Europe’s sovereign debt problem is as severe as the financial crisis of 2008, and a “clear and present danger” to the world economy, said Roger G. Orf, head of real estate, Europe, for Apollo Global Management, a firm that invests in private equity, credit-oriented capital markets, and real estate. Uncertainty about the fate of the euro, and whether some of the continent’s weaker economies, including Italy and Spain, will be able to maintain it as their currency, is already an impediment to investment.

“It does create a chilling effect on where you invest,” Orf said. “Are these guys going to be in or out in three months’ time?” he asked. Orf was a panelist at a session on the implications of the debt crisis for Europe at ULI’s 2011 Fall Meeting in Los Angeles in October.

If, for example, Spain were to be dropped from the euro, he said, building tenants would pressure landlords to renegotiate their euro-denominated leases. Tenants getting paid in a lower-valued local currency would argue that they could no longer afford to pay leases pegged to the euro.

Panelist Jon H. Zehner, a European-based senior director of AREA Property Partners, a global real estate investment and asset manager, said his company is not investing in Spain and Italy because of such risk. “It’s difficult to even contemplate what’s going to happen if they come out of the euro,” he said.

Lending for real estate development is already highly constrained because of the debt crisis, panelists said. Only top-tier projects can find financing, and most banks are focusing on investing in their own countries, avoiding cross-border projects, Zehner said.

Opinions about Germany’s likely role in preserving the euro differed according to the location of the expert. Former ULI Chairman Jeremy Newsum, executive trustee of the Grosvenor Estate in the United Kingdom, was pessimistic. “My own opinion is the euro is impossible to sustain,” he said. Newsum anticipates either that it will be dropped entirely, or that the European system will be broken into strong-currency and weak-currency sectors. (The U.K., while a member of the European Union, never adopted the euro.)

Newsum noted that German business has benefited from a euro that is weaker than the Deutsche Mark would have been in its absence. The Grosvenor Estate is a portfolio of businesses, rural estates, and other investments, including Grosvenor, an international property group of privately owned property development, investment, and fund management businesses.

Zehner said he believes Germany is committed to the European currency, and would remain so even if German Chancellor Angela Merkel were to lose office. The Germans, he said, “believe they have an obligation to preserve the euro. They will do whatever it takes.” That euro, however, may not include Greece, he noted.