The policies of the current U.S. administration have created political risk to investing in the United States, billionaire real estate investor Sam Zell said on Wednesday.

Appearing on a panel at the Urban Land Institute's real estate summit in Boston, Zell said what's going on now is frightening and working to undermine confidence, although he allowed that an economic recovery is under way.

Up until this administration, you knew the rules and had a very stable environment, Zell said.

Never one to mince words, Zell said he saw similarities that are a little eerie between Nero's Rome and the United States of 2010.

I continue to be an optimist about the United States, if for no other reason than I think we are going to alter the current political situation, said Zell, who has been a critic of President Barack Obama's policies for some time and was a major donor to John McCain's 2008 presidential campaign.

If the current situation is indicative of the next half century, I think we're screwed.

Zell, who led a 2007 leveraged buyout of media company Tribune Co which is now in Chapter 11 protection, said one of the few real opportunities in U.S. real estate investing at the moment was in hotels.

I don't see any great equity opportunities on the real estate side in the United States. All of our activities have been in buying distressed debt in one form or another.

Still, he said that on the cusp of an economic rebound there was not a serious inventory overhang of multi-family units to absorb the potential formation of new households.

We could eat through that inventory in three or four months given a strong recovery, Zell said.

(Reporting by Ros Krasny, editing by Matthew Lewis)

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