Frankfurt used to advertise itself as “better than its reputation.” And it was. Connoisseurs praised the high quality of suburban life in the Taunus hills, and the nearby wine regions. Strasbourg for dinner was always a possibility, by barreling down the eight-lane autobahn with no speed limit. These days, however, Frankfurt no longer needs to advertise to get people to move there, because the UK took care of that by voting for Brexit.
Perhaps 10,000 bankers may move from the City of London to Frankfurt in the coming years, as the likes of America’s Citigroup and Goldman Sachs and Japan’s Nomura and Daiwa send at least part of their London staff to the Germany city by the Main River. The bankers, moreover, are expected to draw 80,000 other jobs with them – lawyers, accountants, PR flacks, programmers and so forth. Most of these expats will be English-speaking and high-income. And they will demand nice apartments and good international schools for their kids. Is Frankfurt ready?
Some long-time residents are worried. “The influx of newcomers that [Brexit] brings with it will exacerbate the notorious shortage of apartments and drive certain renters out of attractive places,” said Jürgen Lutz at the “Renters Help Renters” organization. Frankfurt has already been stretched by the expansion of the European Central Bank there. Rents have risen 40 percent in the city over the past 18 years. Supply can’t keep up with demand as there are only 557 residences for every thousand jobs. One member of his renters’ association told Mr. Lutz that he feels like the only one left in his block in the tony Westend neighborhood who doesn’t work for the ECB.
The 17 international schools and 200 private schools in the metropolitan region also have to do some planning. The Association of Private Schools estimates that 20,000 further students will be seeking a place in the next one to three years. Paul Fochtman, the head of the Frankfurt International School (FIS), the largest international school in the area with 1,800 students, said one bank wanted to reserve 100 places in his school. However, the school, which has hardly any room left to expand, plans to limit each institution to just 10 new students per year. “We can’t be and shouldn’t be a purely Brexit school,” he said.
Other schools are more accommodating. Silvia Staab at Fintosch, which operates daycare centers and kindergartens, says there has already been an influx from India as computer programmers staff up for the coming migration of financial services. Ms. Staab is expanding into the private school business and expects to have a hundred students next year in her first school. Peter Ferres, himself a former investment banker, just added two stories to his Metropolitan School, increasing its capacity to 650 students. He gets new calls every week from banks, law firms and consultants in London seeking to reserve places.
The demand for schoolrooms has already attracted interest from private equity and other investors who see an opportunity in the influx of professionals with school-age children. Students at FIS, for instance, pay €20,000 a year, though in 60 percent of the cases, it is the firm that pays the tuition. Sweden’s Academedia, which is northern Europe’s largest school operator and is listed on the Stockholm stock market, has already expanded in Germany with daycare and kindergartens and plans for further expansion. Other education chains, such as Dubai-based Gems, which has focused on lucrative metropolises like London and Singapore, might soon be looking at Frankfurt.
“Frankfurt isn’t considered to be glamorous, so you have to help out a bit to get people enthusiastic.”
“We don’t really know if this Brexit fuss is only a bubble,” cautions FIS’s Mr. Fochtman. By definition, expats come and go. When General Motors’ Opel factory in nearby Rüsselsheim shut down, 50 American managers picked up their families and went home. FIS loses 100 students every year as their expat parents move on. But even if there is a bubble, it is very bubbly indeed. Mr. Fochtman says he spent his whole summer showing around interested parents and skyping with families in London.
London used to laugh at Frankfurt’s pretensions of overtaking it as Europe’s financial capital, pointing out that London had more people working in finance than the entire population of the city of Frankfurt itself. But even a small fraction of London’s bankers could overwhelm “Mainhattan,” as Frankurt cheekily calls itself. And it seems to be ahead of Dublin, Paris and Amsterdam.
“Frankfurt isn’t considered to be glamorous, so you have to help out a bit to get people enthusiastic,” admits Andrea Simon from BS Relocation Services. Thanks to Brexit, they’ll be coming anyway.
Handelsblatt reporter Katharina Slodczyk and WirtschaftsWoche writers Saskia Littmann and Andreas Macho contributed to this article. Handelsblatt Global editor Darrell Delamaide adapted it to English. To contact the authors: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org.