With a bumper election year ahead, Robin Marriott wonders to what extent (geo)politics is shaping real estate firms' business strategies.
To what extent are you factoring in political risk as your company goes about analysing business plans, making difficult decisions, and assessing fresh opportunities in real estate?
My sense is this is live debate that could grow louder within the industry given the record number of elections coming up in 2024. In this issue, Sirius’ CEO Andrew Coombs argues it is essential not to overlook elections, no matter how difficult it might be to predict outcomes and their consequences for real estate.
He recalls being right about the risks surrounding Angela Merkel’s departure as German chancellor years before it happened, and how that would embolden Vladimir Putin. Sirius locked in its gas pricing for all its German business parks in 2021 for three years – before energy prices rocketed after the Russia-Ukraine conflict began on 24 February 2022.
As has been widely reported, we are in for a momentous election year during which parties described as ‘far-right’ might make big gains in Europe, while all eyes are also on the US, which goes to the polls in November. If Coombs is right that geopolitics runs economics and not the other way around, then his stance is certainly noteworthy. Because, right now there is an amazing concoction of factors all working at the same time.
With most people agreeing interest rates have peaked, we see delegates arriving at this year’s Mipim buoyed by that. We also see alternatives climbing ever higher up the investment playbook with a solid approach of concentrating on strong-growth prospects somewhat decoupled from macroeconomics in sectors such as student housing, senior living, and data centres.
But will some of the shine be taken off the mood come Q4 when we start to see implications from the wave of elections? Certainly, Coombs is in that camp. But are you? Where is all this going?
This is the fascinating backdrop against which unique market stories are playing out across Europe (see Jane Roberts’ article on Germany’s wave of insolvencies). Similarly, when we drill down we find Europe’s cities have unique tales to tell. We have launched a brand-new series looking at some of Europe’s most interesting urban hotspots, beginning in this issue with the European city that has the youngest population – Birmingham.
Watch out for more of these where long-term demographics meet history and heritage to provide opportunity to create valuable real estate.
We hope you enjoy the issue, and Mipim!
