While we often express frustration in Northern Ireland at political inactivity and its impact on economic progress, we are by no means insulated from wider geopolitical forces.
Geopolitical and geographic instability have become defining influences on the global real estate market.
They are fuelling uncertainty and prompting a shift in strategy, away from growth-orientated investment and towards more defensive, pragmatic positioning.
Surveys conducted in early 2026 indicate that over 90% of senior industry professionals cite global political instability as a primary concern.
Rising tensions linked to the latest conflict in the Middle East, the ongoing war in Ukraine, and evolving US trade policies have all contributed to a ‘wait and see’ stance among investors.
One immediate consequence is a clear flight to quality. Investors are prioritising stable jurisdictions, directing capital towards perceived safe havens, often in the US or very select European markets.
At the same time, foreign direct investment has softened, reflecting heightened risk aversion and tighter foreign investment restrictions in strategic sectors.
Instability also disrupts supply chains. Constraints in the availability of raw materials such as steel and aluminium are driving up construction costs and extending project timelines. These pressures are compounded by rising energy costs, which we have experienced locally in recent days.
Different property sectors respond in different ways. Office and retail assets typically come under pressure during periods of uncertainty, while capital increasingly flows towards alternative sectors underpinned by structural demand. Data centres, logistics and student accommodation – all supported by long term demographic and technological trends – are attracting significant interest.
Currently, data centres are the most favoured investment class in Europe, however, Northern Ireland does not yet host any major facilities of scale, representing both a limitation and a potential opportunity.
There will be worldwide variations in real estate recovery due to this instability. Across much of Europe, values appear to have bottomed out, but the market remains cautious with regulation and high construction costs shaping investor decision making.
In the US, potential volatility linked to trade tariffs is encouraging a continued holding pattern, with some forecasts pointing to stalled growth during 2026.
Parts of the Middle East and Asia that were previously viewed as stable, including the United Arab Emirates, are now experiencing increased volatility due to the regional conflict, raising questions about how quickly investor confidence will return.
Meanwhile, emerging markets such as Vietnam are being viewed strategically, particularly for manufacturing related real estate, though they too may experience knock-on effects from wider geopolitical tensions.
So how are major investors responding? Diversification remains central, spreading exposure across geographies and sectors to mitigate concentrated risk.
The flight to quality is likely to continue, and some will make the deliberate decision to ‘sit on their hands’ and preserve capital until conditions stabilise.
Long-term implications of the current geopolitical environment suggest that market volatility will continue at least through the start of 2026, tempering the optimism that many had hoped would define the year.
Brian Lavery
Yet there remains one important constant – real estate retains its intrinsic appeal because of its physical nature and its historic function as an inflation hedge during periods of instability.
In this part of the world at least, bricks and mortar remain intact as an attractive and visible home for one’s money.
- Brian Lavery is managing director at CBRE NI