At a time when hundreds of senior staff, particularly in the financial sector, are being relocated from London to new European hubs, and when many EU expats are returning home because of Brexit uncertainties, the price of prime accommodation in desirable areas of such cities as Frankfurt and Paris has rocketed.The latest Prime Global Cities Index from property consultancy Knight Frank – which tracks the movement in luxury residential property prices across 46 world cities – found that Berlin and Frankfurt saw the largest increases over the past year.The German capital recorded the strongest price growth rate globally, with a 12 per cent rise year-on-year, while Frankfurt – the financial centre and home to many new European hubs – was in second place on the list.A recent report from property research company bulwiengesa also found that, between 2010 and the end of last year, house prices in Frankfurt had doubled. Kate Everett-Allen, head of international residential research at Knight Frank, said that prime prices in Berlin and Frankfurt currently stood at about €11,500 (£10,456 approx) per square metre and €13,500 (£12,275) per square metre respectively.
Brands and companies move their European headquarters
Yet, according to a report in the Financial Times (FT), price rises have been even steeper in Amsterdam, “The housing squeeze looks set to intensify because of Brexit, as the European Medicines Agency and multinationals, including Sony and Panasonic, move their European headquarters from the UK to the Dutch cultural and financial capital.”Barbara Van der Grijp, managing director of estate agents Engel & Voelkers, added, “Every day in the newspaper, we hear about another company coming here. I expect a lot more people to come from [the UK]. We have people who want to buy places without seeing them, just based on the pictures.”According to Knight Frank, house prices in Amsterdam rose by 64 per cent in the five years to September 2018, but disposable household income grew just 4.4 per cent in that time, despite ultra-low unemployment. ING puts the average Amsterdam selling price at €470,000 (£427,000 approx) compared with a national average of €300,000 (£272,000 approx), reported the FT.
Brexit uncertainty drives people out of London
Meanwhile, according to The Times, wealthy French families are leaving London amid concerns over a hard Brexit and are helping to drive house prices in Paris to a record level. “The rise is particularly steep at the luxury end of the market, with les Brexités, as they have become known, seeking flats near the capital’s finest schools. Some flats are selling for more than €3 million,” reported the newspaper.Alexander Kraft, chairman of Sotheby’s International Realty France-Monaco, said, “Ever since a hard Brexit has been on the cards, the expatriates have been coming back. They are bankers, asset managers, executives in big companies.”The Euro Weekly newspaper reported that sale prices in the desirable Sixth Arrondissement rose from €11,300 (£10,272 approx) per square metre in January 2015 to €14,000 (£12,000 approx) per square metre in January this year. In affordable areas of Paris, such as the 19th Arrondissement, prices rose from €6,500 (£59,000 approx) in January 2015 to €8,350 (£7,591 approx) in January.The Euro reported, “A major contributor to rising demand for French real estate is the impending UK Brexit from the EU. This factor alone has an outsized impact on property prices, given that so many people from France are living in the UK, and vice versa. Expatriates from both sides are now looking to shore up their portfolios by buying property in Paris and other parts of France to protect against a downturn in the UK.”