IPF Investigates Global Capital Flows in a World of Increasing Political and Economic Uncertainty
IPF today announced it has commissioned Control Risks and Didobi to outline what a more nationalist and protectionist world may look like and what it could entail for real estate investors. This research is specifically intended to provide insights for market participants who, by 2030, could be operating in a very different environment to that of 2019.
The research, led by Anna Walker, director at Control Risks, and Matt Richardson, principal at Didobi Limited, and drawing on data supplied by Real Capital Analytics, will provide a high-level analysis of recent trends in protectionism and nationalism globally and develop alternative outlooks to 2030 with a specific focus on the implications for the real estate sector. It will also identify steps the industry should take to mitigate the potential impacts of both a more protectionist and nationalist world.
After a long period of stability leading up to the global financial crisis, there appears to be a breakdown in the general accord on how to deliver rising living standards and economic growth. Western democratic governments and civil institutions are increasingly challenged by the demands of individuals and growing power of global businesses. Different views about national identity and sovereignty are changing politics. The rules-based international order established after the Second World War is under pressure and facing an uncertain future. The rising economic and political powers in the world – both countries and non-nation powers – did not write the rules that have historically governed global economic interaction. In some instances, there appears open indifference or, even, hostility towards these rules.
Andrew Angeli, Head of European Strategy and Research at CBRE Global Investors, who is chairing the Project Steering Group (PSG) overseeing the study, said: “The real estate investment management industry has benefited immensely from the increased role that international capital flows have precipitated in a host of firmly ensconced global gateway markets. However, the rise of nationalism and ardent protectionism threaten to upend the status quo that has been decades in the making. In my engagement with global investors, I am spending increasingly more time assessing current political affairs and the sustainability of investing in markets perceived to be safe havens. This topical work commissioned by the IPF Research Programme comes at a critical time.”
Anna Walker of Control Risks said: “Nationalism and protectionism are fuelling global trade tensions, driving tax and regulatory changes, and leading to concern among businesses – including in this sector – over their investment protection and property rights, particularly when these are coupled with weak institutional capacity. This research will help to inform industry decision-makers as they seek to navigate these challenges in the coming years.”
Matt Richardson of Didobi commented, ”This report is timely given the growing impact of political decisions on the global real estate investment industry. From QE and interest rate policy in Western Europe and North America to restrictions on the export of capital from China, market pricing around the world is increasingly driven by weight of capital rather than traditional demand supply drivers. Any attempt to understand how future political decisions will shape our sector in the coming years has to be welcomed.”
Other members of the PSG comprise Ben Thatcher (BNP Paribas Real Estate), Ben Sanderson (Hermes Real Estate Investment Management), David Dix (The Townsend Group) and Simon Wallace (DWS).
The research findings will be announced in the autumn, with the report due to be published at that time.