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Five ways to mitigate the impacts of geopolitical and regulatory risk for REITs

Explore five ways REITs can mitigate geopolitical and regulatory risks to protect assets and build resilience in a volatile market.

12/10/2025 · 5 minute read

Geopolitical risks, including changes in trade policy and regulatory shifts, can significantly impact the performance, stability, and long-term growth of real estate investment trusts (REITs).

Research shows that geopolitical uncertainty can impact REIT returns, and may contribute to a higher-for-longer interest rate environment that can create challenges for the real estate sector. Now and into the future, REITs must be prepared to proactively identify, assess, and manage these risks to protect their assets, secure investor confidence, and pave the way for future growth.

REITs and geopolitics

Rising tensions between nations, trade disputes, sanctions, and economic uncertainties can create a volatile environment for REITs, especially those with international holdings or reliance on foreign capital. Such instability can lead to capital flight, currency fluctuations, and changes in investment flows, all of which influence property values and rental income.

Similarly, trade tensions and sanctions can disrupt supply chains, increase construction costs, and delay development projects. Additionally, political unrest or conflict in key markets can lead to decreased demand, higher vacancy rates, and reduced property valuations.

A spotlight on regulatory risk

Regulatory environments are also in a constant state of flux. For REITs, this means navigating a complex web of tax laws, zoning regulations, environmental standards, and housing policies that can change unexpectedly.

The recent passage of the One Big Beautiful Bill Act, signed into law in July 2025, exemplifies this dynamic, bringing with it new provisions that have significant implications for businesses and individuals alike. The legislation introduces tax cuts, incentives, and increased federal spending around border security, defense, and energy production.

It also includes amendments to the Internal Revenue Code, which may alter tax obligations, eligibility criteria, and compliance requirements, potentially influencing investment strategies, cash flow, and overall financial planning. For example, modifications to tax rates, deductions, or credits could reduce certain benefits or create new complexities, requiring stakeholders to reassess their tax positions and adapt their financial approaches accordingly.

Similarly, new zoning laws or land use restrictions can limit development opportunities or require costly adjustments to existing properties. Environmental regulations, including sustainability mandates and climate resilience standards, are also becoming more stringent, requiring REITs to adapt portfolios accordingly. Failure to comply with these regulations or to anticipate upcoming changes can result in financial penalties, reputational damage, or loss of tax advantages that are critical to the REIT structure.

Opportunities to build resilience amid geopolitical and regulatory change

Given the complexity and potential severity of these risks, REITs must adopt a strategic, proactive approach to risk management. The following five steps can help your organization do so:

Your organization should regularly evaluate geopolitical developments in key markets. This involves monitoring political stability, trade policies, sanctions, and regional conflicts. Engaging with geopolitical risk advisors can provide early warning signals of potential disruptions.

For international holdings, REITs may also consider diversifying across regions to reduce exposure to any single geopolitical event. Establishing contingency plans — such as alternative supply chains or flexible leasing arrangements — can also help mitigate the impact of instability.

Staying ahead of regulatory changes is vital. Your organization should maintain ongoing communication with policymakers, industry associations, and legal experts to anticipate legislative shifts. Participating in advocacy efforts can influence policy development and maintain that the interests of REITs are considered.

Implementing a dedicated compliance team to monitor regulatory updates and assess their implications can prevent costly surprises. Additionally, integrating regulatory risk assessments into strategic planning can help you factor potential changes into investment and operational decisions.

Flexibility is key to resilience. Your organization should design investment portfolios and development plans that can adapt to regulatory constraints or geopolitical shifts. This may include diversifying property types and geographic locations. 

In regions where regulatory uncertainty is high, you may also consider phased development or leasing strategies that allow for adjustments without significant financial penalties. This approach can reduce exposure to sudden policy shifts and provides room to pivot as needed.

Transparent communication with investors, tenants, regulators, and community stakeholders helps build trust and can facilitate smoother navigation through regulatory changes. Clear disclosures about potential geopolitical and regulatory risks demonstrate strong governance and can enhance reputation.

Engaging with local communities and regulators early in development or operational processes can also help identify potential issues before they escalate, fostering collaborative solutions. For example, climate change and environmental regulations are increasingly intertwined with geopolitical considerations. Incorporating resilience measures — such as green building standards, energy efficiency, and climate risk assessments — can mitigate risks, demonstrate a commitment to community priorities, and appeal to socially conscious investors, providing a competitive edge in a crowded market.

To effectively navigate geopolitical and regulatory risks, your organization should prioritize investing in robust risk management infrastructure and specialized expertise. This may include leveraging advanced data analytics, scenario planning, and crisis management capabilities that are customized to your portfolio, geographic locations, and specific risk profile. 

Collaborating with experienced risk advisors can enhance your organization’s ability to respond swiftly and effectively to emerging threats. Additionally, ongoing training for leadership and operational teams on geopolitical and regulatory developments can strengthen organizational agility and help maintain compliance.

Thriving amid uncertainty requires proactivity

In an era where geopolitical dynamics and regulations are constantly shifting, the ability to anticipate, adapt, and respond will distinguish resilient REITs from those vulnerable to unforeseen shocks. Embracing this mindset is critical to long-term success.

To better understand your exposures, protect your assets, and design risk and insurance programs suited to your needs, get in touch with our real estate and hospitality specialists. 

Contact us

To better understand your exposures, protect your assets, and design risk and insurance programs suited to your needs, get in touch with our Real Estate and Hospitality specialists.

Contact us

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Duncan Ellis

US and Canada Real Estate and Hospitality Practice leader

  • United States

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