Bye, London: Brexit exodus worsen housing crisis in EU cities

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Since the Brexit referendum, we have seen financial businesses relocating their staff or operations to other EU financial centres. Paris, Amsterdam, Dublin and Luxembourg are some of the most popular destinations. However, Frankfurt remains the frontrunner. Goldman Sachs, Citibank, Morgan Stanley and UBS, for example, have moved hundreds of staff to the German city. As a result, Frankfurt now occupies the 10th position on the Global Finance Centres Index – in the past decade, it oscillated between 12th and 24th.

But the Brexit exodus affects other areas, too – such as Real Estate. According to Skyline Atlas, there are 29 skyscrapers under construction in Frankfurt at the moment. While most of these new developments are designated to commercial use, investors might want to look at the residential sector. After all, these hundreds of professionals relocating to the city will need a place to live.

onefourzero looked at online search demand for residential properties to rent in Frankfurt since the Brexit referendum. Data shows that interest for houses and apartments in the city has indeed increased, reflecting current events – and indicates that this trend will last beyond March 29th.

In London, however, the demand for properties to rent was relatively stable in the months before the referendum, but has seen a small decline since the country voted to leave the EU.

Source: Google

Frankfurt has been struggling with a housing crisis since 2006, as population growth has also spiked. Last summer, the local government announced plans to build two new residential districts to tackle the housing shortage, expecting to bring 36,000 properties to the market. However, the regional authority forecasts that the area will need 184,000 more units by 2030.

Undeniably, most big cities in Europe currently face some level of housing shortage – the relocation movement caused by Brexit only highlights the issue. Amsterdam and Paris have also noticed an increase in demand and are now working towards a solution.

We then looked at social conversations on the topic to know what Britons think about the idea of living in Frankfurt. It seems that the online community is divided: 25% wouldn’t consider or think it’s a bad idea, while 23% are more optimistic about the German city and 52% are neutral.

Source: Crimson Hexagon

Some conversations mention that some unhappy professionals might eventually end up moving back to London, while others consider the timing good to pursue a better lifestyle without missing out on the “big city buzz”. There is, therefore, a chance that the migration in and out of Frankfurt won’t stop any time soon, but it doesn’t change the fact that big companies relocating there need staff – whether they are British or not. In summary, the residential sector in the city will continue to see demand increasing.

It’s fair to assume that the Brexit exodus from the City is not the only reason behind this, but added to the fact that European immigrants have started to look at other destinations, it explains the plunge. Nevertheless, short supply of new properties, a national flux of professionals moving to London and the recent tax changes that have made buy-to-let homes less lucrative for landlords will still keep overall demand high. According to a survey by Rics, rent prices will continue to rise in the UK, while sale prices are already seeing a decline.

It’s good timing for investors looking at the Real Estate industry to step up. By using data to identify the exact markets and trends to the detail, companies can correctly direct investments and decisions.

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