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If Not London, Where Else Can You Invest?

It is a universally acknowledged truth that prime property prices in London are too high. when even the bankers start to agree, you’ve arguably reached a tipping point. The continuing question of course is:- If not London, where else can you invest?

As residential property investors, our perspective has to always be focused on the macro as well as the micro realities of the market. In order to read the health of a country or a city’s market situation and the opportune point in the cycle to invest, it is important to keep one eye on the commercial and corporate markets as well as to consider occupational requirements.

Understandably, with the uncertainty of post-Brexit regulations shaking even the staunchest London-loving occupiers, businesses have begun to look elsewhere, both within the UK and elsewhere in Europe.


A huge consideration for most office occupiers when selecting an office location deals with access to a valued talent pool. As “soft skills” as it may seem, selecting a place where young, educated professionals want to live at is still a primary factor.

In addition, it is also vital that the city infrastructure’s is modern and capable of servicing an expanded population. This is particularly true of more “flexible” industries like insurance or banking which will be more affected by the potential lack of access to the single European market required to function successfully.  

The case for Dublin has been made loudly, vociferously and early. The Guardian ran a light-hearted analysis of the differences and similarities between Dublin and London for the banking sector as early as last year. However, the Irish capital has been working to make that comparison less an absurdity and more a reality.  

A lot of effort has been put into researching the types of things likely to appeal to the bankers and people working in the finance sector. These include property prices, lifestyle considerations, commuting time and connections to international markets. Dublin has the benefit of affordability, a common language and geographic closeness to the UK and of course the all-important continuing inclusion in the European Zone (Eurozone).

The International Financial Services at the Industrial Development Authority of Ireland tasked with attracting foreign investment have described Brexit as a “historic opportunity” for the financial sector. However, Ireland seems to have felt overwhelmed by the task – both of competing with other European cities which are keen to “aggressively” attract unsettled financial institutions and with the prospect of success.

Credit Suisse has been an early adopter, having already moved an office there. They even have a team of traders in place, although most occupiers are still back of house – perhaps an indicator that Dublin’s appetite is not yet sufficient to create a new financial hub as their encouragement of and attractiveness extends to only a certain type of occupier; back office or insurance businesses, for example.  

They have every reason to be wary. After all, a few new faces could change the whole economy, and it is an economy still in many ways, reeling from the last financial crisis. Ireland was hit hard in the crash of 2008 so the government and regulators are understandably reticent to open up their market to any similar risks.


Ireland is a small economy, only making up approximately 10% of the size of the UK. It is unlikely to be able to accommodate the risky balance sheets that trading banks in London need to attract investments to make a viable market.

An indication of this inability lies with their current and projected lack of actual regulators. Ireland’s central bank is struggling to hire and retain enough staff to deal with the potential growth in the authorisation of relocated firms. The necessary continuing supervision in line with European Union (EU) regulations is not currently accounted for either. At the end of 2016, the central bank had almost 100 fewer full-time staff than it was authorised to hire although it had set itself to expand by a further 10% in 2017. The governor, rather euphemistically, has termed this a “challenging target”.

Paris sent a delegation to London with the sole mission of attracting banks and businesses to trade and relocate across the channel. Likewise, London’s financial companies are likely to be considering some European diplomatic missions of their own as these delegations continue to court new investment opportunities. Cities and regulators are circling occupiers and the residential market is hovering on the outskirts trying to read the mood and market sentiments while being ready to pounce on any early indication of a critical mass of banks.

Paris is looking to lure 20,000 workers, says Arnaud de Bresson, Managing Director of Europlace, the French capital’s lobby group. The main reason to disregard this threat is the crippling 75% tax that would hit any of the big earners in the company.

Worker protection, strikes, high taxes and a history of political upheaval all combine to make France an unappealing home for migrating institutions. In addition, there are already hundreds of thousands of French people working and living in London, begging the question: What makes Paris think it will be able to attract new talent if it can’t keep a hold of its own nationals to begin with?  

Other cities such as Luxembourg, Frankfurt and Berlin have been pitching for assembled banker occupiers, each promising to be the new all-access, low-regulation financial capital of Europe.

The strongest argument I can find for staying in London is perhaps the most obvious: Collective bargaining. It has taken over 100 years for the banking sector to get to where it is in London. This can be seen in the volume of banks represented while trading out of the city has gained them a unique voice in regulation and politics. 


Successive governments have also courted them and together, they have found a beneficial position that will not easily be replicated. It may be that the perfect storm of Brexit, the elections and souring property prices in the capital are making the usually loyal band of banks look out of London. However, if it is cheaper office space that they want without losing the vital workforce of young and not so young professionals, I would be surprised if they go beyond UK’s shores.

“The UK property market seems to be Brexit-proof,” said Alex Gosling, CEO of online estate agents in analysing the current situation.

“It has coped remarkably well with the economic turmoil in the months following the vote to leave the EU,” he comments.

As we have remarked before, the chronically low stock levels and the continuing appetite for rentals are likely to support the market throughout the unstable Brexit negotiations or snap elections. With all of the above in mind, we do not expect office occupiers to desert the UK in alarming numbers, and in fact, we see a real opportunity for business hubs outside of London to attract new types of businesses and with them, a new breed of renters to support an exciting residential property market.

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