No property man has ever got this far, writes real estate finance specialist Jeppe de Boer, of Donald Trump's US election win. And his victory may not spell all bad news for the European property sector.
Donald Trump has emerged as the winner of the world’s biggest reality show. He did - masterfully - what he had to do to win the elections. No property man has ever got this far.
For American democracy it is not at all bad news that Trump has departed from the norm of candidates with the biggest campaign funds or those related to a former president winning the elections. The coming months will tell what Trump's government agenda is really about. In his victory speech, gone was the man given to hyperbole and bizarre statements, in his place was a calm, presidential looking-and-speaking statesman. It is to be hoped that his latest appearance is a taste of the kind of president America is set to get. Given the Republican majority in both, Trump will have both the Senate and the House of Representatives on his side, enabling him to rule more effectively than the current president.
On the economic front, Trump has said he wants to double GDP growth. To achieve this, he will have to resort to extensive stimulus packages. He has already indicated that he wants to invest large sums of money in infrastructure and urban renewal. This is not a bad thing in itself: it is good for job creation and anyone who has ever travelled to an American airport knows that it is no extravagant luxury. Financing all these investment programmes will be a major challenge. Trump does not want higher taxes and if he allows the government debt to mushroom even more, interest rates will very likely be hiked. As a creative real estate developer, he will no doubt look at alternative funding options. The good news for the property sector is that institutional investors worldwide are sitting on huge piles of cash and infrastructure is a popular investment class.
For European property, the likelihood that the new president will mean 'business as usual' is bigger than we think. US trade politics will likely get somewhat more aggressive than they were already and the rest of the world will feel more US pressure to pay for their own defence programmes. This is more than justified really. Together with an entrepreneurial cabinet, Trump will probably pursue a pragmatic foreign policy, focused more on what is good for America and less on changing the world. If we compare this with the foreign policy of the previous Republican president and his Neocons, that may be an improvement.
Keep calm and carry on.
Jeppe de Boer is founding partner of real estate corporate finance firm Masterdam
