Political risks mean real estate is far from out of the woods

Substantial political risks overshadow the European economy and, by implication, the real estate market, as political scientist Ian Bremmer outlined.

A keynote speaker at the recent EPRA Conference, Bremmer, who is president of the political risk research and consulting firm Eurasia Group, said that China’s domestic political environment makes it hard for it to respond transparently and effectively to a slowdown, particularly in the real estate sector.

“That’s something that everyone is worried about right now,” he said. “Xi Jinping spent most of the summer working on the floods, not working on a view that he needed to have a big economic response.”

In an interview with Real Asset Insight during the EPRA conference Bremmer also said that the fact that the US and China, the world two most powerful governments, have a relationship that at times is overtly hostile is leading to a level of decoupling in economic trade relationships, also causing uncertainty and volatility in investment flows.

Bremmer added that Europe’s asymmetric war in Ukraine and the fact that the US is the most powerful economy in the world, while having  one of the most dysfunctional democracies, are both political factors that are “driving a lot of sand in the gears, economically”.