Low Down on LeipzigWhere is it? Why Are We There?

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Low Down on Leipzig

Where is it? Why Are We There?

We get to meet and discuss investment with a wide range of private and institutional in-vestors from all around the world. Many get in touch with us as they have heard the story of Germany as being a seriously undervalued property market and want to know more. Some come to us to discuss how we can deliver sustainable high-yielding investments and are less interested in geographics. Very few investors come to us with the specific object-ive of buying in the city of Leipzig, the area we do around 80% of our current business within. So why are we there?

City Overview

Leipzig is the 12th largest city in Germany, and the largest city in the state of Free Saxony. Current population is growing and stands at 520,000. Leipzig's emergence of a city of some standing in Germany come about as much from its geographical position as any-thing else. Situated between “old and new” Europe, the city became of strategic import-ance to traders from around Europe, an advantage that the city still enjoys today.

Leipzig underwent a process of rapid industrialisation during the second half of the 19th century. It was mainly driven by the publishing, textile and metalworking industries. Its emergence as a major urban centre is also mirrored in the unprecedentedpopulation growth. In the last three decades of the 19th century, the city’s population more

Low Down on Leipzig

Where is it?

Why Are We There?

We get to meet and discuss investment

with a wide range of private and

institutional investors from all around

the world. Many get in touch with

us as they have heard the story

of Germany as being a seriously

undervalued property market and want

to know more. Some come to us to

discuss how we can deliver sustainable

high-yielding investments and are less

interested in geographics. Very few

investors come to us with the specific

objective of buying in the city of

Leipzig, the area we do around 80% of

our current business within.

So why are we there?

City Overview

Leipzig is the 12th largest city in

Germany, and the largest city in

the state of Free Saxony. Current

population is growing and stands at

520,000. Leipzig’s emergence of a city

of some standing in Germany come

about as much from its geographical

position as anything else. Situated

between “old and new” Europe, the

city became of strategic importance

to traders from around Europe, an

advantage that the city still enjoys

today.

Leipzig underwent a process of

rapid industrialisation during the

second half of the 19th century. It

was mainly driven by the publishing,

textile and metalworking industries.

Its emergence as a major urban centre

is also mirrored in the unprecedented

population growth. In the last three

decades of the 19th century, the city’s

population more than quadrupled

– from 107,000 (1871) to 456,000

(1900). Most of the older housing

stock in German cities was constructed

during this period, in typically dense

four-to-five storey apartment buildings

of a fine period quality.

The city continued to grow strongly, even through the inter-war

period, the growing manufacturing base being much of this story. The

population hit 750,000 in 1933 which made it the 4th largest city in

Germany.

During the GDR period following the second world war, Leipzig suffered

continued decline as its position in the middle of Europe was no longer

an advantage. The city now stood at the edge of the Warsaw Pact

countries. Much of the government and political functions were sited in

East Berlin and the city waned in significance. The population statistics

during the GDR period and afterwards are shown below:

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than quadrupled – from 107,000 (1871) to 456,000 (1900). Most of the older housing stock in German cities was constructedduring this period, in typically dense four-to-five storey apartment buildings of a fine period quality.

The city continued to grow strongly, even through the inter-war period, the growing manu-facturing base being much of this story. The population hit 750,000 in 1933 which made it the 4th largest city in Germany.

During the GDR period following the second world war, Leipzig suffered continued decline as its position in the middle of Europe was no longer an advantage. The city now stood at the edge of the Warsaw Pact countries. Much of the government and political functions were sited in East Berlin and the city waned in significance. The population statistics dur-ing the GDR period and afterwards are shown below:

than quadrupled – from 107,000 (1871) to 456,000 (1900). Most of the older housing stock in German cities was constructedduring this period, in typically dense four-to-five storey apartment buildings of a fine period quality.

The city continued to grow strongly, even through the inter-war period, the growing manu-facturing base being much of this story. The population hit 750,000 in 1933 which made it the 4th largest city in Germany.

During the GDR period following the second world war, Leipzig suffered continued decline as its position in the middle of Europe was no longer an advantage. The city now stood at the edge of the Warsaw Pact countries. Much of the government and political functions were sited in East Berlin and the city waned in significance. The population statistics dur-ing the GDR period and afterwards are shown below:

Sources: Statistiches Landesamt Sachsen; Stadt Leipzig (2006); Nuissl and Rink (2003).

What’s Happening Today?

The city is growing at one of the

fastest rates now, as seen across

Germany as a whole. Reasons for

this are strong investment in the

area, and opening of the borders

to the eastern European countries

in 2011. In terms of growth up to

Dec 2010:

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Source: Statistical Office of the Free State of Saxony

We see an accelerating rate of growth,

continuously over the last 10 years. With

German as a country suffering from a low

birth-rate, below replacement, Leipzig’s story is

somewhat of a success.

Economically, the city is re-asserting its position in the region

and in Europe as a whole.

The city has an abundance of University faculties, some dating

back to the 13th Century. The student population stands

at 36,000 currently. The city is re-finding its past strengths

and putting these into the current political and economic

landscape, as the city’s major points out:

“Leipzig is the central economic region of

Central Germany. Plus points for maturing

investment decisions are the market

potential, proximity to important customers,

the presence of local suppliers, flexible

human resources, the performance profile

of research in strategic directions and its

logistics infrastructure and location.”

• LogisticalhubforthemarketsofEurope

• GatewaytothenewEUaccessioncountries

• Highlevelofcompetenceinrelationto

Eastern Europe

• EastCentralEuropeCentre:astrategic

platform for the systematic exchange

between Germany, Western Europe and the

accession countries

Leipzig is the central economic region of Central Germany.

Plus points for maturing investment decisions are the market

potential, proximity to important customers, the presence of

local suppliers, flexible human resources, the performance

profile of research in strategic directions and its logistics

infrastructure and location.

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Public Sector Investment

Soon after the re-unification, Leipzig

sought to re-assert its position in the

area both politically and economically.

Huge projects were planned with

government backing including a new

main railway station, a whole new

exhibition centre and redevelopment

of a regional airport. Most of these

projects have now been delivered

and the resulting infrastructure is

first class. Ongoing projects include

a new railway system beneath the

city with new underground stations

and a new university building off the

Augustusplatz.

Private Sector Investments

Funding from the private sector was

a little slower, awaiting the needed

improvement in infrastructure before

committing to projects. The story so

far has been of a burgeoning logistics

base, centered around the autobahn

network, train line and heavy lift from

the DHL European Hub in the city.

Companies such as Amazon, BMW,

Porsche and Dell have congregated to

the north of the city to take advantage

of the city transport system and

relative lower wage rates compared to

major cities in the west. Additionally,

around 30,000 jobs in the city depend

on the media sector, with national

television and press having major

presence in the city.

• East Central Europe Centre: a strategic platform for the systematic exchange between Germany, Western Europe and the accession countries

Leipzig is the central economic region of Central Germany.Plus points for maturing investment decisions are the market potential, proximity to important customers, the presence of local suppliers, flexible human resources, the performance profile of research in strategic directions and its logistics infrastructure and location.

Public Sector Investment

Soon after the re-unification, Leipzig sought to re-assert its position in the area both politic-ally and economically. Huge projects were planned with government backing including a new main railway station, a whole new exhibition centre and redevelopment of a regional airport. Most of these projects have now been delivered and the resulting infrastructure is first class. Ongoing projects include a new railway system beneath the city with new un-derground stations and a new university building off the Augustusplatz.

Private Sector Investments

Funding from the private sector was a little slower, awaiting the needed improvement in in-frastructure before committing to projects. The story so far has been of a burgeoning lo-gistics base, centered around the autobahn network, train line and heavy lift from the DHL European Hub in the city. Companies such as Amazon, BMW, Porsche and Dell have congregated to the north of the city to take advantage of the city transport system and rel-ative lower wage rates compared to major cities in the west. Additionally, around 30,000

jobs in the city depend on the media sector, with national television and press having ma-jor presence in the city.

Leipzig's apparent Renaissance continues unabated, with the city being voted No 1 by the Financial Times as the future city for foreign direct investment and development out of 223 European cities in March 2010.

Housing Market

Of the investors we meet that have heard of Leipzig as a potential investment area, many comment on the apparent vacancy in the town and the challenge in finding tenants. Whilst this view has some grounding, much of the vacant stock claimed by the town is of unrefur-bished stock which is not available to the the tenant market. Over the past 20 years, a programme of development of the stock has occurred and in many areas this programme is all but complete. Some stock still is left to refurbish, but this lies mainly in pockets to the

Leipzig’s apparent Renaissance continues unabated, with the city being voted No 1 by the Financial Times as the future city

for foreign direct investment and development out of 223 European cities in March 2010.

jobs in the city depend on the media sector, with national television and press having ma-jor presence in the city.

Leipzig's apparent Renaissance continues unabated, with the city being voted No 1 by the Financial Times as the future city for foreign direct investment and development out of 223 European cities in March 2010.

Housing Market

Of the investors we meet that have heard of Leipzig as a potential investment area, many comment on the apparent vacancy in the town and the challenge in finding tenants. Whilst this view has some grounding, much of the vacant stock claimed by the town is of unrefur-bished stock which is not available to the the tenant market. Over the past 20 years, a programme of development of the stock has occurred and in many areas this programme is all but complete. Some stock still is left to refurbish, but this lies mainly in pockets to the

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Housing MarketOf the investors we meet

that have heard of Leipzig

as a potential investment

area, many comment on

the apparent vacancy in the

town and the challenge in

finding tenants. Whilst this

view has some grounding,

much of the vacant stock

claimed by the town is

of unrefurbished stock

which is not available to

the the tenant market.

Over the past 20 years, a

programme of development

of the stock has occurred

and in many areas this

programme is all but

complete. Some stock still

is left to refurbish, but this

lies mainly in pockets to the

east of the city. ProVenture

are careful when selecting

property, ensuring that

good tenant demand lies

within the area, and help

with the management of

units purchased.

The bar graph above shows the rate of vacant units across the city, by year

until 2009. The level of vacancy continues to fall dramatically, with many

areas where we operate now having excess tenant demand and new build

projects under way.

In terms of price levels, we offer the graph

above, showing prices for apartment houses,

by sqm:

The above graph shows price by year in A

locations [blue] B [red] and C [yellow], with

a prediction of pricing to 2015 based on

current rental level trends.

Between 1990 – 1996, when interest rate

policy was restrictive for investment across

most markets, a wave of speculation of the

real value of property in the former East took

hold. With the market in the East effectively

held under a social regime and property

ownership was not possible, the value of

the property was unknown. A common-

held view that the re-unified country

would equalise in prices to a great extent

as the East caught up with the successful

development of the West during the period

of separation. Investments flowed into the

East from domestic and foreign sources and

the appetite for investment was increased by

high bank lending values and government-

backed grants for development of historical

property.

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east of the city. ProVenture are careful when selecting property, ensuring that good tenant demand lies within the area, and help with the management of units purchased.

The bar graph above shows the rate of vacant units across the city, by year until 2009. The level of vacancy continues to fall dramatically, with many areas where we operate now having excess tenant demand and new build projects under way.

In terms of price levels, we offer the graph below, showing prices for apartment houses, by sqm:

The graph above shows price by year in A locations [blue] B [red] and C [yellow], with a prediction of pricing to 2015 based on current rental level trends.

90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

0

200

400

600

800

1000

1200

1400

1600

1800

Leipzig Apartment House Prices

Year

Pri

ce

Pe

r S

qm

What happened as a result is a familiar story of

over-exuberance, albeit based on a unique event

of the fall of the Berlin Wall. As investments

were made through the period to 1996 or so,

the performance of those investments became

unsupportable. The expectation of rent levels

being similar to those in the developed West

were unrealistic, population fell in many cities

and towns due to the pull of the more affluent

West and the ability for free travel and high

interest payments of the time began to bite. Many

investments failed, or needed to be supported

from external income to prevent foreclosure.

Think about it, just as the developed world

was gearing up for a decade in which property

values increased by 200-300% on the back on

low inflation and low interest rates, so Germany

dropped like a stone. Prices paid for property in

this time climbed to 1000 Eur per sqm or more,

and often for unrefurbished stock which needed

around another 800 Eur per sqm investment

to get in a condition for tenanting. It is not

uncommon to hear of over-exuberant investments

to fall by 50-70% during this period. Despite the

prevailing low interest conditions, particularly

after joining the Euro, the incentive or ability to

support these failed investments waned. Only the

very toughest survived the markets of the East.

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What happened next? Germany went through a programme of fiscal reform and set a course for low-inflation and increased

productivity. Wage bargaining was tough, and output of the prized high-value German goods

increased. All parts of Germany stabilised and began the process of reform. In terms of the property

market, equilibrium was found in most areas between 2000-2005, with prices in Leipzig around 400-

800 Eur per sqm for apartment buildings in the various parts of the city.

So, what about the last 3 years? Well the story has been very interesting for investors in the area. During a period of falling property

prices in much of the developed world, the market in Leipzig has held up very well due to the fruits of

20 years of government investment in infrastructure, good capital values recognised by investors and

the business climate returning to decade high levels of optimism across Germany. In 2007, it would

be typical to conduct a search in the average locations in Leipzig for apartment houses in the price

range 450-600 Eur per sqm. Steady increases have been seen since then, with an increase in demand

from local buyers with increasing access to bank finance. A typical search of the market today in the

same areas of Leipzig will be for property in the 550 – 700 Eur per sqm price bracket. In most cases,

property over the last 3 years has seen around a 20% increase in prices which is good going in this

climate. There are exceptions to this, depending on sub location. Some of the areas to the east of the

city such as Neustadt and Volksmardorf and Sellerhausen have seen little or no capital appreciation,

the stock being characterised by inhabitants of working class or non-working people. Banks still find

it more difficult to finance to any great degree in these areas. On the other side of the coin, property

prices in Schleussig and Plagwitz have really caught investor attention, with increases of between 30-

50% being seen.

So, what’s ahead of us in terms of capital appreciation?

This depends on a number of factors:

•Investorconfidence•Investoraccesstofinance•Rentalleveldevelopment•Increasingowner-occupation

In turn, investor confidence will be the key to purchase prices increasing with all other factors being

equal. Right now, an investor feels rightly rewarded with a net yield of between 7-11%. With interest

rates for 5-10 year fixes at around 4%, there is still room for an increase in confidence pushing yields

further down. Yields in a stable market would equate to around 2% over lending-rate, so around 6%.

Should yields drop due to this increased buyer confidence, then prices have the capacity to rise by

around 40%, should finance remain low.

Access to finance shows now real sign of abating, certainly for local buyers. It is not unusual for

projects to be financed to 80% [or even higher] for German nationals, and 60- 80% for foreign

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buyers. These levels have remained reasonably intact through the financial crisis, and should remain

for investments where rents cover finance payments by at least 125%, so called “rental coverage”.

Currently, rental coverage is often 200% or more, so there seems no immediate threat to tightening

financial conditions.

Increasing rent levels are the typical trigger for capital appreciation in the more mature markets in

Germany. As rents creep up 5% or so per year, so the capital value increases by the same amount,

all other things being equal. The current rent levels in Leipzig are very low and have remained so for

the last 10 years or so.

The above graph demonstrates this point, with the yellow line tracking new build property, and

blue tracking pre-1948 stock. Whilst excess capacity has been worked through with the increase in

population or through demolition of unrefurbished stock, some real anomalies remain to this day.

For example, rental levels across the city for professional tenants lie in a thin range, usually between

4-6 Eur per sqm, a small deviation. As popular areas are developing, higher rents are now being

achieved. For example, in Sudvorstadt and Schleussig and Gohlis South, rents in excess of 7 Eur per

sqm are now not uncommon and on the rise. The development is having an effect across the city,

with pressures on areas in demand or well-presented units with benefits such as balconies. With

wages increasing, the proportion of take home pay used to service rents is now very low, around

20%, and shows capacity for rental increases to be absorbed. Finally, the effect base level for rents,

the amount the government pay for unemployed people had remained un-changed in 8 years until

June 2011. The old level of 3.85 Eur per sqm was the lowest in Germany, and is seen as very out of

sync with other smaller and less economically vibrant cities. For example, nearby Halle which is half

the size of Leipzig has a social tenant rate of 4.35 Eur per sqm. Leipzig has started to catch up with

an increase of 10% granted across the board for social housing in June 2011. This will have a ripple

effect across the rent ranges and encourage all landlords to review their rents.

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Finally, and perhaps of greatest interest, is a fairly unique feature of this market.

In 1989, all property was held by the state and before the wall fell every

inhabitant of the city was effectively a council tenant. Since that time, owner-

occupation has risen steadily to around 15% today. Some may wonder why this

has not risen quicker, particularly with the low capital values of recent years.

An answer to this lies in the appetite and culture of those with sufficient funds

to buy their own home in the last 20 years. Typically, it is those aged around 25

years old or more that aspire to home ownership. It has taken some time for the

lack of a housebuying culture to work through the older generation and arrive

in a new generation with funds to buy. For sure, many of today’s 25-35 year

olds aspire to own their own place, much in the same proportion to the rest of

Germany where average owner occupation is just below 50%. Today, it is typical

for out of town suburbs with new build single family houses or the very best

areas of town in apartment houses to support this growing sector. The real point

to note is the typical much higher price paid by an owneroccupier to an investor

of a complete apartment house. The property is not purchased on a yield-return

basis, more on the ability to pay and service the mortgage through income.

So, areas in Leipzig where owners occupiers are buying their own apartments

are typically paying from 1.200 Eur as a very minimum to 3.000 Eur per sqm or

more. This is between 2-3 times investors buying apartment houses alongside

them are paying. Quite an odd situation!! So, as owner-occupation increases to

a more mature level towards 50%, so the average to good areas of the city will

see viability for investors to divide their apartment houses into individual units

and dispose of them, in a good refurbished state, to owner occupiers at a very

significant uplift to the original price paid. In some areas, this may take 3-10

years to be a viable option, in other areas such as Gohlis South, Sudvorstadt and

Schleussig this is an option to do right now.

We have introduced some 180 investors to Leipzig over the last 4 years,

primarily investors seeking a high rental yield on their investment. Typically

clients seek higher yields than those to be found in cities in the west of the

country, or in the capital Berlin.

Owing to good contacts in the city, yield investors can find property in the

very best areas of town providing yields of 8%, with medium risk areas to

the south and west of the city being the most attractive and producing yields

between 9-12% on delivery. With good management in place, these yields seem

to us to be mis-priced in terms of risk and reward. With capital values at the

lowest levels seen for a decade, often at prices starting around 500-600 Euro

per sqm for well-refurbished and tenanted property, the city demands further

investigation.

Finally, a lowdown on each area of the city which should help in early research of the city …

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City Inner Ring

Previously, the city centre was mainly home to centrally-based office and

retail employees but over the past couple of years there has been significant

demand for city center property, resulting in extensive recent building work.

Shopping and dining facilities are in abundance, although only a very few

apartments for living are situated here.

Gohlis - South

This is one of the most sought-after, tranquil and consquently most in-

demand residential areas of the city. In the last five years, more than

6,000 people have moved in to the areas and the population is forecast

to increase by up to 10% between 2006-2012 overall. Property near the

Rosenthal park commands the highest premuims. Very strong demand for

rentals with a typical 2 room, 50 Sqm apartment renting for 250-350 Eur

net per month. Typical yields for investors tend to range from 4-8% net.

Gohlis – Mitte

An average area of the city, having good links to the centre and also to

the ring road to the north of the city. Property around the Coppitz Platz

should be considered above average for the area, whilst property alongside

the Georg-Schumann Strasse is average in appeal. A typical 2 room, 50

Sqm apartment rents for 220-300 Eur net per month and typical yields for

investors tend to range from 6-10% net.

Leutzsch

Leutzsch is located approximately four kilometers west of downtown

Leipzig. Property here is spacious and there is a wide variety of investment

opportunities. Condominiums are becoming increasingly popular. For a

detached house, some of the nearest to the city centre, you can expect

to pay from between from 200,000 to 400,000 euros. The rents range

between 4 and 7 euros per square meter, with a typical 2 room, 50 Sqm

apartment renting for 200-350 Eur net per month and typical yields for

investors tend to range from 6-10% net. The highest rent levels are to be

found to the north east of the region, approaching the woodland area.

Music Quarter

The flagship of the quarter is Ferdinand Lassalle-Strasse. Thanks to its

magnificent Stadt Palais it is one of the most beautiful streets in Germany.

Already an attractive area, it will be further enhanced by a new city harbour

front. It is anticipated that both ownership and rental rates will continue to

rise over the next couple of months. Rental levels are some of the highest

in the city, at around 350-500 Eur net per month for a typical 50 sqm

apartment. Yields rarely get above 6-7% in this location, due to strong

demand from investors and owner-occupiers.

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500-600 Euro per sqm for well-refurbished and tenanted property, the city demands further investigation.

Finally, a lowdown on each area of the city which should help in early research of the city.

City Inner Ring

Previously, the city centre was mainly home to centrally-based office and retail employees but over the past couple of years there has been significant demand for city center prop-erty, resulting in extensive recent building work. Shopping and dining facilities are in abundance, although only a very few apartments for living are situated here.

Gohlis - South

This is one of the most sought-after, tranquil and consquently most in-demand residential areas of the city. In the last five years, more than 6,000 people have moved in to the areas and the population is forecast to increase by up to 10% between 2006-2012 overall. Prop-erty near the Rosenthal park commands the highest premuims. Very strong demand for rentals with a typical 2 room, 50 Sqm apartment renting for 250-350 Eur net per month. Typical yields for investors tend to range from 4-8% net.

Gohlis – Mitte

500-600 Euro per sqm for well-refurbished and tenanted property, the city demands further investigation.

Finally, a lowdown on each area of the city which should help in early research of the city.

City Inner Ring

Previously, the city centre was mainly home to centrally-based office and retail employees but over the past couple of years there has been significant demand for city center prop-erty, resulting in extensive recent building work. Shopping and dining facilities are in abundance, although only a very few apartments for living are situated here.

Gohlis - South

This is one of the most sought-after, tranquil and consquently most in-demand residential areas of the city. In the last five years, more than 6,000 people have moved in to the areas and the population is forecast to increase by up to 10% between 2006-2012 overall. Prop-erty near the Rosenthal park commands the highest premuims. Very strong demand for rentals with a typical 2 room, 50 Sqm apartment renting for 250-350 Eur net per month. Typical yields for investors tend to range from 4-8% net.

Gohlis – Mitte

An average area of the city, having good links to the centre and also to the ring road to the north of the city. Property around the Coppitz Platz should be considered above average for the area, whilst property alongside the Georg-Schumann Strasse is average in appeal. A typical 2 room, 50 Sqm apartment rents for 220-300 Eur net per month and typical yields for investors tend to range from 6-10% net.

Leutzsch

Leutzsch is located approximately four kilometers west of downtown Leipzig. Property here is spacious and there is a wide variety of investment opportunities. Condominiums are be-coming increasingly popular. For a detached house, some of the nearest to the city centre, you can expect to pay from between from 200,000 to 400,000 euros. The rents range between 4 and 7 euros per square meter, with a typical 2 room, 50 Sqm apartment renting for 200-350 Eur net per month and typical yields for investors tend to range from 6-10% net. The highest rent levels are to be found to the north east of the region, approaching the woodland area.

Music Quarter

The flagship of the quarter is Ferdinand Lassalle-Strasse. Thanks to its magnificent Stadt Palais it is one of the most beautiful streets in Germany. Already an attractive area, it will be further enhanced by a new city harbour front. It is anticipated that both ownership and rental rates will continue to rise over the next couple of months. Rental levels are some of the highest in the city, at around 350-500 Eur net per month for a typical 50 sqm apart-ment. Yields rarely get above 6-7% in this location, due to strong demand from investors and owner-occupiers.

Plagwitz

Plagwitz is predicted to be the next trendy neighborhood in Leipzig. The former

Industrial area is a prominent player on the city art scene. Loft apartments and

galleries are opening up along the Karl Heine canal, boosted by government

investment. Town houses can be bought from €180.000 – 250.000, and there is an

increasing demand from owner occupiers for such units. Rental levels are still low for

the city, at around 4.5 Euro per sqm but are on the increase. The rent of a typical 2

room, 50 Sqm apartment renting for 220-250 Eur net per month and typical yields for

investors tend to range from 8-11% net. Population is set to increase by up to 10%

between 2006-2012.

Schleußig

Schleußig is for in demand by high-income families with children. There are good

family- based facilities available on foot. The adjacent forest to the east of the Clara

Zetkin- Park is an idyllic beauty spot for the whole family. Properties in this area are

extremely sought-after, where detached houses can cost in the region of €600,000.

Further west are good redeveloped Gründerzeitund Art Nouveau, with popular

condominiums for up to €2,300 Euros and rents to €7.50 per square meter. The last 5

years has seen a dramatic increase in population and also rental demand. Population

is set to increase by up to 15% between 2006-2012. The best property lies next to

the Clara-Zetkin Park. Yields have dropped from around 10% net 2 years ago to 6-8%

now, due to capital value increases.

Südvorstadt

With just over 22,000 residents, Südvorstadt is the most populous district of Leipzig.

The area is very popular with families. The media industry is the most prominent

player in the economy, with many film and television producers living in the area.

Condominiums last year were particularly sought after and now cost up to €2,400

euros per square meter. At the Paul-Gruner-Strasse, Shakespeare Street and Brand

Vorwerkstraße are the first town houses of the Südvorstadt, costing €200.000 to

€300.000. This was one of the first areas to enjoy gentrification in the city after re-

unification, and tenant demand continues to be very well-supported. Population is set

to increase by up to 15% between 2006-2012.

Lindenau

This is a large sub district of Leipzig which has been steadily growing over the past 15

years. Growing from a low base, the region initially attracted price-sensitive tenants

to the area and vacancy in the apartment blocks began to decrease. Now, Lindenau

whilst still working class in its roots, supports rental demand well for renters who

like the proximity to the centre, its own commercial centre, theatre and cinemas and

also access to nearby parklands. The rent of a typical 2 room, 50 Sqm apartment

renting for 200-225 Eur net per month and typical yields for investors tend to range

from 9-11% net. The population is set to increase by up to 15% between 2006-

2012, further supporting tenancy in this area. The area is mixed in potential and the

best locations tend to be in parts of Alt Lindenau and also in the area which borders

Plagwitz to the south.

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Plagwitz

Plagwitz is predicted to be the next trendy neighborhood in Leipzig. The former Industrial area is a prominent player on the city art scene. Loft apartments and galleries are opening up along the Karl Heine canal, boosted by government investment. Town houses can be bought from €180.000 – 250.000, and there is an increasing demand from owner occupi-ers for such units. Rental levels are still low for the city, at around 4.5 Euro per sqm but are on the increase. The rent of a typical 2 room, 50 Sqm apartment renting for 220-250 Eur net per month and typical yields for investors tend to range from 8-11% net. Popula-tion is set to increase by up to 10% between 2006-2012.

Schleußig

Schleußig is for in demand by high-income families with children. There are good fam-ily-based facilities available on foot. The adjacent forest to the east of the Clara Zetk-in-Park is an idyllic beauty spot for the whole family. Properties in this area are extremely sought-after, where detached houses can cost in the region of €600,000. Further west are good redeveloped Gründerzeitund Art Nouveau, with popular condominiums for up to €2,300 Euros and rents to €7.50 per square meter. The last 5 years has seen a dramatic increase in population and also rental demand. Population is set to increase by up to 15%

Plagwitz

Plagwitz is predicted to be the next trendy neighborhood in Leipzig. The former Industrial area is a prominent player on the city art scene. Loft apartments and galleries are opening up along the Karl Heine canal, boosted by government investment. Town houses can be bought from €180.000 – 250.000, and there is an increasing demand from owner occupi-ers for such units. Rental levels are still low for the city, at around 4.5 Euro per sqm but are on the increase. The rent of a typical 2 room, 50 Sqm apartment renting for 220-250 Eur net per month and typical yields for investors tend to range from 8-11% net. Popula-tion is set to increase by up to 10% between 2006-2012.

Schleußig

Schleußig is for in demand by high-income families with children. There are good fam-ily-based facilities available on foot. The adjacent forest to the east of the Clara Zetk-in-Park is an idyllic beauty spot for the whole family. Properties in this area are extremely sought-after, where detached houses can cost in the region of €600,000. Further west are good redeveloped Gründerzeitund Art Nouveau, with popular condominiums for up to €2,300 Euros and rents to €7.50 per square meter. The last 5 years has seen a dramatic increase in population and also rental demand. Population is set to increase by up to 15%

between 2006-2012. The best property lies next to the Clara-Zetkin Park. Yields have dropped from around 10% net 2 years ago to 6-8% now, due to capital value increases.

Südvorstadt

With just over 22,000 residents, Südvorstadt is the most populous district of Leipzig. The area is very popular with families. The media industry is the most prominent player in the economy, with many film and television producers living in the area. Condominiums last year were particularly sought after and now cost up to €2,400 euros per square meter. At the Paul-Gruner-Strasse, Shakespeare Street and Brand Vorwerkstraße are the first town houses of the Südvorstadt, costing €200.000 to €300.000. This was one of the first areas to enjoy gentrification in the city after re-unification, and tenant demand continues to be very well-supported. Population is set to increase by up to 15% between 2006-2012.

Lindenau

This is a large sub district of Leipzig which has been steadily growing over the past 15 years. Growing from a low base, the region initially attracted price-sensitive tenants to the area and vacancy in the apartment blocks began to decrease. Now, Lindenau whilst still

between 2006-2012. The best property lies next to the Clara-Zetkin Park. Yields have dropped from around 10% net 2 years ago to 6-8% now, due to capital value increases.

Südvorstadt

With just over 22,000 residents, Südvorstadt is the most populous district of Leipzig. The area is very popular with families. The media industry is the most prominent player in the economy, with many film and television producers living in the area. Condominiums last year were particularly sought after and now cost up to €2,400 euros per square meter. At the Paul-Gruner-Strasse, Shakespeare Street and Brand Vorwerkstraße are the first town houses of the Südvorstadt, costing €200.000 to €300.000. This was one of the first areas to enjoy gentrification in the city after re-unification, and tenant demand continues to be very well-supported. Population is set to increase by up to 15% between 2006-2012.

Lindenau

This is a large sub district of Leipzig which has been steadily growing over the past 15 years. Growing from a low base, the region initially attracted price-sensitive tenants to the area and vacancy in the apartment blocks began to decrease. Now, Lindenau whilst still

Stotteritz

A stable and well-established part of Leipzig which boasts good infrastructure

including hospital and good schools. There are a mix of owner occupied houses and

town houses and multi-family property mainly from the classical building period of

1900s. The population has been very stable in the past 15 years and rental demand is

steady. The rent of a typical 2 room, 50 Sqm apartment renting for 220-250 Eur net

per month and typical yields for investors tend to range from 8-10% net. Population

is set to increase by up to 5% between 2006-2012.

Kleinzschocher

The large region to the south west of the city was formerly characterised by a large

railway depot used for cargo out of the former industrial heartland of Germany. There

railways are now long closed and the area is beginning to change its appearance

and establish itself as an area which offers good value rents in some very attractive

classical style property. This area has proven very attractive to yield-driven investors

over the past 2 years, and this trend is set to continue. The rent of a typical 2 room,

50 Sqm apartment renting for 200-225 Eur net per month and typical yields for

investors tend to range from 9-11% net.

East of the City

A collection of the districts bordering the centre including Reudnitz-Thorberg, Anger-

Crottendorf, Volkmarsdorf, Schoenefeld and Neustadt. Suprising value can be found

in these districts, particularly being in such close proximity in some cases to the city

centre. The reputation of some parts, in particular property on the main routes of

Eisenbahn Strasse and Wuzner Strasse has been characterised by an area of high

unemployment in the past. This effect can lower the loan-to-values offered by banks.

That said, some above average mico-areas and properties exist in this region and a

good demand by renters exists. Population is set to increase by up between 5-10%

between 2006-2012.

Conclusion

Leipzig, of all former east German cities, really has a story to tell in terms of renewal and redevelopment, a story that is unfolding in front of our eyes. Property yields in the city are truly rewarding and cashflow positive and banks are lending to good levels to international investors. We would be proud to show you the city as you make your research for your next investment area.

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