Us election – shoud Europe care?
A recent global survey undertaken by Colliers International suggested that few directproperty investors in the EMEA region were worried about the impact of the US election on their investment decisions. The same was even true on property investment into the US. Obama? Romney? The general consensus of the survey respondents is that “it’s all the same”.
Rather than worrying about what is happening in the US, property investors were more concerned about the state of the Eurozone – seemingly negating the argument that the US election outcome will impact directly on EMEA businesses.
Against this apparent disinterest to the Obama/Romney contest, many respondents cited the ability (or not) to raise equity, the lack of available product and finance conditions as being more pressing concerns. However, they did notfeel that these issues were necessarily linked to American political change.
Equity raising is, of course, linked to global economic certainty as investors are not fond of volatility. The availability of product is linked to the idea that unless forced to, landlords are unlikely to sell income producing assets when pricing is uncertain and the productive redeployment of capital even less so. And finance conditions are linked pretty much directly to bank capital ratios and the like, which are under increasing pressure, not least of all due to policies that were hotly, if inconclusively, debated prior to the election.
So the conclusion that might be drawn from this is that while the US election may not be of immediate concern to property investors, they need to be aware that many of the direct and indirect impacts of this election certainly will.
As well as the three issues listed above, property investors surveyed also listed “constant uncertainty” as a key worry, and as a result business confidence is still at recessionary levels. UNCTAD, in a recent global investment report, cites such uncertainty as the main impediment to increased foreign direct investment which, like property investment, is at a low ebb. EMEA Investment volumes fell over the first half of 2012, but a modest recovery in the third quarter of this year has not been enough to return the figures to 2011 levels. Even ‘safe haven’ markets, such as Paris and Munich have felt the effects.