Property reacts to Trump victory

9th November 2016

The property industry has begun to react to Donald Trump’s poll-busting victory in the US Presidential election.

Following Trump’s victory this morning, Mike Prew, an equity analyst at Jefferies, suggested the news could, among other things, lead to a sharp uplift in demand for homes in Canada.

“It’s another Black Swan in what has been an odd year, from Leicester winning the Premier League in May, the UK voting for Brexit in June and now Donald Trump elected the 45th President of the US in a campaign dominated by a pro-growth and pro-jobs economic themes”, wrote Prew in a note this morning.

“Pro-growth means fiscal loosening in the world’s largest economy, and the bi-products will impact the UK real estate industry and REIT sector. US inflation rates are expected to increase, and US real interest rates are expected to turn negative.”

Liam Bailey, head of research at Knight Frank, said the US will remain the critical global source and destination for property investment flows.

Bailey said: “There may be a period of instability in currency markets, which will influence some short term decision making around asset allocation.

“However, rather like the Brexit vote in the UK the surprise of last night’s result will be likely to be replaced by a more considered view of the implications of the new presidency.

“It is important to remember that almost alone of all developed economies the US has largely shaken off the impact of the global financial crisis and has led the way to improved economic growth.

“The business environment in the US and innovation in business services and technology providers based in the US have helped to drive property market demand globally - it is an incredibly strong platform to build from.”

In the markets, the FTSE 100 opened 145 points, or 2%, lower as investors reacted to Donald Trump’s shock US election win. The initial fall wiped £37bn off the value of the UK’s biggest listed companies in just a few minutes, but the index quickly bounced back to stand just 25 points down at 9am.

London’s reaction followed a 5% slump in Japan’s Nikkei while in Hong Kong, the Hang Seng fell 2%. The US dollar also sank while the Mexican peso plummeted by as much as 13% to a record low.

Investments seen as safe havens, such as government bonds and gold, as well as the Japanese yen and Swiss franc, all attracted investors as Trump’s victory became more clear through the night.