Prague ranks as the 15th most attractive European city for the financial technology, or fintech, sector based on a variety of criteria such as affordability and business environment, according to the latest research from the global real estate services provider Savills.
The fintech sector is set to play an increasingly important role as a real estate occupier as Europe starts to come out of lockdown and occupier activity returns to a degree. Demand for office space from fintech companies is likely to prove resilient because of structural changes to economies and banking sectors that took place during the period, says Savills.
“The Covid-19 pandemic has shown the world how quickly change can happen and it has turbo-charged the digitalisation of the traditional banking and finance sector in key European countries,” says Matthew Fitzgerald, Director, Cross Border Tenant Advisory at Savills. “The global financial crisis of 2008 fostered entrepreneurship which, coupled with the rise of controversy around the big banks, saw the entry of challenger banks and a whole array of start-ups. I am confident that this sector will again emerge stronger in the aftermath of the Covid crisis.”
In its European Fintech Occupier Outlook 2020 report, Savills looked at 16 occupier variables within three main criteria – demographics, talent & innovation, and affordability & business environment – across 23 key cities to compile its European Fintech Occupier Index, which ranks the most attractive European cities for fintech.
London, Berlin, Paris, Barcelona and Manchester topped the index, as these cities combine existing financial services infrastructure, solid demographic fundamentals, strong talent and innovation, relative affordability and attractive business environments. Prague came in 15th place, scoring particularly strongly in the affordability and business environment criterion, given its relatively low corporate income tax rate (19%), low average total cost of employing a software engineer (€35,000 p.a.), and low prime rent costs (€285 per sq m), which could create further demand for office space as companies opt to “east-shore”.
“Prague boasts many of the attributes that make a strong fintech hub – a developed VC market, a business-friendly environment, good technical universities, a high share of ICT specialists among the workforce, and high internet and smartphone penetration – which has created a relatively high fintech presence for the size of the city. As these early-stage fintech companies grow their head count and become more established in their market, some will make the move from flexible to conventional offices, and perhaps even become major occupiers in their own right. As Savills research indicates, fintech companies typically move office an average of 4.5 months after receiving VC funding,” says Petr Florian, Associate, Office Agency, Savills Czech & Slovak Republics.