Mapping Security and Affordable Real Estate in an Era of Conflict
For decades, investments in European real estate were primarily governed by economic indicators: yield, growth potential, tourism, and local infrastructure. However, Russia’s full-scale invasion...
The New Rules of the European Real Estate Market
For decades, investments in European real estate were primarily governed by economic indicators: yield, growth potential, tourism, and local infrastructure. However, Russia’s full-scale invasion of Ukraine has introduced a new, crucial element to the due diligence process: geopolitical security. The peaceful course of international relations, long taken for granted, has become an uncertain variable.
This new reality has direct and measurable impacts. Increased geopolitical risk has been shown to lead to lower investment, a decline in employment, and overall economic instability. For long-term and illiquid assets like real estate, analyzing a state’s security situation has thus become a key component of risk management. It is no longer a marginal issue for specialists but a cornerstone of prudent investment decision-making.
This report presents a unique, data-driven framework—the Security Resilience Score—for systematically assessing the security situation of each European Union member state. It then connects this security analysis with the real estate market to identify regions that offer a compelling combination of geopolitical safety and property affordability. The goal is to provide readers of the 11 Houses newsletter with a practical and unique manual for navigating the complex reality of the new Europe.
Part I: The Security Resilience Score: A Methodology for a Volatile World
For the purposes of this analysis, it was necessary to create a custom evaluation methodology. Commonly available risk indices are often too general or focus on the needs of corporations rather than individual real estate investors. Our model is tailored to the specific threat of a potential conflict between Russia and NATO and its impacts. We define geopolitical risk as the threat, realization, and escalation of adverse events associated with wars and tensions between states that disrupt the peaceful course of international relations. Our Security Resilience Score is built on five key pillars.
Pillar 1: Strategic Geography and Vulnerability
Geography is an immutable factor that primarily determines the level of exposure to a direct threat. It is the foundation upon which all other security considerations are built.
Proximity to Russia/Belarus: A direct land or sea border is the most significant risk factor.
Exposure to Critical Points: Proximity to potential conflict flashpoints, such as the Suwałki Gap, the Kaliningrad, the Baltic Sea, and the Black Sea, dramatically increases vulnerability.