Real estate market overview

Real estate market overview 213 1

FOREWORD INFORMATION ABOUT THE PUBLICATION COUNTRY MACROECONOMIC REVIEW GDP, INFLATION, UNEMPLOYMENT, NET EXPORTS, REAL ESTATE MARKET BUSINESS CENTRES MARKET NEW, IN DEVELOPMENT, PLANNED PROJECTS, OCCUPANCIES, PRICES SHOPPING CENTRES MARKET PRICES, CHANGES, AND DEVELOPMENT TRENDS STREET RETAIL PRICES, CHANGES IN OCCUPANCIES, NEW BRANDS WAREHOUSE PREMISES MARKET NEW, IN DEVELOPMENT, PLANNED PROJECTS, OCCUPANCIES, PRICES INVESTMENT TRANSACTIONS VOLUMES OF INVESTMENT TRANSACTIONS IN THE BALTIC STATES, YIELD DYNAMICS OF COMMERCIAL PREMISES RESIDENTIAL REAL ESTATE MARKET ACTIVITY, CREDIT MARKET, IMPLEMENTED AND PLANNED PROJECTS, PRICE CHANGES FISCAL AND LEGISLATIVE ENVIRONMENT LAND TAX, PROPERTY TAX, VAT, INCOME TAX, CORPORATE TAX, EXPENDITURES IN CASE OF REAL ESTATE PURCHASE OR VENDING ABOUT US CONTACTS 2. 4. 5. 1. 14. 18. 22. 25. 31. 35. 36.

Foreword Solid Real Advisors presents overview of commercial and residential real estate market in Lithuania in 213. In this publication the most important country macroeconomic rates are covered, that seem optimistic in the difficult context of Western Europe and leads for a further successful growth of the country s economy. In the part of the review concerning business centres market we evaluated the business centres and administrative premises in three biggest Lithuanian cities, Vilnius, Kaunas, and Klaipėda, focusing on the market of business centres in Vilnius that was the most active one and boasts new projects next year. Reviewing shopping centres and commercial parks in the three biggest Lithuanian cities we focus on Vilnius city as well as the development of the projects is most intensive here and the coming of new names (brands) is mostly notable. In the overview much attention is paid to street retail tendencies in Vilnius city and we evaluate the main commercial streets: Gedimino avenue, Didžioji street, Vokiečių street, Pilies street, Vilniaus street and Trakų street, their characteristics and business tendencies there. In 213 the main attention in Lithuanian warehouse and industrial projects market was paid to new and planned projects. Offer, vacancies, and price change rates are overviewed. Residential real estate market was distinguished for high activity and big quantity of new projects. Lithuanian market was compared to the markets of neighbouring countries, market activity reasons and future forecasts were overviewed. Sincerely Yours, Aurimas Astramskas Director Solid Real Advisors The overview has been prepared in collaboration with:

COUNTRY MACROECONOMIC REVIEW GDP. According to the figures of Lithuanian Standards Board, in 213 the main indicator of economical growth, real gross domestic product (GDP), has increased by 3.3%. It is.3% less then the growth in 212 but.1% more as it was expected in the end of 212. Such growth of GDP was due to recovering construction sector, manufacturing, and domestic consumption that was substantially improved by increased average salary and decreased unemployment rate. Increased capacity in manufacturing sector and investments made also contributed to the growth of GDP. Inflation. After increased inflation in 212, in 213 there was a further significant decrease of price level in the country and it reached 1.2%. The decrease of the rate was mainly due to external factors, as the prices of petrol and diesel, as well as the prices of food are lower than they were a year ago. It is expected that in 214 and 215 these rates should increase slightly and reach 1.6% and 2.2% accordingly. In 215 euro adoption is planned so according to the estimates of the Bank of Lithuania it could increase the inflation by.2-.3 percentage points. Unemployment. The decrease of unemployment began in 211, in 212 and 213 it decreased rapidly and by the end of the year 213 was 11.5%. Considerable impact to the decrease of unemployment was made by the decrease of long-term unemployment and the main reason for that was emigration. A stable decrease of unemployment is expected for a further two years as well: it is expected to be 1.3% in 214 and 9.3% in 215 respectively. Net exports. In 212 export was one of the main factors that influenced a lot the overall growth of country economics. But in 213 the increase of export began to shrink and by the end of the year represented only ~7% (comparing to 212). The main reasons for the decrease were fall in prices of grain and petroleum products, weak demand in foreign markets that could recover only in the second semester of 214 due to increased consumption in commercial sector, more business-friendly euro zone tax policy and banking reform mechanism. Import was growing at the same rates as export (~7%). The biggest part of the import as usual was represented by mineral products, machines and mechanical equipment and electric equipment. Real estate market. Based on the available data prepared by Centre of Registers, 213 could be distinguished by purchase and vending transactions of land plots. In general, last year in Lithuania there were around 123. real estate units transferred by purchase transactions and it is ~21.8% more than in 212. 15,% 1,% 5,%,% -5,% -1,% -15,% -2,% 12,% 1,% 8,% 6,% 4,% 2,%,% 2,% 18,% 16,% 14,% 12,% 1,% 8,% 6,% 4,% 2,%,% 4,% 3,% 2,% 1,%,% -1,% -2,% -3,% Annual change of real GDP (%) 9,8% 5,9% 2,9% 3,6% 3,3% 3,5% 4,2% 1,3% 27 28 29 21 211 212 213 214pf 215pf -14,7% Annual average inflation of HICP (%) 11,1% 5,8% 4,2% 4,1% 3,2% 2,2% 1,6% 1,2% 1,2% 27 28 29 21 211 212 213 214pf 215pf -25,2% 36,2% 29,8% 29,4% Unemployment rate (%) 17,8% 15,4% 13,7% 13,4% 11,5% 1,3% 9,3% 5,8% 4,3% 27 28 29 21 211 212 213 214pf 215pf Export and import (%) 27,4% 28,2% 12,% 9,% 7,% 7,% 6,8% 7,1% 7,5% 9,5% 29 21 211 212 213 214pf 215pf Export Eksportas Importas 4

Business centres 5

BUSINESS CENTRES MARKET Currently Vilnius, Kaunas, and Klaipėda offer to the market 665,171 sq. m.of speculative floor space for offices. Vilnius city boasts the biggest concentration of administrative premises as there are more than 13 business centres and administrative buildings. Vilnius business centres market is concentrated in 7 main zones (New City Centre [1], Verslo trikampis [2], Central Part of the City [3], Ukmergės str. [4], Ozas park [5], Žirmūnai and Šiaurės miestelis [6], Žvėrynas [7]) and currently covers around 554,799 sq. m. business centres leasable floor space. Some business centres (about 3, sq. m.) are located in individual zones of Vilnius, like Antakalnis, Lazdynai, Karoliniškės and Baltupiai. According to the floor space distribution by zone, the biggest part of leasable floor space is offered to the market in the central part of the city. It is worth noting that due to a great concentration of old administrative buildings in this part of the city, B-class offices premises dominate. Less administrative premises floor space (86,748 sq. m.) can be found in the zone of Ukmergės street. There are quite modern business centres established in the urban periphery and this means that the dominating class is B. Leasable floor space in Vilnius by zone (sq. m.), 213 68.864 41.58 Vilnius Kaunas Klaipėda 554.799 Business centres zones in Vilnius, 213 New city centre is the third zone according to the floor space of the premises offered. In this territory there are 83,128 sq. m. of leasable land, and modern A-class business centres dominate. New in the market. In 213 in the Lithuanian market of business centres Vilnius and Kaunas cities were the most active ones. Leasable floor space in Vilnius by class (sq. m.), 213 In 212 additional 2,7 sq. m. speculative floor space of administrative premises was created in Vilnius city, and in 213 additional 18.4 sq. m. floor space was offered to the market. New administrative premises were opened: A-class Baltic Hearts second stage (3,3 sq. m.), Gama centre in Ozas park (1,6 sq. m.), and administrative/warehouse building in Dariaus ir Girėno str. 42A, where 4,5 sq. m. leasable floor space for offices can be found. 9.427 31.988 6.4 45.138 86.748 83.128 185.897 New Naujasis city miesto centre centras City Centrinė center miesto dalis Ozas Ozo verslo business zonarea Ukmergės g. street Verslo trikampis Žirmūnai and Šiaurės m. Žvėrynas Kiti Others There was a market stagnation of new administrative premises in Kaunas city starting from 29 but in 213 there were two administrative projects implemented. The biggest of them is the administrative building of UAB Senukų prekybos centras where floor space covers 17, sq. m. total. It is built-to suit, it cost EUR 22.6 million, and it will be a permanent workplace for 1,1 employees. 51.34 Total supply of office space in Lithuania is 665.2 sq. m. In 213 18,4 sq. m. of office space was added in Vilnius Next year 26,715 sq. m. of office space will be added in the market Predominant class in the list of projects under development is A 6

Another implemented project is Santakos slėnis where the scope is to create and integrated scientific, study and business centre. This building with 8,467 sq. m. floor space will integrate administrative premises market as well. Projects in development. Next year there will be available even bigger quantities of leasable premises in Vilnius city. It is planned that in 214 there will be three new business centres offered to the market where leasable floor space will cover 26,715 sq. m. total, and in 215 it will be supplemented by 22,5 sq. m. It is assumed that some part of the new offer will be absorbed by increased (business development, creating new businesses, move-in of foreign companies). Increased offer of high-class floor space will have different impact to the market: in periphery zones competition will remain more or less the same as the major part of the projects are developed in the central part of the city and around it. More intensive changes should manifest in the field of lower-class administrative premises that are situated in the city centre or near it. Tenants migration is expected from these premises to the newly constructed or empty higher-class offices that are already existing. Currently UAB Avadi is implementing the refurbishment of old barracks in Šančiai district (Kaunas). It is planned that an investment of EUR 2.9 million will suffice in order to transform the ex-barracks into comfortable offices and cosy apartments. It is planned to equip administrative premises of 1,5 sq. m. total floor space and 58 apartments. Developed business centres in Lithuania, 213 Business centre Class City Owner Leasable area (sq.m) Baltic Hearts II A Vilnius ŽVC, UAB 3,3 Dariaus ir Girėno str. 42A B+ Vilnius VK Turtas, UAB 4,5 Gama B+ Vilnius Realco, UAB 1,6 Senukai administrative building B+ Kaunas YIT Kausta, UAB 17, Šančiai barracks refurbishing B Kaunas Avadi, UAB 1,5 Santakos slėnis A Kaunas Asociacija santakos slėnis 8,467 Business centres in Vilnius under development, 213 Business centre Class Leasable area (sq.m) Construction year Grand Office B+ 9,165 Q2 214 Baltic Hearts III A 3,3 Q3 214 K29 A 14,25 Q4 214 A.Goštauto str. 12A A 6,1 Q2 215 Premium A 8,4 Q2 215 Green hall 2 A 8, Q4 215 Quadrum A 46, Q1 216 In the first quarter of 214 the office market in Klaipėda will enlarge by new spaces. In the end of 213 there were finishing works executed in the cargo passenger terminal. An investment of EUR 27.3 million will increase the offer of office and warehouse premises and will ensure and effective passenger service. Nonetheless this project will have no practical impact to office market in the port city. It is assumed that administrative premises will be used for the needs of state enterprises so the offices will not be freely speculative in the market. 7

Planned projects. Currently there are a lot of planned buildings for new offices in Vilnius city. There will soon be two projects implemented: 2, sq.m. Santariškės business centre and a project developed by MG Valda in Nemenčinės pl. 4 where formerly there was the territory of Lithuanian Cinema Study. Business centre Planned projects Class City Owner Area (sq.m) Construction year Lvovo str. 15A A Vilnius MG Valda, UAB 4,21 215 VCUP business centre A Vilnius Vilniaus centrinė universalinė parduotuvė, AB 16, N/A In the second quarter of 213 Kaunas city municipality fully embraced the second stage of Technopolis (3,8 sq. m.) and allocated more than a half of million litas for this project. It is planned that the new business centre will be developed in Veiverių pl. 132. An additional administrative building will soon be implemented in the city, in Savanorių Avenue. In the beginning of 214 Mitnija construction company has planned to start the construction of office building of 3,6 sq. m. floor space (private order). In the project a great attention will be paid at energy-efficiency of the building. Currently there are no significant projects planned in the other Lithuanian towns. Due to low office demand and low leasing prices the development of new business centres in these towns is economically inefficient. The priorities of local companies are as low as possible leasing price so the companies prefer inexpensive and old administrative buildings. Meanwhile bigger companies and foreign capital companies most often operate in the capital city. Vacancies. In the end of the year the owners of administrative premises in Vilnius city were pleased by the rates of vacancies. During three years the demand increased by 5.9 percentage point despite the fact that every year new leasable floor space was added to the market of business centres: 2,7 sq. m. in 212 and 18,4 sq. m. in 213. Velga B+ Vilnius Nemenčinės highway 4 Vilniaus vartai development Santariškės business centre Mikrovisatos valda Geležinio vilko projektas, UAB 39, 215 B Vilnius MG Valda, UAB 26, 215 A Vilnius Prospera Vilnius, UAB 12, 216 B Vilnius Realinija, UAB 2, 215 B+ Kaunas Mikrovisatos valda, UAB 3,6 215 Technopolis II B+ Kaunas Technopolis, Všį 3,8 214 S.Neries administrative building B Klaipėda Studija 33, UAB N/A N/A Pionierius A Klaipėda Force Palace, UAB 6,24 N/A Helios city A, B B+ Klaipėda Stanvara, UAB 25,917 216 Dynamics of business centres vacancies in Vilnius (%) 12% 1% 8% 6% 4% 11,% 1,2% 6,1% Administrative premises vacancies in Vilnius are most likely to increase slightly despite the forecasted increase of the market and the inability to absorb an intensive increase of administrative leasable floor offer. In the next two years 49,215 sq. m. of new leasable floor space for offices will be added to the market and this makes 8.8% of the present leasable floor for offices in Vilnius city. When analyzing the period of 213 you could notice a remarkable change in the market of B-class administrative premises. During the second half of the year 213 office vacancy rate has decreased by 5.2 percentage points. A slightly smaller change were noticeable in the market of B+ class business centres where the vacancy rate was increased during the first and last quarter of the year 213. These changes were due to the opening of Gama, a B+ class business centre in the fourth quarter of the year and the finish of construction works in the mixed premises in Dariaus ir Girėno str. 42A in the last quarter of the year. Increased leasable floor space not always is satisfied rapidly by the market and this causes the changes in rates. 14 12 1 2% % 8 6 4 2 6,4 5,2 211 m. 212 m. 213 m. Business centres vacancies in Vilnius by class (%), 213 11,8 12 1,8 5,8 5,8 3,5 3,7 6,6 6 3,5 I qketv. II qketv. III qketv. IV ketv. q A B+ B 8

A-class business centre market showed low dynamics. In the first quarter of the year 213 Baltic Hearts second stage was opened and additional 3,3 sq. m. of new leasable floor space were added too the market. This building was already leased fully when finished. Currently the major part of the business centre is occupied by financial services centre of Danske Bank group. As for annual vacancy changes by business centre zones, biggest changes could be noticed in Žvėrynas district (decrease by 12 percentage points) and in Ukmergės street (decrease by 9.8 proc. percentage points). The changes in Žvėrynas zone were influenced by the growth of market demand where buildings with 15% and 25% vacancy level were leased. In Ukmergės street major vacancy decrease are noticed in the business centres that are a bit further from the city centre: MB Projektai (decrease by 27 percentage points), Trio (decrease by 2 percentage points), Orange Office (decrease by 15 percentage points). The occupancy of the rest of business centres in the Ukmergės str. zone is up to 9% and more. Kaunas city for the second consecutive year boasts high vacancy changes. In 212 vacancy rate was around 4% and in one year it increased up to 5.4%. As there is no demand for new administrative premises in the market developers do not start any new projects and the market of administrative premises in Kaunas can be called as stagnant. While in Klaipėda city vacancy changes were far more active. There was an insolvency proceedings opened for Neapolis, one of the most modern business centres and their rights to sign new leasing or purchase contracts were restricted. Vacancy rate decreased (from 2% to 16.2%) due to the decreased offer of business centres. Prices. Lease prices of highest A class administrative premises in Vilnius reaches 13 17.4 EUR/sq. m. while you can lease a lower B+ class office for 1.1 13 EUR/sq. m. Lease prices of B class offices currently range from 7.2 to 1.1 EUR/sq. m. Comparing to year 212, office prices increased 7.5% average in one year. A further price increase is likely and it could be a bit lowered next year as the offer will increase substantially. Decrease in lease prices is possible only in separate cases and in old administrative buildings. In Kaunas and Klaipėda where office supply is scarce, administrative premises can be divided into two categories: higher-class and lower-class. Lease price of higher-class administrative premises in Kaunas ranges between 8.7 11.6 EUR/sq. m. and lease price of lower-class ranges between 5.8 7.3 EUR/sq. m. While in Klaipėda city price difference is slightly bigger. A higher-class office can be leased for 7.3 1.1 EUR/sq. m. and a lower-class one for 4.4 7.3 EUR/sq. m. Business centres vacancies in Vilnius by zone (%), 213 11,6% 12,% 7,5% 7,2% 5,2% 3,5% 1,1% 2,1% 1,6% 2,%,%,% Vacancies in the biggest Lithuanian cities (%) Tenant Business centre Area (sq.m) National Commission for Energy Control Ulonų business centre 1, and Prices VASPVT Jeruzalės str. 21 2, CVPA Pieštukas 2, Danske bank Baltic Hearts II 2,2 Adform Quadrum 2,7 (from 215) 2 18 16 14 12 1 8 6 4 2 25 2 15 1 3% 25% 2% 15% 1% 5 5% % Ozo bussines zone Atea Baltic DnB bank New NMC city centre 2,8 9,8 7,5 Verslo trikampis Center 212 m. 213 m. 2 1,2 4 Biggest leasing transaction of offices in Vilnius (sq. m.), 213 Atea baltic (Build-to-suit) Quadrum Žirmūnai and Šiaurės miestelis 211 212 213 25,% 15,2% Žvėrynas Ukmergės steet 16,2 6,1 5,4 Office leasing prices (EUR/sq.m.), 213 Vilnius Kaunas Klaipėda 6,5 (from 214) 1, (from 215) A B+ B Higher Lower Higher Lower Vilnius Kaunas Klaipėda 9

1 Shopping centres

SHOPPING CENTRES MARKET Common trends. As domestic consumption in Lithuania grows higher and retail trade rates for the third consecutive year get higher and higher, real estate owners and tenants are happy as well for better operating results. Offer of leasable floor space in the main shopping centres exceeds the demand very much so there already are substantial sector investments in the newly projects in the biggest cities of the country. Shopping centres and shopping parks under development. In 214 Domus Pro shopping park (12, sq. m. of floor space) in Vilnius (Ukmergės street) and Luizė shopping centre (6,2 sq. m. of floor space) in Klaipėda will be added in the Lithuanian market of shopping centres. The main tenant of the both newly implemented projects is Rimi Hypermarket. Furthermore, in 214 a new store by retail chain Prisma will be opened (1, sq. m. of floor space) where other tenants may claim as well for leasable floor space. Development trends. In 213 one of the most important events in commercial market was the opening of IKEA shopping centre (26, sq. m. of floor space) in Vilnius. This is the first shopping centre of Swedish retail chain in Lithuania. It was opened on 14th August. There is a developmental trend of shopping centres in the periphery of Vilnius city: Domus Pro (Ukmergės street), IKEA (near southern city bypass), Prisma (near western city bypass). Increasing turnovers of shopping centres. In 213 total turnover of shopping centres increased by ~1% (in 212 it was ~7%). Higher turnover was achieved by shopping centres in the capital city that attracted most new brands (Europa, Panorama, Akropolis); the increase of the turnover of these shopping centres was mainly due to clothing and food sectors. Name Shopping centres under development City Floor space (sq.m.) Main tenant End of construction Domus Pro Vilnius 12, Rimi Hypermarket 214 Prisma Vilnius 1, Prisma 214 Luizė Klaipėda 6,2 Rimi Hypermarket 214 Planned shopping centres Shopping centre City Comments Žirnių str. 56 Vilnius Shopping centre of ~18,8 sq. m. of total floor space should be constructed near IKEA that was opened in 213. Developer: Contestus projektai. Prospective end of construction works is the 1st quarter of 215. Mega (II stage) Kaunas In a shopping centre of 22, sq. m. of total floor space commercial premises should dominate but a certain part of it will be designated for offices, and entertainment and leisure zones. Owner: Baltic Shoping Centers Senukai Šiauliai The new shopping centre that is planned to be constructed in Šiauliai will be the biggest shopping centre for construction, refinishing and domestic goods in the town. Renovated shopping centres, 213 Shopping centre / Shopping park City Floor space (sq.m.) Urmas Kaunas 7, VCUP Vilnius 26, Gedimino 9 Vilnius 16,5 EUROPA Vilnius 22,611 Shopping centres renovated in 213. Europa. This shopping centre expressed in a clearly manner its orientation to business clients and the clients from middle-income and higher-income grou ps. G9. Renovation that cost around EUR 5.8 million included trade mark update, reconstruction of premises, and preparation of new tenants portfolio. One of the most important changes is the new tenant H&M which will cover 3 floors of the shopping centre in 214. Berry. The brand formerly called SBA idėjos namams was updated to integrate the chain better in the international market. Shopping centres that are currently under development make 28,2 sq. m. of total floor space Maxima allocated the biggest amounts for its development, EUR 25.2 million Fresh Market opened the biggest number of shopping places in the country When compared to year 212, lease prices increased by 1% 11

New brands in 213. The biggest number of international brands appeared in clothing and cosmetics sectors. The main part of them started to operate in Panorama and Akropolis, shopping centres in Vilnius. We can distinguish Hennes & Mauritz (H&M), one of the biggest clothing retail chains in the world. The first shop was in the end of the year 213, in Akropolis in Vilnius and Klaipėda. Meanwhile in 214 it is planned to open more stores, this time in Panorama, Ozas, Gedimino 9 (shopping centres in Vilnius), Akropolis in Šiauliai and Babilonas in Panevėžys. Due to fact that this tenant entered in Lithuanian market the reconstruction of Babilonas shopping centre will be held (the last quarter of the year 214). The main tenant will be changed there as well, as food store Norfa will be changed by Hyper Rimi. New car and motorcycle showrooms. In 213 Porche cars and Harley Davidson motorcycles were introduced in Lithuanian market. The right to represent Porche is owned by international group of companies Modus grupė (BMW, Mini Cooper, Maserati). Temporary Porche car showroom was established in the corporate seat in Ozo street, Vilnius. Meanwhile it is expected that the main showroom will be constructed in 214 at the junction of Southern bypass and Dariaus ir Girėno street. Harley Davidson showroom and service are established in Vilnius, Užupis district, Paplaujos street. 4 3 2 1 New brands in the shopping centres, 213 Brand H&M (Hennes & Mauritz) NoLo OMBRE Desigual Premium M A C (Make-up Art Cosmetics) Cortefiel Minimood Pedro del Hierro Springfield Women secret Shopping centre Akropolis (Vilnius) Akropolis (Vilnius) Akropolis (Vilnius) Akropolis (Klaipėda) Europa Europa Panorama Panorama Panorama Panorama Panorama Development of retail chains in 213, new shopping centres in the major cities Vilnius Kaunas Klaipėda Šiauliai Panevėžys 12 Development of retail chains. The year 213 for retail chains was the stage of transformation and development. Maxima in 213 enlarged by 9 stores and 4 ones were reconstructed. IKI this year did not have any development of new stores (3 new stores were opened in the country) but 38 stores were reconstructed and one regional bakery for and bread flour confectionary was opened in Klaipėda (investment of EUR ~1.5 million). Rimi in 213 mainly opened new but major (of 2.5 sq. m. floor space and more) stores. In 213 there were 3 Rimi Hypermarket opened in Lithuania. Aibė, alliance of commercial enterprises showed a country-wide development. In 213 15 new enterprises joined the alliance (Express Market among them). New stores were opened in the biggest cities of the country: 7 ones of Aibė and 5 ones of Express Market. Fresh Market is a retail chain that opened the biggest number of retail outlets in the biggest cities of the country. There were 12 stores opened in total and the investments reached around EUR ~4.92 million. This retail chain has started to operate in Lithuanian market only in 213. The shareholders of the chain are Ipsun wholesale company and investors related to the shareholders of Euroopt, Belarusian retail chain which is the largest one at the level of the lowest price concept. AIBĖ Express Market Fresh Market IKI KUBAS Maxima Norfa Rimi Investments of the shopping centres for development and reconstruction (LTL million / EUR), 213 Mln. Lt 1, 9, 8, 7, 6, 5, 4, 3, 2, 1,, Freshmarket Maxima Norfa Iki Rimi Mln. EUR 3, 25, 2, 15, 1, 5,,

Vacancies. Vacancy rates of shopping centres in the major Lithuanian cities continue to decrease. During the crisis it exceeded 5% but currently it is up to 2%. Due to the comfortable vacancy rate the owners of the shopping centres can allocate more attention to the improvement of tenants portfolio in order to attract more clients. Shopping centres vacancies (%), 213 1,8% 1,9% 1% Prices. Starting from 211 leasing prices in shopping centres began to increase and this continued both in 212 and 213. In recent years the increase was negligible and compared to 212 prices have grown by ~1%. Vilnius Kaunas Klaipėda In the context of the major Lithuanian cities the capital city still remains the leader in leasing prices. The largest gap between the prices is apparent when leasing small premises where the floor space is up to 1 sq. m. 35 3 25 2 15 1 5 Leasing prices in shopping centres and parks in Vilnius (EUR/sq.m.), 213 up to 1 sq.m 1-3 sq.m Large units up to 1 sq.m 1-3 sq.m Large units 35 3 25 2 15 1 5 Leasing prices in shopping centres in the major Lithuanian cities (EUR/sq.m.), 213 up to 1 1-3 sq.m sq.m Large units up to 1 1-3 sq.m sq.m Large units up to 1 1-3 sq.m sq.m Large units Shopping centres Shopping parks Vilnius Kaunas Klaipėda 13

Street retail

STREET RETAIL Common trends. In the central part of Vilnius city there are more than 6, sq. m. of commercial floor space identified. The most prestigious Old town premises are included in the so called pedestrian walk circle. Most popular pedestrian route in Vilnius Prices. Leasing prices began to increase slightly in 212 and in 213 they have risen even more. Leasing price in the main commercial streets increased by ~15-2%. Currently leasing price of typical commercial (~1 sq. m. of floor space) ranges between 26 and 43.5 EUR/sq. m. In Didžioji street there are premises mainly covering 7-95 sq. m., in Vokiečių street they mainly cover 85-11 sq. m., in the beginning of Gedimino avenue the premises mainly cover 12-25 sq. m., and in Vilniaus street you can find commercial premises of 12-23 sq. m. of floor space. In the part of Gedimino avenue starting from Lukiškių square and up to the Parliament Palace commercial premises can cost 11.6-14.5 EUR/sq. m., leasing price of the premises in the beginning of Gedimino avenue and near the Cathedral square can range up to 43.5 EUR/sq. m. Leasing price of the premises in the central part of Kaunas (Kumelių str., Karaliaus Mindaugo pr., Laisvės al., Pilies str., Vilniaus str., Gruodžio str.) ranges from ~8.7 to 2.3 EUR/sq. m., and in Klaipėda (Old town: Herkaus Manto str., Kepėjų str., Tiltų str., Turgaus str., Jono str., Žvejų str., Kurpių str.) it can range up to ~5.8-17.4 EUR/sq. m. In Šiauliai (central streets: Varpo str., Vilniaus str., Višinskio str., Vytauto str., Žemaitės str.) leasing of the premises can cost up to 3.5-11 EUR/sq. m., and in Panevėžys (central streets: Laisvės ave., Elektros str., J.Basanavičiaus str.) leasing price of the premises is ~4.4-7.3 EUR/sq. m. Vacancies. Vacancy rates in the main street of Vilnius can range from 2% to 6%. Very often the reason of the street vacancy is the specific features of the premises and not the place: condition, plans, volume, and expectations about leasing price. In 213 commercial streets were most often populated by catering companies, small boutique, and shops of luxury goods. Occupancy in the streets of Vilnius Old town (%), 213 1% 98% 96% 94% 92% 9% 88% 86% 84% 82% 96% 96% 95% 94% 92% 95% 98% 98% 89% 89% 88% Gedimino pr. ave. Pilies g. str. Didžioji str. g. Vokiečių str. g. Trakų str. g. Vilniaus g. str. 94% 212 213 Leasing prices of commercial and catering premises in the main Lithuanian cities (EUR/sq. m.), 213 Leasing prices of commercial and catering premises in the main streets of Vilnius (EUR/sq. m.), 213 7 6 5 4 3 2 1 5 45 4 35 3 25 2 15 1 5 Kaunas Klaipėda Panevėžys Šiauliai Vilnius Didžioji str. Gedimino ave. Pilies str. Vilniaus str. Vokiečių str. Currently in the central part of the city there are 6, sq. m. of commercial floor space In one year leasing price increased by 15-2% Vokiečių str. boasts the highest occupancy in Vilnius The biggest number of new brands were introduced in Vilniaus str. 15

New brands in Vilnius Old town. In 213 there was a slight recovery in the market of commercial, shopping and catering premises as many locally significant projects were added to the market where catering companies participated most actively. More and more fast food restaurants were introduced in the central streets of the capital city. In 213 Drama Burger and Senoji Kibininė were opened. In 214 a new fast food snack bar chain Subway should be opened in Vokiečių street. Last year new higher-class restaurants were added to the premises market in the Old town: Glory Bar By Stikliai (Aušros Vartų str.), Imperial Restaurant (Subačiaus str.), Uzbekistanas (Vilniaus str.), and V4 Vilnius (Vilniaus str.). Changes in the main streets of Vilnius Didžioji street In 214 instead of Ermenegildo Zegna a shop of new clothing brand Burberry should be opened In 213 a shop of new clothing brand Dress Code was opened In 213 m. instead of Basel Boutique new clothing showroom was opened for a short time and later new jewelry brand Frey Wille will move in these premises New restaurant Cafe Montmartre will be opened in the premises of former restaurant Harmonija Pilies street New flea shop 6 blusos Vokiečių street New Italian clothing brand Allure Boutique New perfumery shop Private Label. Rėminimo studija moved nearby New yarns shop Tiulio Fėja Čili catering chain was updated: new brands Forest and Soya New Korean restaurant Korean Paste In 214 Subway should move here Vilniaus street Restaurant Barbazzar Restaurant Lizzaran Restaurant Uzbekistanas Restaurant Sarkozy Restaurant Vanille Lounge Bar and nightclub V4 Vilnius Bar and nightclub Cash Lounge Bar Gedimino street Fast food restaurant KFC Fast food restaurant Drama Burger Cafe and bakery Kavakuki Senoji kibininė catering and commercial outlet Clothing boutique Urpėja Trakų street Meat products shop Kadaginė Lightning and interior salon Ferola Boutique KING & MOUSE whiskey bar 16

New brands in Vilnius Old town 1. Sarkozy 1. KFC 19. Ferola vintage 28. Taste jnk & DD s place 2. Cash lounge bar 11. Senoji kibininė 2. Kostiumų centras 29. Tulio fėja 3. Vanile lounge 12. Uzbekistanas 21. Kunstkamera 3. E&M ties 4. Barbazzar 13. The private club 22. Private label 31. Karmelitai 5. Lizzarran 14. Forest ir Soya 23. Allure boutique 32. Glory bar 6. V4 Vilnius 15. Drama burger 24. Drabužių salonas 33. Dress code, Monmartre 7. Green oasis 16. Kavaliukai 25. Bus Berry 34. Rožės aukso namai 8. Chaika 17. King & Mouse 26. Springs 35. Sweet & Sour bar 9. Maghrib 18. Kadaginė 27. Tete a tete 17

Warehouse

WAREHOUSE PREMISES MARKET Lithuanian market of warehouse premises is highly concentrated around the three biggest cities of the country: Vilnius (538,78 sq. m.), Kaunas (161,841 sq. m.), Klaipėda (96,66 sq. m.), and Panevėžys (2,59 sq. m.). The capital city boasts the most modern and the biggest floor space in warehouse premises as well as big number of new projects under development. According to the volume of the building, projects of 15, sq. m. and more floor space dominate in new and old warehouse premises, and that makes more than 54.3% of the supply. Then there are projects of 1,-15, sq. m. floor space (21.5% of all the warehouse premises). However the trends are changing and the floor space in new projects under development quite often do not exceed 1, sq. m. Compared to the present situation, and these projects do not have large leasable floor space. Major part of the new projects was developed near trunk road network. There are two highways where the biggest number of new projects was developed: the road connecting Vilnius and Panevėžys (marked as A2) and motorway A3 connecting Vilnius and Minsk. Implemented projects. In 213 not-so-much new, speculative warehouse projects were implemented. One building of mixed use was finished in Kirtimai district, in Dariaus ir Girėno str. 42A. There are 1,78 sq. m. of floor space for warehouse premises in the building. 6. 5. 4. 3. 2. 1. Supply of warehouse premises (sq.m.), 213 26 27 28 29 21 211 212 213 Distribution of the supply of warehouse premises by floor space, 213 54,3% 6,7% 17,5% 21,5% 2 Vilnius Kaunas Klaipėda Panevežys < 5. msq.m 2 5. - 1. msq.m 2 1. - 15. msq.m 2 >15. msq.m In other Lithuanian cities there were no implemented speculative logistics and warehouse centres. Developed projects. In 214 a speculative warehouse premises 22,5 sq. m. of floor space will be added in the market in Vilnius. It is planned to finish the construction of Transekspedicija logistics centre (14, sq. m. of floor space) and to open a new logistics centre (8,5 sq. m. of floor space) constructed by Arvydo paslaugos. In August when the symbolic capsule was dug into the principal pillars, the first stage of Vilnius public logistics centre was started to implement. In 214 it will be added to the offer of modern logistics centres in the county of Vilnius. In Kaunas city Baltic Logistics Solutions company began to construct a new analogous warehouse building (7, sq. m.) near the present logistics complex in Alšėnai eldership. The company already possesses warehouse premises of 5, sq. m. of floor space and extends successfully its activity in all the Baltic States. Other projects of warehouse premises are being developed for own use and will not be available for other players in the market. These projects boast high geographical extent and are constructed in the major Lithuanian cities or near the main trunk roads. Total floor space of warehouse premises in Lithuania covers 817,9 sq. m. The major part of the market is occupied by premises bigger than 15, sq. m. The lowest vacancy rate is in Kaunas (1.7%) In 214 22,5 sq. m. of floor space will be added to the market in Vilnius 19

Projects under development Logistics centre Type City/town Owner Area (sq.m. ) Construction year Transekspedicija Speculative Vilnius Transekspedicija, UAB 14, 214 Arvydo paslaugos Speculative Vilnius Arvydos paslaugos, UAB 8,5 214 Public logistics centre Speculative Vilnius Republic of Lithuania N/A N/A Vilnius intermodal terminal Built-to-suit Vilnius Lietuvos geležinkeliai, AB 7, 215 Hormann Lietuva Built-to-suit Vilnius Hormann Lietuva, UAB 5, 214 Baltic Logistic Solutions Built-to-suit Kaunas Baltic Logistic Solutions, UAB 7, 214 Sanitex Built-to-suit Kaunas Sanitex, UAB 16, 214 Osama, UAB Built-to-suit Kaunas Osama, UAB 2, 214 Klaipėdos Ad Rem Lez Speculative Klaipėda Ad Rem Lez, UAB 8,2 214 Klasco bulk fertilizers terminal Built-to-suit Klaipėda Klasco, UAB 9, 214 Vlantana Built-to-suit Klaipėda Vlantana, UAB 15, 215 Wurth Lithuania Built-to-suit Ukmergė Wurth Lietuva, UAB 5,7 214 Siramis Built-to-suit Panevežys Siramis, UAB N/A 214 Planned projects. Major part of the projects are developed for own purposes and in the nearest future warehouse premises of speculative floor space should increase only in Klaipėda city. Next year there are plans to develop many specialised warehouses as UAB Gintarinė vaistinė plans to invest EUR 6.4 million into a new logistics centre where the most modern line in the Baltic States for collecting medicines will be implemented Lietuvos paštas (Lithuanian Post) has planned to lease new logistics centre in Kaunas (currently under construction) for a period of 15 years where sorting of letters and parcels will be performed. UAB Intersurgical already allocated investments for a fully automatic logistics centre for the distribution of respiratory equipment and DHL courier company is considering about the construction of shipment terminal in the territory of Vilnius airport. Logistics centre Type Owner Region Rhenus svoris Gintarinė vaistinė National logistics centre of Lithuanian Post Klaipėda public logistics centre (2) Intersurgical Planned projects Built-to-suit Built-to-suit Built-to-suit Speculative Built-to-suit Rhenus svoris, UAB Gintarinė vaistinė, UAB Lietuvos paštas, UAB Lietuvos geležinkeliai, AB Intersurgical, UAB Area (sq.m.) Vilnius 15, Kaunas 8,4 Kaunas 1, Klaipėda 8,5 Pabradė N/A 2

Vacancy. Talking about vacancy rates of warehouse Vacancy of warehouse premises in the major Lithuanian cities (%) premises there is a clear trend of vacancy decrease. This 16% indicates growing needs for warehouse premises and encourages investing in the development of warehouse market. 14% 12% Starting from 29 vacancy rate in Vilnius city was decreasing and reached 4.5% meanwhile in Kaunas speculative floor space in warehouse premises did not 1% 8% 6% Vilnius Kaunas Klaipėda increase for a certain period of time and this caused a very low vacancy of premises, 1.7%. In Klaipėda city the number of vacant premises decreased (this is a trend) and in the end of 213. it reached 3.8%. 4% 2% % 27 28 29 21 211 212 213 214 Prices. Starting from 21 you can notice a new economical cycle when warehouse prices in the biggest Lithuanian cities show a stable growth. Essential factor influencing positive changes in prices is the fact that professional developers operate in the market of speculative premises. New speculative warehouse premises are started to develop only if there is the need for them and when a least one part of tenants portfolio is already formed. Built-to-suit projects decrease the total demand and cause the increase of the prices in the market. Talking about the prices in the biggest Lithuanian cities in 213 Vilnius still is the leader of the leasing prices of modern and old warehouse premises. Leasing price of new warehouse premises (built later than the year 2) in Vilnius ranges between 3.6 and 4.6 EUR/sq. m., in Kaunas 3.5-4.2 EUR/sq. m., and in Klaipėda 3.2-4.2 EUR/sq. m. Leasing price of old warehouse premises in Vilnius ranges between 2 and 2.9 EUR/sq. m., in Kaunas and in Klaipėda leasing prices are up to 1.7-2.6 EUR/sq. m. and 1.6-2.5 EUR/sq. m. accordingly. Leasing prices of modern and old logistics centres (EUR/sq.m.), 213 Price dynamics of modern logistics centres (EUR/sq.m.) 5 6 4,5 4 5 3,5 3 4 2,5 3 2 1,5 2 1,5 1 Vilnius Kaunas Klaipėda Vilnius Kaunas Klaipėda Modern Old Vilnius Kaunas Klaipeda Vilnius Kaunas Klaipeda Vilnius Kaunas Klaipeda Vilnius Kaunas Klaipeda Vilnius Kaunas Klaipeda Vilnius Kaunas Klaipeda Vilnius Kaunas Klaipeda 27 28 29 21 211 212 213 21

Investment transactions

REAL ESTATE INVESTMENT TRANSACTIONS Real estate investment transaction is the purchasing, management, leasing or vending of a real estate unit for the purpose of providing a return. Real estate improvement also considered as real estate developing is regarded one of categories of investments into real estate as well. In Lithuania a transaction is regarded as an investment one if its amount exceeds EUR 1.6 million. The year was successful for the Baltic States as the total amount Investment transactions in the Baltic States (million EUR), 213 of investment transactions into real estate reached the limit of EUR 478 million. In the long term Estonia remains the leader of investment transactions in the Baltic States as there are twice as investments as in Lithuania and 4,5 times more investments as in 172 166 Lietuva Lithuania Latvia. Estija Estonia In 213 the amount of investment transactions into real estate Latvija Latvia reached a record level in Lithuania. This year the volume was 29% 14 higher than both in 211 and in 212. This activity of investments was due to the fact that some of the real estate funds finish their Volumes of investment transactions in Lithuania operation in Lithuania and sell out the property owned. (million EUR) Administrative premises. In the first part of the year a Finnishcapital 18 166 real estate company Technopolis purchased three business 16 14 centres (Alfa, Beta, and Gama) in Ozas park and it cost EUR 6.9 12 million; therefore a record number of investment transactions into 1 real estate was predicted. This transaction was not a single one in 8 71,3 the market of administrative premises. BPT Asset Management 6 sold a business centre in A. Goštauto str. 4 (4, sq. m. of floor 4 42,6 space) for a private investor from Russia. 2 Investments into administrative premises become more attractive due to constantly decreasing vacancies and increasing leasing 211 212 213 prices. This encouraged Darius Nedzinskas, the sole shareholder of UAB Danhaus LT and the member of former VP group, to purchase the company LPVP Clinet-1 from Lords LB Asset Management as the company LPVP Clinet-1 owns an A-class business centre in Saltoniškių str. 2 that is fully ooccupied by the tenants. The investment amounts EUR 16.2 million. Next year investment transactions into administrative premises should give way to the investment transactions into other type of premises. It is expected that highly increased offer could affect negatively the profitability of such type of premises. Investment transactions in Lithuania Purchaser Vendor Object Type Technopolis Lietuva, UAB Icor, UAB Alfa, Beta, Gama Business centre Private investor BPT Secura A/S Goštauto str. 4 Business centre Danhaus LT, UAB Lords LB Asset Management Saltoniškių str. 2 Business centre Lords LB Baltic Fund III SMI Lietuva, UAB 1 % of shares Shopping centre BPT Secura A/S TK Development Lietuva, UAB Domus Pro Shopping centre Capital Mill BPT Secura A/S Žarijų logistics centre Logistics centre The biggest transaction of 213 in Lithuania was worth EUR 6.9 million Annual change of investment transactions is EUR 13.5 million 6% of investments are allocated for administrative premises Profitability of the investments in Vilnius city ranges around 7-9% 23

Commerce. There are lots of changes in the commercial market as well. Lords LB Baltic Fund III have purchased 1% of shares of SMI Lietuva and of the companies owned by it. Thereby Lords has taken in hand the ownership of 8 shopping centres in Lithuania and Latvia. Meanwhile BPT investment group has purchased Domus Pro shopping centre (yet under construction) from TK Development real estate company. It is planned that the first stage (7,5 sq. m. of floor space) will be opened in Spring of 214. Currently the occupancy of the shopping centre amounts 79%. Logistics centres. Investors did not forget logistics centres. An investment transaction was made between BPT Secura A/S and Capital Mill, a private-capital Estonian commercial real estate fund. BPT sold Žarijų logistics centre (constructed in 26, 14, sq. m. of floor space) that was fully leased at the moment of the transaction. In conclusion, higher activity of the transactions executed was due to the attractive return on investment. In 213 profitability of the investments in the capital city ranged between 7 and 9% while in other cities it was even higher. It is expected that in the future profitability will increase together with the growing market so we can expect a higher number of investments. Distribution of investment transactions (%), 213 Potential investment transactions in 214 Object Owner Floor space (sq.m.) PC Europa Baltic Property Trust Secura 22,611 Šeimyniškių business centre Baltic Property Trust Secura 3,266 Warehouse premises (present office of Onninen) Baltic Property Trust Secura 2,857 A.Vivulskio str. 7 Used by the insolvency administrator of Snoras 7,65 North star MG Valda 19,874 12% 1% 8% 3% 1% Office Biuro premises patalpos 6% Prekybinės patalpos Commercial premises Sandėliavimo patalpos Warehouse premises Profitability of commercial premises (%), 213 6% 4% 2% % Vilnius Kaunas Klaipeda Šiauliai Panevežys 24

Residential real estate

RESIDENTIAL REAL ESTATE Baltic States. A slightly higher activity of the market of residential real estate can be noticed in the Baltic States. This is indicated by increasing number of transactions and the number of issued housing loans. Estonians not only are the leaders in leasing but also take the greatest amounts as loans. In 213 an average sum for a housing loan in Estonia reached EUR 48.7 thousand, in Lithuania it was EUR 44.9 thousand, meanwhile Latvians were the most modest ones and took EUR 42.9 thousand as an average loan. Estonian citizens great intention to lease is based on very favourable conditions for housing loans. If you want to take a housing loan in Lithuania you have to own at least 15% of transaction amount meanwhile in Estonia banks tend to fund the whole amount. From the perspective of real estate purchasers in the Baltic States, Lithuanians are distinguished as the most demanding ones. The residents of our country take the first place in the Baltic States when purchasing new houses and try to purchase a bigger house than the citizens of neighbouring countries. Meanwhile the needs of Latvians and Estonians are quite similar. Between them more Latvians purchase new houses and Estonians prefer a little bit bigger houses. Activity of Lithuanian market. In 213 as in 212 positive trends were visible in the market in respect of the number of the transactions and the prices. According to the data of Centre for national Records, annual turnover of real estate market reached EUR 956 million. Number of transferred real estate units exceeds 123 thousand and this is 21.8% more than in 212 and almost reaches the rate before the crisis (in 28). Monthly average of transactions executed makes 2,4 for apartments and 75 for houses. A very high activity was noticed when transferring land plots and the number of such transactions increased by 24.7% compared to 212. A record number of land plot transactions was registered in December when there were more than 1 thousand transactions executed in the market. This increase of activity was due to two factors: in 212 state land purchase was very high and this year they participated in secondary market; in 214 burdensome legislation will enter into force for purchasing agricultural land. These changes indicate that starting from the 1st January 214 related persons could not purchase more than 5 ha of agricultural land. You can notice also the activity of the market of the transactions of purchasing apartments in apartments blocks as there were 24,8% more such transactions than last year. 9.8% more detached houses were purchased and the purchase of other type of real estate increased by 11.5%. More than a half of these transactions were executed when purchasing house in Vilnius city. Annual turnover of a residential real estate unit ranged around EUR 956 million 31% of purchase transactions by natural persons are funded by banks 7 6 5 4 3 2 1 Average floor space of apartment (sq. m.), 213 65 purchased, sq. m. Ratio of purchased new apartments and old buildings in the Baltic States (%), 213 16% 14% 14% 12% 1% 1% 8% 8% 6% 4% 2% % Lithuania Lietuva Latvija Latvia Estonia Estija Number of objects transferred in Lithuania, by type, 213 11.4 28.6 8. 7. 6. 5. 4. 3. 2. 1. 13.1 Žemės Land plots sklypai 7. Butai Apartments daugiabučiuose in namuose apartments blocks Individualūs Detached namai houses Kitos Other rūšies type of real nekilnojamieji estate daiktai Dynamics of transactions by unit, 212-213 Projects developed in 213 offers 2,4 apartments to the market 5 52 Lithuania Latvia Estonia Lietuva Latvija Estija 212 213 Žemės Land plots sklypai Butai Apartments daugiabučiuose in apartments blocks Individualūs Detached houses namai Kitos Other rūšies type of real estate Economic class apartments are the most popular in the market 26

This activity of the market is due to three essential reasons: 1. More stable economical situation of the country and very favourable conditions for housing loans. It is observed that these reasons encouraged the residents that lease out a house to purchase own assets. In line with the recent market conditions the price when leasing an apartment is the same or even higher than a monthly bank payment for a housing loan. 2. Low interest rates encourage the residents to find alternative methods for taking advantage of their money. Furthermore you can get 5-6% of annual return on investment of residential real estate in Vilnius. 3. Activity of foreign citizens (mainly Russians and Belarusians) in the market of residential real estate. Last year our neighbours from the East were very active to purchase apartments in the capital city and in smaller resort towns. Essential reason for that is the opportunity to cross Schengen zone without any disturbances. Market of housing loans. Some time ago funding of banks and other credit institutions was quite low but now it is increasing. In 213 31% of apartment purchase transactions by natural persons were funded by credit institutions. That makes 3.9 percentage points more than a year ago. There were 17% transactions funded by banks in the housing market and this is an increase by 2.3 percentage points compared to the last year. Better conditions for crediting and lower interest rate impacts directly the activity of the market of residential real estate. During the period of crisis banks were decreasing interest rate all the time and thus encouraged the need to take a loan. Currently interest rate of housing loans is the lowest (if you take in mind the whole history) so a higher activity of purchasing one s own house is expected in the market. In 21 the number of loans issued was very low but up to 213 there was a constant grow. Last year 55 million housing loans were issued and this makes 25% more than in 212. Major part of loan stock in the turnover of residential real estate indicates that the residents have lower and lower financial burden if they want to purchase their own house. Behaviour of house prices and number of transactions, 23-213 K, units Tūkst. vnt. Procentai Percent 1 5 9 4 8 3 7 2 6 5 1 4 3-1 2-2 1-3 23 24 25 26 27 28 29 21 211 212 213 First I ketv. quarter Second II ketv. quarter Third III ketv. quarter Fourth IV ketv. quarter Annual Būsto kainų change metinis pokytis of house (skalė dešinėje) prices (scale on the right) Source: SE Centre of Registers Dependency of residential real estate turnover and interest rate, 211-213 1,2 1,,8,6,4,2, Part of loan stock in residential real estate market (%), 211-213 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % EUR million 29 21 211 212 213 Residential real estate turnover (EUR million) Annual interest rate of purchasing a house (%) 211 212 213 Apartment sales by class (%), 213 pct. 1 8 6 4 2 Residential real estate turnover (EUR million) Number of house loans issued (EUR million) Implemented projects in Vilnius. This year 26 projects of apartment blocks were implemented in Vilnius and developers sell them directly. It has to be noted that the offer of such apartments has grown by 3% in one year. Projects developed in 213 offer 2,4 apartments and 2,12 of them (66%) already are reserved or purchased. This means that the market is active and the need for new houses is positive. 36% 4% 6% Ekonominė Economy Average Vidutinė Prestižinė Prestigious 27

Economy-class apartments dominate and they make around 6% of all the property units on sale. High-class apartments make only few percents and currently there is a lack of such type of apartments in the market. Small economy-class apartments (of 1-2 rooms) are the most popular ones and they are sold firstly. Larger houses are sold with big difficulties. Most apartments in the projects of 213 construction were available in Lazdynai, Šnipiškės, and Antakalnis districts. Projects in Naujamiestis and Visoriai are implemented most easily in the market. In these territories occupancy of apartments blocks of 213 construction was 84.7% and 74.8% and respectively in the end of the year. One of the most important projects that was under construction in 213 was the fourth stage of Bajorų kalvos where two new apartments blocks were constructed. This project was very popular in the market (73% occupancy) due to the developers aim to make these apartments blocks the most energy-efficient ones in the country. The new apartments blocks are not only attributed to A-class energy efficiency but there also are many smart solutions implemented in them in order to save more (it is relevant for the residents of the buildings). New projects. Currently there are 28 projects under development. In 214 1,971 apartments will be added to the market and 1,19 of them (48%) are already reserved. Most new apartments will be constructed in districts of Šnipiškės (313) and Pilaitė (317). In the perspective of implemented and new projects the risks of saturated offer is noticed. During a period of one year in Vilnius fewer houses are purchased than offered to the market. There is a trend that every year 1% of new and not implemented houses are added to the market. Even now there are 2,7 new apartments (built later than in 28) in Vilnius that are not yet sold. Next year the ration between demand and supply in the market should become balanced. This would decrease the number of projects under development and adjust the prices. 4 35 3 25 2 15 1 5 Number of new projects and the occupation of the market (district / units), 213 Zones of implemented projects and projects under development, 213 Laisvi Vacant butai apartments Užimti Occupied butai apartments 28

Projects that are planned to be constructed in Vilnius city, 214 Project Developer District Number of planned apartments Expected vending price 7 Kvartalas Pilaitėje Vilmestos projektai Pilaitė 23 1,1-1,3 EUR/sq.m. Bajorų dominija Merko statyba Bajorai 54 1,2-1,5 EUR/sq.m. Čiurlionio butai Hanner Naujamiestis 4 1,9-2, EUR/sq.m. Dociškių str. Arkada Justiniškės 67 1,4-1,5 EUR/sq.m. Dzūkų namai Sostinės butai Naujininkai 46 1,-1,4 EUR/sq.m. Elguvos deinamtai II Elguva Karoliniškės 53 1,4-1,5 EUR/sq.m. Helios Pilaitė Helios grupė Pilaitė 56 1,1-1,4 EUR/sq.m. Justiniškių namai Informo Justiniškės 48 1,-1,3 EUR/sq.m. Karaliaučiaus terasos Negreskio investicijos Pilaitė 58 1,-1,3 EUR/sq.m. Koriai Aurum apartamentai Šnipiškės 123 1,3-1,6 EUR/sq.m. Liepyno namai Vilnius Property Investment Žvėrynas 86 1,4-1,8 EUR/sq.m. Light House MG Valda Fabijoniškės 156 1,4-1,5 EUR/sq.m. Loft town Penki kontinentai Žirmūnai 144 1,-1,4 EUR/sq.m. Micro Loft Microlofts Žirmūnai 69 1,1-1,3 EUR/sq.m. Naujamiesčio namai Vilbra Naujamiestis 114 1,7-1,9 EUR/sq.m. Odminių str. 14 - Senamiestis 8 2,8-4,3 EUR/sq.m. Oslo namai Oslo namai Naujamiestis 11 1,5-2,2 EUR/sq.m. Ozo trikampis BRP Invest Šnipiškės 127 1,3-1,6 EUR/sq.m. Rasų namai Solo House Rasos 24 1,7-2, EUR/sq.m. Rinktinės namai Infrasta Šnipiškės 63 1,3-1,7 EUR/sq.m. River Loft Merko statyba Užupis 78 1,-1,3 EUR/sq.m. Šaltūnų butai WG Investments Lazdynai 21 1,5-1,7 EUR/sq.m. Šeimyniškių butai - Žirmūnai 18 1,9 EUR/sq.m. Užupio citadelė Sermeta Užupis 52 2,6 EUR/sq.m. Veikmės namai Veikmė Viršuliškės 57 1,4-1,6 EUR/sq.m. Vingrių namai Realinija Senamiestis 27 2,3-2,6 EUR/sq.m. Žolyno vila Aurum apartamentai Antakalnis 16 2,3-2,8 EUR/sq.m. Žvėryno namai Hanner Žvėrynas 12 1,6-1,9 EUR/sq.m. 29

Prices in Vilnius. In one year average price for one square meter in old apartments decreased by 1.1% and ranged around 1,4 EUR/ sq. m. Based on the available data prepared by Centre of Registers, purchase of old apartments makes the major part of the market (72.1%). Average price for one square meter in new apartments remained almost the same and reached 1,286 EUR/ sq. m. Compared to last year, the price increased by.3% and the transactions of new apartments made 19.1% of the market. In one year prices of old detached houses decreased by 7.4% and were 885 EUR/ sq. m. on average. The purchase of this type of houses made 5.3% of the market. There were new detached houses implemented in Vilnius region that make 3.5% of the market and in 213 they were sold on average price of 676 EUR/ sq. m. 7.2% price decrease was noticed compared to 212. New detached houses are cheaper than the old ones because they are implemented more often in the urban periphery and sold in the stage of partly finished. Average prices residential real estate (EUR/sq.m.), 213 Distribution of purchase of residential real estate in Vilnius by price (%), 213 1.4 2,87% 1,3% 2,26% 1.2 1. 8% up to 87 K 8 87-145 K 6 4 2 New apartments Old apartments New apartments Old apartments 13,14% 26,69% 43,74% 145-2 K 2-29 K 29-435 K 435-58 K 58 K + Vilnius Other cities Prices of apartments blocks in Vilnius constructed in 213-214 by district (EUR/sq.m.) 4 35 3 25 2 15 1 5 26 23 185 25 21 2 2 19 14 15 17 15 15 15 16 17 13 15 14 14 17 1311 12 149 1 135 1 1 1 12 12 13 145 13 14 1 1 1 9 34 1 sq.m. min 1 sq.m. max 3

FISCAL AND LEGISLATIVE ENVIRONMENT Property tax tariffs, 213 Land tax. In 213 legal framework for land tax remained the same. Land tax payers are land owners, natural and legal persons, as well as collective investment undertaking management companies. Land tax tariff ranges from.1% to 4% of land fiscal value. Special tax rates are fixed annually by each Municipal Council individually. Moreover Municipal Councils can fix several special tax tariffs which shall be graded only according to one or several criteria. Criteria affecting land tax tariffs Main use purpose of the land Method and nature of land use Land use or set-aside Land size Categories of tax payers Land location in the territory of a municipality The tax is payable to the budget of the municipality in whose territory the land is. In case the land is in the territory of several municipalities, the tax is payable proportionally according to the part of the land that is in the territory of the respective municipality. It is important to note that the tax is payable by the person which was the owner of the land up to the 3th June of the current year. Therefore if the person purchased the land later than the 3th June of the current year he/she must not pay the land tax the same year. Property tax. Property tax object is a property that is in the territory of the Republic of Lithuania, except the property that is not actually used and the construction of it is not yet finished under the Construction Act of the Republic of Lithuania. Property tax tariffs (ranging from.3% to 3% of land fiscal value) are fixed by municipalities. This tariff range of property tax is applied when counting property tax for 213 and later tax period. When counting and declaring property tax for 27-212 tax period,.3-1% tariff range of property tax is applied. 1% property tax tariff will be applied for residential property; gardens; garages; farms; greenhouses; agricultural property; auxiliary agricultural property; scientific-purpose property; religious-purpose property; leisure-purpose buildings (premises); buildings for fisheries purpose; and engineering structures owned or purchased by natural persons if the total value of such property exceeds EUR 29 thousands. The property tax is payable for the part of such property that exceeds the indicated amount. Property tax is payable by the legal persons for: Fully owned property Property owned according to the contract of leasing (where ownership transfer is indicated) and according to the contract of purchase and vending on instalment credit terms or the contract of leasing Property or a part of property that is transferred to be used for an unlimited period or a period longer than one month that is owned by a natural person. 31

The following property is exempted from a property tax if it is paid by a legal person: 1. Property owned by foreign diplomatic missions and consular authorities, international intergovernmental organizations or their representations; 2. Property owned by state of municipalities; 3. Property owned by companies on free trade zones; 4. Property owned by failed companies; 5. Property owned by traditional religious communities, associations and centres and property (or its part) owned by other religious communities, associations and centres used only for non commercial designation or production of goods for use in religious ceremonies; 6. Property and objects for general purposes used for environmental protection and fire protection according the list approved by the Government of the Republic of Lithuania; 7. Property (or its part) used for funeral services or located in cemetery territory; 8. Property owned by associations, companies and institutions for disabled people, which members are only disabled people; 9. Property owned by legal persons which receive more than 5% income from agricultural activity during the tax period, as defined in part 281 article 2 of Law on Income Tax of the Republic of Lithuania; 1. Property (or its part) owned by apartment house owners communities, apartment house building associations, garage exploitation and gardeners associations, used only for non-commercial purposes; 11. Property (or its part) owned by charity and support funds, acting according to the Law on Charity and Support Funds of the Republic of Lithuania, used only for non-commercial purposes; 12. Property owned by scientific and study institutions, listed in the Law on Science and Study of the Republic of Lithuania; 13. Property owned by education institutions, listed in the Law on Education of the Republic of Lithuania; 14. Property owned by institutions providing social services, acting according to the Law on Social Services of the Republic of Lithuania; 15. Property (or its part) owned by trade unions, used only for non-commercial purposes laid down in the articles of trade unions; 16. Property (or its part) owned by legal persons, acting according to the Law on Associations of the Republic of Lithuania, used only for non-commercial purposes; 17. Property owned by Central Bank of the Republic of Lithuania; 18. Property owned by legal persons, acting according to the Law on the Status of Artistic Creators and Artistic Creators Organisations; 19. Property (or its part) used only when providing healthcare services. 32

VAT on property. Standard VAT tariff in Lithuania is 21% and the payers eligible are taxable persons in the Republic of Lithuania or a foreign country with activity of any economic nature. If a person executes any economic activity that is VAT taxable and earns more than EUR 45, per year (last 12 months) he/she must register as a VAT payer. Land or other property can be: Taxable with standard VAT tariff Land transferred together with new buildings, structures or their parts; land intended for construction; New buildings, structures or their parts. Exempted from VAT Land that is not intended for construction, and land that is supplied together with old buildings, structures or their parts; old buildings, structures* or their parts. *Old building or structure is a finished building or s structure and its part when there are more than 24 months passed after finishing of them. If a person which is a VAT payer sells land or other property he/she can choose whether to apply VAT or not to apply it, in case: He/she transfers land or other property that is exempted from VAT: land that is not intended for construction, and land that is transferred together with old buildings or structures or their parts, and old buildings or structures, and He/she transfers this property to a VAT payer (whether or not the purchaser is a VAT payer registered in Lithuania or a foreign country) or to a diplomatic mission, consular post and international organization or its agency. If a natural person has sold land or other property, VAT obligations for supplying the fully owned property is applied only in case these conditions are satisfied: The property supplied is in the territory of Lithuania The property supplied is land intended for construction or new buildings, structures or their parts Vending transactions of land and other property are continuous and repetitive when they are a regular source of income Consideration received during last 12 months for supplied goods and (or) services exceeds EUR 44,93. VAT advantages applicable in Lithuania % VAT tariff Tariff is applicable in cases referred to in law when goods and services are supplied by other state member and goods are purchased from other state member. 5% VAT tariff Reduced tariff is applicable for the persons which supply and repair medicine and medical aids and when the acquisition costs are compensated fully or partly in accordance with the arrangements set out in Law of Health Insurance. Reduced tariff is applicable for technical assistance measures intended for persons with special needs and the repair of such measures. 9% VAT tariff Up to the 31st December 214: Tariff is applicable for thermal energy and hot water supplied for residential buildings (including thermal energy transferred via domestic hot water distribution), hot water supplied for residential buildings or cold water that is used to prepare hot water, and thermal energy used to warm up the water. Tariff is applicable for books and non-periodical information publications, books, and other periodical publications (including textbooks, exercise books, encyclopaedias, dictionaries, manuals, information brochures, photo albums and reproduction albums, books for children with images, drawing and colouring books, printed or manuscript musical notes, maps, schemes and graphics, except calendars, notebooks, and other prints of similar type). Starting from 1st January 215: Tariff is applicable for accommodation services supplied in accordance with national legislation governing tourism activities Tariff is applicable for newspapers, magazines and other periodical publications except ones containing erotic and (or) violent material; publications that do not obey professional ethics; publications that were recognized as not obeying professional ethics by the institution empowered under the relevant national legislation; print production where paid advertising contains more than 4/5 of the contents Tariff is applicable for scheduled routes of passenger transportation services, and luggage transportation services stated by the Ministry of Transport and the empowered authorities or the municipalities. 33

Corporate tax. Taxable persons from Lithuania and foreign countries are eligible to the corporate tax. Corporate tax basis is the whole amount of the income received in the Republic of Lithuania and foreign countries that is originated in Lithuania. Corporate tax tariff in Lithuania is 15%. Companies with not more that 1 employees and income during tax period is not bigger than EUR 29, are eligible to a reduced corporate tax that is 5%. If the losses during a tax period are present the amount of such losses are transferred to next tax year without any limit except the losses incurred in respect of securities or the transfer of derivative financial instruments. The amount of the transferred and deductible tax losses cannot be higher than 7%. Taxable profit received during 29 218 can be reduced by 5% if an investment project is implemented that is new fixed assets are purchased that can be attributed to the following groups: machinery and equipment; equipment (structures, wells etc); computer equipment and means of communication (computers, related networks and equipment); software; rights acquired; commercial vehicles, trailers and semi-trailers, buses. Companies that render charity and support are eligible to the deduction of all the benefits from the income (that is to reduce the corporate tax) provided that those benefits are not paid in cash and do not exceed the amount equal to 25 times the minimum monthly wage for a single beneficiary; and included the property transferred and services rendered, that are intended to charity and support. Income from undistributed profits (dividends) are taxable by applying 15% corporate tax tariff. Dividends that are received by a Lithuanian entity from other Lithuanian entities, in which a Lithuanian entity receiving the dividends holds shares attaching at least 1% votes for at least 12 months without interruption, or the dividends paid out for such foreign entity are not taxable except the cases when a foreign entity receiving the dividends is registered or organized in other way in target territories. Income tax. The object of income tax is the income of a resident received like money or in kind. Residents and non-residents that have received income originated in Lithuania are eligible to the income tax. Tariffs of income tax: 5% is applied for income received from individual activity except the income received from activity based on business certificates and freelance activity 15% is applied for all other types of income included the income from dividends (up to 1/1/214 dividends were taxable applying 2 % tariff). 15% tariff is applied for the income of a resident received from the leasing of real estate to legal persons and leasing of real estate of commercial purpose to the natural persons. Specific arrangements regarding real estate transactions. Vendor must inform his/her purchaser about all the persons related to the real estate. Leasing contract of real estate can be stipulated in two ways: usually a leasing contract is signed or the contract signed is registered at the Centre for National Records. The registration of a leasing contract at the Centre for National Records ensures both parties from any intervention of the third party. Property owner has an opportunity to sell real estate together with the tenants provided that the purchaser is aware of that unless the contract stipulates otherwise. Expenses related to the vending or purchase of real estate. Contract of vending or purchase of real estate must be certified as authentic by a notary public. The certification of the transaction costs,45% of the total transaction amount but not more than EUR 5,8 for a single real estate unit and not more than EUR 14,5 for several real estate units in the transaction. Mortgage or charge of an object will be taxable from.2 to.3% of the total amount but not less than EUR 14.5 and not more than EUR 145. Registration of a property at the Centre for National Records is charged in respect of the legal status of the future owner, property type and average value but cannot exceed EUR 1,45. 34

About us Solid Real Advisors is a professional real estate company which provides services for enterprises and natural persons operating in Lithuania. We provide a wide spectrum of real estate services starting from comprehensive market research, diverse analysis, all types of real estate brokerage services to consulting on strategic issues and client asset management. Together with our partners we can offer all types of real estate services needed during property life-cycle. High-quality services and successful long-term cooperation are maintained by our attitude towards our work: we perceive our client s strategic scopes and hence we can offer and implement optimal real estate solutions. 35

Contacts SOLIDREAL, UAB Business code 148335689 VAT payer code LT16311919 Kalvarijų str. 2, Vilnius Lithuania Consulting Šarūnas Tarutis +37 647 993 sarunas.tarutis@solidreal.lt Brokerage Aurimas Astramskas +37 69 98 91 aurimas.astramskas@solidreal.lt Professional partnership of lawyers Bagdanskis ilaw Konstitucijos ave. 7, Vilnius Email: info@ilawfirm.lt Tel.: +37 5 248 767 Faks.: +37 5 248 7671 UAB Nepriklausomas auditas Subačiaus str. 15/2-53, Vilnius Email: info@nepriklausomasauditas.lt Tel.: +37 5 279 1597 Faks.: +37 5 278 4686 36