Brexit: Frankfurt's battle to lure banks could put pressure on local housing market
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Version 0 of 1. Frankfurt is winning the battle to lure companies from London in the run-up to Brexit. That may come at a price for local residents who face rising rents as a result. Homebuilders have struggled to keep up with Frankfurt’s population growth since 2006, causing asking rents to jump by almost 50 per cent, according to data compiled by Jones Lang LaSalle (JLL). Brexit-related demand for housing could -- on its own -- lift asking rents by another 3 per cent, the property broker estimates. That’s based on 8,000 people relocating to the city in a single year and renting rather than buying. “The vacancy rate is practically zero and, at the same time, there has already been a massive population increase,” said Stefan Mitropoulos, a real estate analyst at Landesbank Hessen-Thueringen Girozentrale in Frankfurt. Brexit “will put additional pressure on rents.” As many as 10,000 workers from Britain’s financial-services industry could relocate to Germany’s banking capital because of Brexit, according to lobby group Frankfurt Main Finance. The population is already growing by about 15,000 people a year, outstripping the supply of new homes, as the city’s growing economy attracts workers. In the past five years, only one apartment was built for every three new Frankfurt residents, JLL wrote in an August report. To provide the 6,000 new homes required by the city every year, Frankfurt has about 20 residential-tower projects, according to the broker. They include a plan, announced last week, to convert an office tower -- formerly occupied by Union Investment -- into a futuristic high-rise. The Riverbank Tower will be part of Germany’s biggest collection of skyscrapers that includes Commerzbank Tower and Deutsche Bank’s headquarters. EU Headquarters Since the UK decided to leave the European Union, Morgan Stanley, Citigroup, Standard Chartered and Nomura have picked Frankfurt for their EU headquarters. Goldman Sachs and UBS have been weighing the same choice. One- and two-bedroom homes with as much as 70 square meters (750 square feet) of space are likely to prove most popular among professionals moving to the city, according to Jan Ludwig, an associate director at Colliers International in Frankfurt who advises investors and landlords. “Bankers may not bring their families to begin with, so there’s a chance they will only live there during the week,” he said. Frankfurt’s City-Residence GmbH, a company that rents out serviced apartments in the city, has received 15 per cent more inquiries this year. Most have been for homes that can be leased for months or even years at a time, according to Managing Director Martin Bernemann. “Because of Brexit, we expect a flood of calls when the winter ends,” he said. If they fail to find a home in Frankfurt itself, newly located bankers could always try their luck in one of the well-heeled towns to the north of the city, such as Kronberg im Taunus or Bad Homburg. “After all, most people coming from London will be used to commuting,” said Mark Gellert, a spokesman for the City of Frankfurt’s housing department. Bloomberg |