Donald Trump appealed to millions of working class voters who were disillusioned with the Obama administration. (Photo: Gage Skidmore, Wikimedia Commons)
Millions of Americans who voted for Donald Trump think his tough stance on trade and immigration will bring more jobs to the US, but many others are worried his ‘America First’ policy will unsettle an already weak global economy.
By Romesh Navaratnarajah
In the United States and around the world, many people remain stunned and worried about the future, following Donald Trump’s shock election win on 9 November. Despite losing the popular vote, he still won the presidency.
So why did more than 61 million Americans vote for the brash real estate billionaire from New York? There are a variety of reasons, one of which was his promise to “make America great again”, which resonated with the country’s working class.
For 40-year-old Minnesota business owner Jennifer Carnahan, Trump’s win did not come as a surprise. “There seemed to be widespread support for Trump, and a lot of frustration with the current government and traditional politicians,” said Carnahan, who ran as a Republican candidate for the Minnesota State Senate, but lost.
She told PropertyGuru that many Americans are optimistic, and excited to see what Trump will do when he takes office in January 2017.
Change is here
She believes this is the start of a new era in US politics. “I think that Trump is a smart businessman, and will appoint people with experience and leadership skills into key roles to set his administration and our country up for success.
“Trump is doing all the right things to ensure a smooth and successful transition of power. And hopefully, this means he will revitalise the economy, bring more sustainable jobs to the US, and right some of the wrongs which have taken place in the last eight years.”
This is in reference to the Obama administration, which she feels didn’t do enough to support ordinary Americans.
“The issue with our country is that people need opportunities to work, live the American Dream, increase their wages, and be able to provide for themselves and their families.
“Under the Obama administration, the middle- and lower-classes were hit hard, and people became more reliant on the government to survive. That is not the heartbeat or fabric of America. We want all of our citizens and residents to become self-reliant and be able to build their own dream,” she said.
Carnahan is aware that much of the world is upset that Trump won the election, but she feels people abroad don’t fully understand the key issues facing the US.
“They only know what they read and hear from the liberal media, so based on this, I think foreigners will have a negative view of Trump’s presidency.”
Jennifer Carnahan, a business owner from Minnesota, is optimistic about America’s future.
Mixed views on Trump
But what effect will Trump’s win have on the global economy and property markets? Not surprisingly, views from analysts outside the US have been less positive.
Nicholas Hoult, Asia Pacific Head of Research at Knight Frank, said: “Similar to the impact of Brexit, the result of the US presidential election is likely to cause further uncertainty in terms of global economic recovery, and is likely to lead to a rush towards safe haven assets. Along with gold and triple-A rated government bonds, prime real estate in key global city markets is likely to see an uptick in interest.”
Hari Krishnan, CEO at PropertyGuru Group, believes property markets in the ASEAN region will see marginal declines due to the uncertainties of a Trump presidency.
“His campaign did not indicate specifics on monetary policy, or the role of the US in Southeast Asia. As such, we expect the real estate market in Singapore and the region to see muted increases or even declines, as investors adopt a wait-and-see attitude to see how the dust settles,” said Krishnan.
Flight to safety
Lloyd Hughes, Communications Director at property investment advisory firm Athena Advisors, thinks many US investors will look to acquire assets in Europe instead.
“Currency has been the biggest catalyst for Americans buying overseas, and there is resounding uncertainty over whether Trump’s economic policies will affect the US dollar negatively,” he said.
“US buyers targeting Europe are still around 24 percent wealthier than they were two years ago. US buyers have always had a love affair with Paris, so with both currency and historically low mortgage rates in their favour, demand is expected to increase in the short term.”
He also expects cities like Lisbon, Portugal to see increased interest from South American investors, especially from Brazil, who have traditionally favoured US cities like Miami and New York.
Sky-high home prices
Aside from the Trump factor, housing affordability is another key consideration. Hughes pointed out that New York recently overtook London as the most expensive city in the world to live, with average psf prices hitting nearly US$1,500.
“In Manhattan, the average apartment price is now US$1.87 million, up from US$1.77 million in 2014. Miami is not as extreme as New York, with property prices averaging US$419,164 in 2015.
“Compare that to Lisbon, where a prime city centre apartment on the equivalent of Fifth Avenue (a major thoroughfare in Manhattan) currently goes for around €7,000 psm to €8,000 psm, and you can really see the value and potential for uplift,” he said.
Hughes added that Portugal’s Golden Visa programme, a flexible scheme which allows non-EU citizens to acquire a residence permit via investments in the country, has already made Lisbon a strong investment destination, and a Trump presidency will only build on this trend. He shared that over 200 Brazilians have already received Golden Visas.
Ties run deep
However, another analyst told PropertyGuru that there is no evidence to support such assertions, and thinks Latin Americans will stay committed to investing in the US.
Eric D. Rosen, Associate Real Estate Broker at Halstead Property LLC in New York, said: “Most of those investors have deep ties to both the New York and Miami markets. They have either business ties, family ties, or banking relationships firmly established in the US. They are not going to cut those relationships just because of Trump’s election.”
In his opinion, nothing has changed in the New York property market since the election. “Trump is a real estate developer who will not do anything to negatively impact the market,” he noted, comparing the outcome of the US election to the Brexit vote in the UK.
“The only difference with Brexit is that prices in Manhattan did not have the severe, but short-term drop like they did in the UK. Our prices stayed stable.”
Rosen believes the stock market is an indicator of what effect Trump’s win may have on the economy.
“Stock market futures took a severe hit on the eve of the election, but by the time they opened on the morning following the vote, the market was positive and has been positive since the election. That shows that businesses and investors are positive, and that is also good news for the US real estate market as a whole,” he said.
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