It seems that, try as we might, we cannot avoid talking about politics in Europe as Italy’s general elections on the 4th March dealt a blow to those who had hoped that the tide of populist Euroscepticism was finally beginning to ebb. Not so, as following a hung parliament, 55% of the Italian electorate chose Eurosceptic or anti-establishment parties, with the far-right League and the anti-establishment Five Star Movement emerging as the winners. The former rivals had seemingly set aside political differences to form a government together, only for President Mattarella to controversially veto the nomination of the Eurosceptic Paolo Savona as finance minister, leading to the resignation of incoming Prime Minister Conte and plunging the Italian political system into further uncertainty. Meanwhile, 860 km away, political tensions continue to rumble on in Spain following Catalonia’s unilateral declaration of independence in October of last year and now with Prime Minister Mariano Rajoy facing a vote of no confidence, threatening to undermine the Spanish economic recovery. The question that needs to be answered is how will these political risks impact Southern Europe’s real estate markets, which in Spain’s case, had been in the midst of a strong cyclical bounce back. This month’s Europe Watch outlines our thoughts on the subject.
Source : CBRE Global Investors