Inadequate availability of office spaces in rival European financial centers may alter plans of some of the London banks to quit the British capital and opt out of the European Union (EU) membership.
As commented by the British prime minister, he has promised to work on Britain’s relationship with EU, and to come over a decision by 2017 to stay in the block or quit.
Deutsche Bank, the second largest bank in the euro zone by assets, confirmed it was giving consideration to cut its UK operations if the country withdrew. In such an eventuality, other big banks are also rethinking on scaling down operations in the UK.
But relocating expansive operations from London to Paris, Frankfurt, and Dublin would be a daunting task. None of the major cities in Europe is capable of catering this massive demand at short or even at a six months notice, as commented by commercial research head at a real estate consultancy based in London.
Across Europe, the rentals market is tight in terms of vacancy and lenders absolutely do not want to take any chance for speculative office development. In such a scenario, banks would either have to pre-let or buy a development site.
Both of the options would incur huge costs unnecessarily if the UK decides to stay in the European Union.
The potential statute on EU membership is not in favor of many clients, as commented by real estate advisor at CBRE.
Although there is speculation for the UK’s prime minister to campaign for ‘in vote’, and have high chances of winning, the sooner the better the issue is resolved.