On June 23, 2016, the British people have decided to leave the European Union. While the domestic limbo is slowly coming to an end with the new Prime Minister Theresa May, the process remains mostly uncertain, yet repercussions also affecting the German real estate market become apparent already now.

While international investors are leaving open property funds with a high share of commercial properties in their portfolio such as Standard Life Investments, Aviva or M&G Investments in droves, forcing the funds to suspend the trade of their shares as a consequence of this capital flight, investors could “increasingly start looking for new opportunities at German locations” due to stable fundamentals with comparatively low prices even for top class properties, as stated by Andreas Mattner, President of the ZIA German Property Federation.

As a result of the British exit Germany’s dominant position as the strongest economy in Europe would be strengthened even more, a fact which will also be reflected by the attractivity for resettlements respectively new settlement of companies. Such a development would in turn intensify capital flows towards German metropolises, would create more jobs for higher qualified employees and potential candidates, thus actuating a circle which will attract even the more companies again.

Already the mere announcement of mayor financial institutions and corporate groups to relocate parts of their branches currently located in London to the European mainland after the Brexit has already affected regional property prices. According to the real estate consulting company Catella “conservative estimates assume that around 70,000 jobs could be cut as an indirect result” and refers to the relocation of the European Central Bank (ECB) to its new Frankfurt headquarters in 2014 which also triggered a price increase that also included privately used properties.

Besides the relocation of departments and staff of the financial sector from London to Frankfurt gains are also likely fir the Berlin economy.

As the Senator for Economics, Cornelia Yzer, stated, “London was an important location for the European headquarters of multinational companies which wish to remain in the core of Europe”, “in the past two years about 50 companies with their headquarters have settled in Berlin. More of them are welcome.”

As Berlin with its central location within Europe and the European Union has already developed to the most important hub of this branch, Berlin might be interesting especially for young start-up companies. According to a statement of the Federal Association German Start-Ups e.V. especially these do not consider themselves to be German or British companies but instead as European Founders setting up their business for international markets, requiring access to an open and strong single market.

These relocations of economic capacities and the increasing need not only for commercial properties but also living space already short of today will continue to increase property prices, especially for desired residential areas, thus bringing increasing property prices and yields for owners and investors.