Low Down on Leipzig

Where is it? Why Are We There?

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 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 inour the world. Many get within. vestors from all around current businessin 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 an 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?

objective of buying in the city of Leipzig, the area we do around 80% of

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.

stock in German cities was constructed during this period, in typically dense four-to-five storey apartment buildings of a quality.

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. Leipzigs 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 citys 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.

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 perio quality.

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

The city continued to grow strongly, even through the inter-war period, the grow facturing base being much of this story. The population hit 750,000 in 1933 whi The city continued to grow strongly, even through the inter-war the 4th largest city in Germany. period, the growing manufacturing base being much of this story. The population hit 750,000 in 1933 the second world war, Leipzig in During the GDR period followingwhich made it the 4th largest citysuffered continu as its position in the middle of Europe was no longer an advantage. The city n Germany. the edge of the Warsaw Pact countries. Much of the government and political were sited in East Berlin and the city waned in significance. The population sta During the period and afterwards are shown below: ing the GDRGDR period following the second world war, Leipzig suffered continued decline as its position in the middle of Europe was no longer The city continued to growcity now stood at the edge of the Warsaw Pact growing manu an advantage. The strongly, even through the inter-war period, the facturing base being much of this story. The population hit 750,000 in 1933 which made i countries. Much of the government and political functions were sited in the 4th largest city in Germany. East Berlin and the city waned in significance. The population statistics Duringduring the GDR period and afterwards are shown below: the GDR period following the second world war, Leipzig suffered continued declin

as its position in the middle of Europe was no longer an advantage. The city now stood a 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:

Whats 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:

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, Leipzigs 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 citys 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. Logistical hub for the markets of Europe Gateway to the new EU accession countries High level of competence in relation to Eastern Europe 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
Source: Statistical Office of the Free State of Saxony

profile of research in strategic directions and its logistics infrastructure and location.

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.

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 jobs in the city the private sector was sector, slower, awaiting the neededpress having maFunding from depend on the media a little with national television and improvement in injor presence beforecity. frastructure in the 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

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.

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

Leipzigs 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 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.

tors we meet that have heard of Leipzig as a potential investm n the apparent vacancy in the town and the challenge in finding s some grounding, much of the vacant stock claimed by the to k which is not available to the the tenant market. Over the pas of development of the stock has occurred and in many areas t mplete. Some stock still is left to refurbish, but this lies mainly

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.

Leipzig Apartment House Prices

1800 1600 1400 1200

Price Per Sqm

1000 800 600 400 200 0 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

Year

The graph above shows price by year in A locations [blue] B [red] and C [yellow], with a prediction of pricing levels, we offer the on current rental level trends. a result is a familiar story of What happened as In terms of price to 2015 based 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 commonheld 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 governmentbacked grants for development of historical property. 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.

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 400800 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 3050% being seen.

So, whats ahead of us in terms of capital appreciation?

This depends on a number of factors:

Investor confidence Investor access to finance Rental level development Increasing owner-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

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.

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, owneroccupation 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 todays 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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re was mainly home to centrally-based office and retail employees e of years there has been significant demand for city center propPreviously, the city centre was mainly home to centrally-based office and ve recent building work. Shopping and dining facilities are in retail employees nly a very few apartments for living are situated here. 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.

City Inner Ring

sought-after, tranquil and consquently most in-demand residential ast five years, more than 6,000 people Gohlis - in to the areas have moved South recast to increase by up to 10% between 2006-2012 overall. Proppark commands the highest premuims.This is strong demand for Very one of the most sought-after, tre was mainly home to centrally-based office and retail employees tranquil and consquently most inoom, 50 Sqm apartment renting for 250-350 Eur net per month. of the city. In the last five years, more than demand residential areas e of years there has 4-8% net. ors tend to range from been significant demand for city center prop-

6,000 people have moved in ive recent building work. Shopping and dining facilities are in to the areas and the population is forecast nly a very few apartments for living areincrease byhere. 10% between 2006-2012 overall. Property near the to situated up to 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.

sought-after, tranquil and consquently most in-demand residential Gohlis Mitte last five years, more than 6,000 people have moved in to the areas recast to increase by up to 10% between 2006-2012 overall. PropAn average area of the city, for park commands the highest premuims. Very strong demandhaving good links to the centre and also to room, 50 Sqm apartment renting for the ring road tonet per month. city. Property around the Coppitz Platz 250-350 Eur the north of the ors tend to range from 4-8% net. 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 to the ty, having good links to the centre and also to the ring road 220-300 Eur net per month and typical yields for y around the Coppitz Platz should beinvestors tendabove average considered to range from 6-10% net. rty alongside the Georg-Schumann Strasse is average in appeal. apartment rents for 220-300 Eur net per month and typical yields e from 6-10% net.

Leutzsch

Leutzsch is located approximately four kilometers west of downtown oximately four kilometers west of downtown Leipzig. here is spacious and there is a wide variety of investment Leipzig. Property Property here a wide variety of investment opportunities. Condominiums are beopportunities. Condominiums are becoming increasingly popular. For a ular. For a detached house, some of the nearest to the city centre, om between from 200,000 to 400,000detached house, some of the nearest to the city centre, you can expect euros. The rents range er square meter, with a typical 2 room, pay Sqm apartment renting to 50 from between from 200,000 to 400,000 euros. The rents range month and typical yields for investors tend to range from 6-10% between 4 and 7 euros per square meter, with a typical 2 room, 50 Sqm els are to be found to the north east of the region, approaching 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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er is Ferdinand Lassalle-Strasse. Thanks to its magnificent Stadt

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

o be the next trendy neighborhood in Leipzig. The former Industrial ayer on the city art scene. LoftIndustrial area is and galleries are opening scene. Loft apartments and apartments a prominent player on the city art galleries are opening Town houses can be e canal, boosted by government investment. up along the Karl Heine canal, boosted by government investment. Town houses can be bought from 180.000 250.000, and there is an 250.000, and there is an increasing demand from owner occupintal levels are stilllies next toincreasing demand4.5 Euro per sqm for such units. Rental levels are still low for low for the city, at around from owner occupiers but have best property the Clara-Zetkin Park. Yields he rent years ago room, 50 now, at around 4.5 Euro per for butincreases. Sqm due to capital value are on % net 2 of a typical 2to 6-8%the city, apartment renting sqm 220-250 the increase. The rent of a typical 2 typical yields for investors tend to range from 8-11% net. Popularoom, 50 Sqm apartment renting for 220-250 Eur net per month and typical yields for by up to 10% between 2006-2012.
investors tend to range from 8-11% net. Population is set to increase by up to 10%

ed to be the next trendy neighborhood in Leipzig. The former Industrial between 2006-2012. t player on the city art scene. Loft apartments and galleries are opening Heine canal, boosted by government investment. Town houses can be 000 250.000, and there is an increasing demand from owner occupiRental levels are still low for the city, at around 4.5 Euro per sqm but e. The rent of a typical 2 room, 50 Sqm apartment renting for 220-250 and typical yields for investors tend to range from 8-11% net. Populase by up to 10% between 2006-2012.

Schleuig

Schleuig 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 Grnderzeitund Art Nouveau, with popular condominiums for up to 2,300 Euros and rents to 7.50 per square meter. The last 5

The best property lies next to the Clara-Zetkin Park. Yields also rental demand. Population years has seen a dramatic increase in population and have d 10% net 2 years ago to 6-8% now, due to 15% between 2006-2012. The best property lies next to capital value increases. is set to increase by up to
from around 10% net 2 years ago to 6-8%

mand by high-income families with children. There are good famlable on foot. The adjacent forest to the east of the Clara Zetkauty spot for the whole family. Sdvorstadt area are extremely Properties in this tached houses can cost in the region of 600,000. Further west are nderzeitund Art Nouveau, with popular condominiums for up to With just over 22,000 residents, Sdvorstadt is the most populous district of Leipzig. s to 7.50 per square meter. The last 5 years has seen a dramatic dents, Sdvorstadt is the The area populous district of Leipzig. The is the most prominent most and also rental demand. Population is very popular with families. The media industry is set to increase by up to 15% amilies. The media industry isinthe economy,prominent player in the player the most with many film and television producers living in the area. and television producers living in the area. Condominiums last Condominiums last year were particularly sought after and now cost up to 2,400 ght after and now cost up to 2,400 euros per square meter. At euros per Vorwerkstrae are the first Shakespeare Street and Brand Shakespeare Street and Brand square meter. At the Paul-Gruner-Strasse,town Vorwerkstrae are was town of the the Sdvorstadt, t, costing 200.000 to 300.000. Thisthe first one houses of first areas costing 200.000 to he city after re-unification,300.000. This was one of the first areas to enjoy gentrification in the city after reand tenant demand continues to be ulation is set to increase by up to and tenant demand continues to be very well-supported. Population is set unification, 15% between 2006-2012.
to increase by up to 15% between 2006-2012.

the Clara-Zetkin demand by high-income families with children. There are good fam- Park. Yields have dropped available on foot. The adjacent forest to the east of the Clara Zetknow, due to capital value increases. beauty spot for the whole family. Properties in this area are extremely e detached houses can cost in the region of 600,000. Further west are Grnderzeitund Art Nouveau, with popular condominiums for up to rents to 7.50 per square meter. The last 5 years has seen a dramatic ion and also rental demand. Population is set to increase by up to 15%

Lindenau

apartment blocks began to decrease. Now, Lindenau whilst still

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 0 residents, Sdvorstadt is the most populous district of Leipzig. The whilst still working class in its roots, supports rental demand well for renters who with families. The media industry is the most prominent player in the like the proximity the centre, Condominiums last film and television producers living into the area.its own commercial centre, theatre and cinemas and also access 2,400 euros per square meter. 50 y sought after and now cost up toto nearby parklands. The rent of a typical 2 room,At Sqm apartment sse, Shakespeare Street renting Brand Vorwerkstrae and typical yields for investors tend to range and for 200-225 Eur net per month are the first town rstadt, costing 200.000 to 300.000.The population isone of the by up to 15% between 2006from 9-11% net. This was set to increase first areas n in the city after re-unification, and supporting demand continues to mixed in potential and the tenant tenancy in this area. The area is be 2012, further Population is set to increase by up growing over the 2006-2012. to 15% of Leipzig which has been steadilytend to be in betweenLindenau 15 also in the area which borders past and best locations parts of Alt w base, the region initially attracted price-sensitive tenants to the Plagwitz to the south.

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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, AngerCrottendorf, 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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