, the cultural city with its numerous sights, castles and parks, is popular with visitors and increasinglyalso with homeowners, which has led to an increase in residential property prices. Of the 22 analysed easternGerman cities, population growth in Weimar is expected to be the second fastest after Potsdam, with itspopulation increasing by 9% by 2030.

As already mentioned, the population is also expected to grow in Dresden, Erfurt and Jena. Accordingly, saleprices of up to €250,000 for terraced houses and semi-detached houses are expected to increase further.

Available building land is an important prerequisite for a stable housing market. Last year, building land ingood to excellent locations was in much higher demand. Accordingly, prices charged for good to excellent loca-tions increased in 10 of the 22 analysed cities. At the same time, prices in fair and average locations remainedmainly constant. Interestingly, land prices in four cities – Greifswald, Halle, Jena and Weimar – increasedregardless of their location – a sign that investors expect these cities to grow in the future. Please refer to ourmarket snapshot entitled ‘building plots’ for more information.

POST: PHONE:MY GERMAN PROPERTY LIMITED USA TOLL FREE: 1855-810-6781CAPITAL OFFICE, KEMP HOUSE 152-160, UK: (+44) 020 376 91179

LONDON, ENGLAND EC1V 2NX EMAIL:OR:MY GERMAN PROPERTY LIMITED ENQUIRIES@MYGERMANPROPERTY.EUBORSIGSTRASSE 9, 10115, BERLIN GERMANYON THE WEB: FACEBOOK:WWW.MYGERMANPROPERTY.EU FACEBOOK.COM/MYGERMANPROPERTY