Do real estate markets discount political upheaval?

When you look back on the short-term, medium-term and long-term, there have been some major political events around the world. Over the last few years we have seen the collapse of the European market, problems in the Middle East yet amongst all this upheaval it seems as though real estate markets tend to take political change in their stride.

There are a number of reasons why political change is often discounted in the longer term and while it may look bizarre on the surface, perhaps there are valid reasons?

Long-term investments

Before we even look at the specifics of political change and political upheaval it is worth mentioning that real estate investments are seen as long-term. There are individuals and companies who will look to take advantage of overbought and oversold markets to make a short-term profit but the majority of investment in real estate is seen as longer term.

Quote from : “his is so typical not only in Egypt but may other countries. In Cyprus the picture is much the same, with some developers refusing to lower their prices and as a result they are not selling anything while other more sensible ones have made large reductions, as a result of which their developments are selling well.”

This is perhaps one of the main reasons why political upheaval does not have the effect that you might expect on an individual real estate market. If we look at the UK, there is currently concern that the Scottish government will be successful in September’s independence referendum. However, at the moment Scottish house prices are more than holding their own. Indeed, places such as Edinburgh are seen as one of the hotspots of the UK and while this may change in the event of independence, at this moment in time the markets seem to be taking this issue in their stride.

Political upheaval in Egypt

One area of the world, amongst many, where there has been political upheaval in the short to medium term is Egypt. While public disorder, protests and political issues are the subject of the day, the real estate market has remained fairly steady. There have been dips in specific areas, due in the main to localised issues, but on the whole you have to say that the Egyptian real estate market has held up better than many would have expected. Indeed, amongst all of the property forums you will see constant suggestions of investors picking up real estate stock on any short-term setback.

The fact is that we all need somewhere to live, there will be constant demand for property and indeed sometimes political change can actually be for the better. We have seen regime changes across the globe, we have seen changes in political ideals and very often these have played into the hands of international real estate investors.

It’s all about the future

There is a saying within stock market circles that share prices tend to look nine months in advance, well in the real estate market very often investors look even further ahead. Any price changes in the short to medium term will likely be based upon long-term economic changes and while sometimes they can appear to be tied in with political regime change, this is not necessarily the case. This is why in many instances we see short-term real estate investors flocking towards countries which have had major political regime change – perhaps moving to a more capitalist approach.

This observation is not set in stone and there will be exceptions but on the whole it seems is though real estate investors tend to take a more long-term approach when looking at international markets.




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