The prices of new luxury apartments in Frankfurt, Germany, have jumped by 25 percent in the past year, according to fresh data, fueled by market hopes that thousands of London bankers will move to the city after Brexit.
The rise puts the price of an upmarket two-bedroom apartment at up to about 1 million euros (US$1.2 million), making the small city, which has struggled with the reputation of being among Germany’s dullest, also one of its most expensive.
Britain’s plan to leave the EU has caused banks and money managers in London to look at moving parts of their business elsewhere to enable them to sell across Europe without additional costs or trade hurdles after Brexit.
Photo: Reuters
Frankfurt and Dublin have emerged as popular choices.
The rise in property prices in Frankfurt, shown in city data comparing the price of newly built apartments in the first six months of this year with a year earlier, comes as Frankfurt prepares to build 20 new skyscrapers within five years to provide offices and apartments.
There are more than 30 high-rise buildings on its skyline.
While a long-running property boom driven by low interest rates has prompted such building, the potential migration of bankers from London has increased investor enthusiasm, and prices, this year.
“We are ready for Brexit,” said Mark Gellert, a spokesman for Frankfurt town hall’s planning division. “We can imagine that the people who come to Frankfurt due to Brexit will take up this offer of high-end apartments.”
The data showed that the price spiral is concentrated on new luxury apartments, while other properties in less fashionable locations remain affordable.
Dublin has also seen house prices jump, by more than 11 percent in the year to June, according to Ireland’s Central Statistics Office.
House prices in London rose by less than 3 percent during the period.
A recent study commissioned by Frankfurt’s chief promoter predicted that there would be 10,000 new bankers in the city within four years and that their arrival could create tens of thousands of additional jobs, from estate agents to building workers.
However, some are skeptical that this will happen.
“You can see the optimism that Frankfurt will profit from Brexit already filtering through in rising property prices,” said Christine Kuhl, a headhunter with Odgers Berndtson in Frankfurt.
However, “the hiring of new staff has yet to start and I don’t expect it until spring next year. Some of the optimism about thousands of extra jobs is also overdone. The real impact of Brexit may be more modest,” Kuhl said.
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