Real estate investors seek shelter for Brexit’s finance refugees

Bloomberg

A property company managed by Schroders Plc is bidding for an office building in Frankfurt, anticipating the banking fallout from Brexit will boost values in the German financial center.
The London-based property investor isn’t alone preparing for an exodus from the British capital, with both CBRE Global Investors LLC and Standard Life Plc seeking to purchase office space in cities from Dublin to Amsterdam.
“The potential additional growth as a result of companies relocating from the U.K. enabled us to be firmer on pricing and financial underwriting,” Tony Smedley, a fund manager at Schroders, said of the proposed Frankfurt acquisition by Schroder European Real Estate Investment Trust Plc.
About 70,000 jobs could leave the U.K. finance industry if the government sacrifices unfettered trading access to European markets to regain immigration controls, according to lobby group TheCityUK. Those seeking to move overseas face a problem — the lack of development and growing domestic demand has already pushed vacancy rates for prime space in the business districts of Paris, Frankfurt and Amsterdam to the lowest levels in about a decade, according to broker Savills Plc.
Real estate investors are now seeking to capitalize on that shortage by buying partially vacant offices and plots with the potential to develop buildings the banks may need.
“We believe that there will be strong occupational demand” from banks and financial services companies, said Jeremy Plummer, chief executive officer for Europe, the Middle East and Africa at CBRE Global Investors, which manages about $88.6 billion of real estate globally. “We believed that before Brexit, but we believe it even more now because of the inquiries coming from companies seeking to locate some functions in other locations.”
Schroder European Real Estate Investment Trust raised funds through a share placing this month to purchase about 150 million euros ($165 million) of assets throughout Europe.