As the clock ticks towards the U.K.’s departure from the European Union, cities such as Frankfurt, Amsterdam and Paris are scrambling to present themselves as the best place to relocate London’s largest financial services business. Amsterdam city leaders admit to having had conversations with more than 100 companies thus far, and are already arranging re-location for 18 of them.
And, proving the real estate adage that the most important item is “location, location, location,” Amsterdam business and government leaders also say the city has a built-in location advantage – technically and physically.
“Paris, Frankfurt and London are an hour away by train or plane,” says Irishman Patrick Ryan, whose technology and services provider KYCnet (Know Your Customer) was purchased by London-based Equiniti last year. The combined company chose to maintain its EU operations in this city of canals in 2008, with Ryan as CEO, even before the Brexit vote, largely because of the city’s convenience. “In London it can take you two hours just to get to an airport.” Indeed, Amsterdam’s Schiphol Airport consistently finds itself in the top-ten list of world’s best airports, with daily flights to world capitals and modern efficient rail inks that can take you into the center-city train station in under 15 minutes.
Amsterdam is also centrally located in the digital world of fibre optic cable and satellites, which makes connectivity possible and has already turned Holland into one of the world’s main Internet hubs, along with London, Frankfurt and Hong Kong. “80 percent of Europe’s population is reachable within a 50 millisecond network reach of Amsterdam,” says Mihiel Eilts, CEO of Equinix, which has two multi-million dollar 70-meter-tall (230-feet) data center providers at Amsterdam’s Science Park, just beyond the city center, which will ultimately provide space and power for 4,200 IT cabinets. Founded in 1998 in Redwood City, CA, Equinox boasts three European data centers: Frankfurt, Dublin, and Amsterdam; the latter, founded in 2008, has been located since 2010 at Amsterdam’s Science Park – where one of the first three websites in the world was built in 1992, creating the foundation for the Internet itself.
Equinix already has a flight of international clients – such as Philips and some 250 telecomm companies – accessing European Union customers from its huge data centers, AMX 3 & 4, just outside the city center. “Video games, data processing, phone calls…it all comes together here,” Eilts says. “Your smart phone is just a pretty fashion accessory.”
Brexit will ultimately result in legislation that changes the borders of the European Union, but the digital infrastructure in hubs such as Amsterdam probably won’t be changing much – at least not right away. “Companies won’t be moving their hardware until there is more clarity on Brexit and they’re absolutely sure of their next move,” Eilts continues. “A sea cable takes 3-5 years to install and it’s costly. But the digital world will finally follow Brexit.”
A lot of that digital following will depend on what happens to the U.K.’s so-called financial passport, which allows financial products, such as loans and mortgages and investment vehicles created under London’s more risk-oriented financial rules, to be sold across the EU. If the passport remains valid despite Brexit, then the digital support necessary to servicing those financial products can remain in London. But if not, then U.K. companies or multinationals with EU headquarters in London will have to relocate at least their data processing to a location within the EU. A “hard Brexit” would most probably not renew the financial passport, but for the moment no one knows what will happen. “The opportunities for Amsterdam will come when companies realize they have to move their hardware,” Eilts continues. “And they will not do this until they are absolutely sure. We can serve customers from this data center wherever they are, and we still have the biggest capacity for infrastructure expansion of any hub.”
Moving people is a little less complicated. For one thing, in today’s interconnected Internet world, it’s possible to shift your business without shifting all of your staff. “International banks now based in London are not going to be moving in their entirety from London to another city,” says Dr Udo Kock, City of Amsterdam Deputy Mayor for Finance and Economics, with 15 years at the IMF in Washington, DC, under his belt. Indeed, one thing that might keep high-flying, high-earning financial traders from moving to Amsterdam is the Netherlands’ cap on bonuses. “It is what it is,” Kock admits,” and it’s not going to change. But any job not bonus-driven would be ideal for Amsterdam: fin tech, treasury, clearing, back-office jobs, even jobs in the creative sector such as software.” There are clearly more of these backend jobs around than the high-flying ones that grab all the headlines.
Kock is a good example of the full campaign mode in Amsterdam as the city sets out to attract some of the Brexit business fall out. “We are the only location that offers the whole package,” he says. “Great connectivity, a huge talent pool and a quality of life.” Indeed the city’s three universities and ambitious startup entrepreneurial ambience mean young people with ideas are everywhere. “You find yourself surrounded by people why are trying to achieve something,” Ryan points out. “The caliber of people in Amsterdam is very high – it’s a destination city for young talent.”
Where To Put Everyone?
The one big drawback in Amsterdam is space: all those houses lining the canals for the past 400 years look charming but they are seriously tiny and leave no room for much more to be built in the scenic parts of town. Where to put all those newly arrived workers? The Dutch are not experts at logistics for nothing. Besides reclaiming and converting former military and industrial buildings from organizations themselves relocating outside the city, Amsterdam is also using a marketing ploy by employing the now ubiquitous term “Greater Amsterdam.” (Note: There is also a greater Paris” on the horizon) It’s all down to the city’s transportation connectivity. “Amsterdam is more than just a city – it’s Metropolitan area,” says Kock. “Cities like Haarlem are just 15-minutes away by train.”
Kock has also cut the waiting list for seats in classrooms by expanding by 1500 the number of places in schools available for children of visa-holders from the elementary to high school to vocational level, thanks to a boost to the city’s budget from the regional and national governments of 10-million Euros. And not just for the children of CEOs, but also children whose parents are at the worker-bee level, or even PhD candidates. “Two years ago we were told by the international community that having a waiting list for schools was hurting our competitiveness, so we fixed it. We want to be one of the most attractive places in Europe to live and work, and if we have problems, we’ll fix them,” he says. It also helps that virtually everyone in the country speaks English.
Finally, Amsterdam leaders like to point – and within reason – to the city’s long record of having managed prosperity and working in cooperation, from the Golden Age spanning the 17 century to the present. “When you live eight feet below sea level, you have to be able to work together to build structures to hold back the waters,” Kock says, pointing out that Amsterdam is the fourth largest harbor in Europe, while the city itself has been around since 1275. “This has been an economically stable city for more than 700 years,” he continues. “We’re not a fluke.”