Could Politics Divert Real Estate Markets?
The number of political risks that promise to test the nerve of investors is on the rise, and yet real estate continues to attract capital, demonstrating its enduring appeal. One index, which attempts to measure political uncertainty, is running at near historical levels, after rising to just below an all-time high in August 2019.1 In the United States, geopolitical provocations in the form of contentious elections and escalating trade tensions have the potential to disrupt the economy. In Europe, political uncertainties stemming from Brexit, rising Catalan nationalism, and an upsurge in populism have attracted significant attention. It seems logical that these considerations might persuade investors to adopt a wait-and-see approach, but investors from all over the world remain attracted to real estate. Capital available for deployment into real estate is near an all-time high, and investors continue to target the sector. However, the persistence of uncertainty raises questions about the extent to which political shocks impact real estate markets.