EU must sort its governance issues, says CBRE GI's Hendrikse

The European Union needs to address shortcomings in the way it is governed if it is to emerge stronger from the current eurozone crisis, says Pieter Hendrikse, CEO of CBRE Global Investors EMEA.

'The perception of non-European investors is that there’s a United States of Europe, like the US. But that’s not the case,' Hendrikse told PropertyEU in an interview. 'We don’t have one language, one tax regime, one legal system, one culture, one type of behaviour. That means we have to adapt continuously.'

CBRE GI’s European chief is a staunch proponent of the EU but believes that its current governance model is fundamentally flawed. 'The formation of the European Union hasn’t led to good governance. The governance is not right, it’s based on a compromise and it’s not complete.'

Hendrikse claims that greater political and economic convergence is necessary to manage Europe's financial situation. 'When the single currency was introduced, we should’ve taken a big step. We need another governance model to manage the financial situation. The idea was to focus on finance and the currency first. But it needs to be the other way round. In a corporate environment this would never have been allowed to happen. The EU first needs to work together. It lacks clear leadership and managing 27 countries is impossible.'

Political union could take another 10 years or more to realise, but unless the EU moves in that direction, it could jeopardise the achievements of the past 60 years, Hendrikse argues. 'It would be a shame if the EU doesn't go forward. Greater political and economic corporate governance would create a stronger market. Within the EU, most countries conduct about 90% of their business at home, only 10% of GDP is cross-border, but it could be 20%.'

CBRE Global Investors has modelled various different scenarios for its investment strategies should a Greek exit from the eurozone become a reality. Hendrikse is less concerned about the likelihood of Italy or Spain leaving the eurozone due to their different economies and wealth backgrounds, but is not ruling out a Greek exit.

'A Greek exit would have repercussions, probably more on the debt side than property side. But I’m not so sure there would be total chaos.' Should the Greeks leave the eurozone, the EU would have the opportunity to grow stronger politically, Hendrikse claims. 'If the EU says goodbye to those who don’t play the game, it can set new rules for greater economic convergence and prosperity over the next 25 years.'

The full interview with Pieter Hendrikse appears in the June issue of PropertyEU Magazine. Clink on the link below to subscribe