Property markets around the world could benefit from the election of Donald Trump as the next President of the United States but a lot will depend on how the country’s economy and dollar performs.
Experts believe that it could be good news for US investment in the UK property market as London in particular is regarded as a safe haven for real estate investors while the Canadian market could suffer as Americans look to buy elsewhere.
The election result saw the value of the dollar immediately fall and a prolonged dip could have a positive effect in that investors might want to move their money to other international markets, but it could also mean property buyers getting less for their money.
According to Adriano Amorese, a construction and property expert and partner at international law firm Berwin Leighton Paisner, Presidential elections traditionally result in a dip in the dollar which corrects once the new President takes office in the New Year.
But he believes that a prolonged dip in the value of the dollar could lead to a slowdown in US investment activity in the UK property market. ‘Presidential elections traditionally result in a dip in the value of the dollar, which corrects once the new president is elected and stability returns. However, a Trump victory is something of shock to the political system. It could result in a prolonged period of uncertainty and downward pressure on the dollar,’ he said.
‘The good news is that the significant drop in the value of the pound due to Brexit should hopefully mean the dollar has further to fall before this starts affecting transatlantic investment decisions,’ he explained.
But Camilla Dell, managing partner at independent property buying agency Black Brick, believes market turmoil and weakening of the dollar is likely to result in a rise in global investment into the prime central London property market.
‘We are already seeing a flight to safe haven assets such as gold this morning and prime property in London has always been seen as a safe haven asset in turbulent times. We are also likely to see some wealthy US citizens, particularly those most offended by Trump, move to the UK as some of our American clients hinted to us prior to this outcome,’ she pointed out.
‘Foreign buyers, particularly those from the Middle East and of Muslim faith, may enter the London property market, too, as they decide not to buy property in the US due to his remarks about banning Muslims from entering the country,’ she added.
Simon Tollit, central London sales director for Sotheby’s International Realty, also revealed that there has been an increase in US purchasers looking to buy in and around the prime central London market.
‘Whilst the impending election was causing concern for some, it is more likely this was being driven by the weak pound rather than the election results. It is possible this interest from US purchasers may wane as we have already seen the pound make strong gains against the dollar following the vote, with these currency shifts in mind we expect other foreign buyers to look to the London property market as a consistently safe investment,’ he explained.
‘Investors do not like to buy in uncertain markets and a win for Trump means a change of party, meaning changes in policy are far more likely. New York and London are historically rival property markets, meaning this result could sway buyers to favour a London purchase instead,’ he added.
The Australian property market could also benefit as it too is regarded as a safe haven for property investors. However, it does have more restrictions on overseas buyers than markets like the UK.
Trump’s win will drive more foreign investors to the Australian property market, according to Nerida Conisbee, chief economists at the REA Group. ‘It makes investment in Australia more attractive for large foreign developers and institutions, as well as high net worth private buyers looking to purchase residential property,’ she said.
‘Australia will be a beneficiary of this as it is considered to be one of the safest markets in the world,’ she pointed out but added that in uncertain markets, people don’t like to buy.
The US election results could also result in a change in buying habits for South Americans who have traditionally bought in, who suggests that Portugal could benefit. ‘South American investors, especially from Brazil, are now much more likely to steer clear of usual favourites like Miami and New York. With a flexible golden visa programme and cheap prime real estate, Lisbon was already a strong contender to Miami and a Trump presidency will only build on this trend,’ he said.
Historically, Americans have been the largest foreign buyers in the Canadian property market, especially in places like Muskoka in Ontario and Whistler, but he believes that a dip in the US dollar will impact Canadian real estate prices and that impact could last years.
He pointed that property markets in Nova Scotia and New Brunswick plunged as much as 60% after the 2008/2009 financial collapse when Americans pulled out en mass and some of these markets are still in the process or recovering, almost a decade later, so could be vulnerable again.
But for the US property market policies outlined by Trump may be beneficial such as tax cuts and infrastructure spending. ‘At the end of the day, the fundamentals underlying the US real estate market are sound. We believe it would take a very significant exogenous shock to derail the market, and Trump’s win is unlikely to prove enough of a shock to sharply reverse that progress, particular given the checks and balances in place,’ said Michael Gately, head of real estate research at Barings Real Estate Advisers.