Tuesday 17 September 2019

Brexit set to stretch Frankfurt's housing market even further

Rents in Frankfurt have risen by 50pc since 2006. Photo: Bloomberg
Rents in Frankfurt have risen by 50pc since 2006. Photo: Bloomberg

Stephen Kahl and Andrew Blackman

Frankfurt is winning the battle to lure companies from London in the run-up to Brexit. That may come at a price, however, 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 50pc, according to data compiled by Jones Lang LaSalle.

Brexit-related demand for housing could - on its own --lift asking rents by another 3pc, 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.

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.

One and two-bedroom homes with as much as 70 square metres 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.

Frankfurt's City-Residence GmbH, a company that rents out serviced apartments in the city, has received 15pc 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. (Bloomberg)

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