Political risk is commonly associated with less developed economies, but in 2017 investors began to realise that it was residing, latent, in Western democracies.

Last year will be remembered for the UK referendum on EU membership and the electoral victory of Donald Trump in the US. But it is in the next 12 months – and beyond – that the implications of these exercises in democracy will start to play out in earnest.

Readers will notice that politics are woven throughout the fabric of this edition of IPE Real Estate. There are the obvious topics: will infrastructure investment prosper under the Trump administration? What will happen to the London office market when Britain starts to extricate itself from the EU?

But, elsewhere, populism is having an impact on major institutional investment. In Australia, politicians have been putting pressure on the domestic superannuation industry to own more of the country’s infrastructure – the implication being, to avoid it all being bought up by foreign investors. Australian super funds – ironically, one of the pioneers of infrastructure ownership at home and abroad – appear to have responded.

There are other examples of political risk. In the US state of North Carolina, a controversial law relating to transgender people’s use of public restrooms has had an effect on the office market in the city of Charlotte, explored in our City Focus section.

Political uncertainty – and a resultant flight to safety among investors – could also provide a boost to the growing real estate ‘secondaries’ market.  We look at how political shocks are helping what has already been a burgeoning market in recent years. And while much of its previous growth came about within the opportunity fund market (as the fallout of the global financial crisis developed), today it could be core funds that find themselves at the centre of trading activity.

In the Investor Forum section, investors provide their outlooks for the next 12 months, factoring in Brexit and Trump among a number of considerations.

In our interview with Varma, Ilkka Tomperi explains how the Finnish pension insurance company will continue with its plans to diversify its real estate exposure despite rising uncertainty.

“The question is whether more Brexit-type events will start to happen,” he says. Varma is responding by focusing on liquid markets, where it believes investor demand will remain reasonable over the cycles. “This means that our strategy is not necessarily focused on different markets and sectors, but is very deal-driven and there is great effort made regarding downside protection,” Tomperi says.