MARKET SNAPSHOT:

RETAIL PROPERTYHISTORICAL MARKET TRENDS FOR RETAIL PROPERTY IN

EAST GERMAN CITIES

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INVESTOR SERIES

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 % .

RETAIL PROPERTIES- MARKET SUMMARY

RETAIL PROPERTIES: INVESTORS BENEFIT FROM INCREASED PURCHASING POWER

Conditions for investment in German retail properties are currently favourable, as domestic consumption hasso far not been affected by the uncertainties of the European financial crisis.

In 2012, German retailers saw a third consecutive year of nominal sales growth. Compared to 2011, sales in-creased by 1.9 % to € 428 billion.

With the exception of Potsdam, the centrality index of the 22 analysed eastern German regional centres(excluding Berlin) was in certain cases well above the German average, which is nearly always reflectedin a considerable inflow of purchasing power in the respective cities.

High consumer spending is currently reflected in the development of retail space rents. Last year, half ofthe 22 eastern German cities (excluding Berlin) recorded stable or rising rents. The development hasbeen particularly positive in Mecklenburg-Western Pomerania (with the or rising rents. Thedevelopment has been particularly exception of Greifswald). At the same time, some cities saw rentsdrop in some segments (e.g. Dessau and Dresden).

At 100.8, the purchasing power index of Potsdam is much higher than in other eastern German cities such asDresden (95.0), Erfurt (95.5) and Rostock (93.3).

The purchasing power index of Brandenburg’s provincial capital is the high- est among eastern German citieswith over 80,000 inhabitants.

Potsdam’s Brandenburger Straße is one of the busiest shopping streets in Germany, as evidenced by arecent pedestrian traffic count.

The continuing population growth and strong increases in purchasing power make Dresden, the provincialcapital of Saxony, a particularly attractive location for retail properties. The population has increased by 9 %since 2000, bucking the overall trend in eastern Germany. Over the same period, from 2000 to 2012,purchasing power increased by 12 %, even though at € 18,759 (2012), it still remains below the Germanaverage of €20,554 per capita. In addition, the boom in city tourism has created favourable conditions forthe development of the inner-city retail trade in Dresden. According to the retail specialist COMFORT,Dresden has importance, but also from its appeal as a shopping centre attracting shoppers from near andfar, including the Czech Republic and Poland. One reason for this is the A 17 motorway, which wascompleted in 2006 and connects Dresden with the Czech border, thus significantly improving the city’stransport links.

As the largest city in Thuringia, Erfurt plays an important role as a retail location. With a high purchasingpower per capita of €18,720, ranking in the upper third compared with the 22 eastern German regional cen-tres, employment growth of 4.4 % between 2007 to 2011, and a relatively low unemployment rateunder 9 %, the economic fundamentals of Thuringia’s provincial capital are solid. The growth in theretail market is reflected in rising rents in the Erfurt city centre. Rents charged for smaller retail spacesup to 100 square metres can reach up to € 110 per square metre.

Rising rents for larger attractive locations are scarce and Erfurt, together with Leipzig and Dresden, isincreasingly on the radar of retailers.

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