The global real estate industry will be watching to see whether the US presidential election result will have an impact on global capital flows.
The US commercial real estate market is not expected to react immediately to the victory of Donald Trump, but the longer-term effects of the incoming presidency are more uncertain.
In the immediate aftermath, global stock markets fell, the US dollar weakened and parallels were drawn with the .
Michael Gateley, head of real estate research at Asset Management, said: 鈥淚t is unclear how much of Trump鈥檚 agenda will actually be implemented. In this sense, we鈥檙e facing a scenario not unlike June鈥檚 Brexit vote.
鈥淲e believe the best approach to investing is to let the initial shock subside and focus on the implications of Trump鈥檚 cabinet appointment and policy proposals going forward.鈥�
Elisabeth Troni, head of EMEA research at Cushman & Wakefield, gave a similarly measured short-term prognosis. 鈥淎s happened after the Brexit vote, we suspect that stock prices will rebound once investors digest the shock outcome and realise the impact of a Trump presidency might be smaller than initially feared,鈥� she said.
鈥淭he vote for Brexit delivered an immediate shock, but since then UK economic data has held up relatively well.鈥�
But questions remain over whether high levels of foreign capital will continue to flow into US real estate, which is widely perceived to be a 鈥榮afe haven鈥� market.
Mark Gabbay, CEO for Asia at Investment Management, told IPE Real Estate in London today that the US would remain a major destination for global capital, including Asian investors.
He said: 鈥淭here鈥檚 a short-term pause 鈥� a natural reaction 鈥� and the result causes uncertainty in the largest safe-haven market.鈥�
鈥淭he biggest risk is if gates to foreign investment are established. Access for investors will play a bigger role than ever in real estate investment.鈥�
Uncertainty, he said, benefits the real estate sector and creates opportunity, of which, he said, there is no lack of across the Asia Pacific region. 鈥淔or Asian markets, this is only net-positive in terms of diversification. We already saw inflows increasing last year.鈥�
Gateley said the US real estate market鈥檚 solid fundamentals and underlying strength and transparency will 鈥渕itigate some of the initial shock鈥�.
He added: 鈥淚n the near term, Trump鈥檚 victory is unlikely to be viewed favourably by markets or by our trading partners and investors overseas. In the coming months, we will be paying close attention to Trump鈥檚 views on monetary policy, immigration, taxes and foreign policy.
鈥淎t the end of the day, the fundamentals underlying the US real estate market are sound.鈥� It would, Gateley said, take a 鈥渧ery significant exogenous shock to derail the market鈥�.
鈥淭rump鈥檚 win 鈥� while certainly a shock 鈥� is unlikely to prove enough of a shock to sharply reverse that progress, particularly given the checks and balances in place.鈥�
For Europe, Troni said there is the possibility that flight capital could eventually benefit London and other European capital cities, as investment into the US may be put on hold.
Unless there is material deterioration in economic conditions, market conditions across the UK and Europe are unlikely to change, she said.
鈥淥ccupier demand in EMEA was unaffected by the Brexit vote which was also a shock result,鈥� she said. 鈥淒emand for commercial space in London has been dented by Brexit and a contraction in business investment, but outside London things are ticking along well.
鈥淗ow persistent the weakening in London becomes is largely dependent on Brexit negotiations, but should remain generally unaffected by the US election outcome.鈥�
Assuming markets calm down, Troni said, Cushman & Wakefield expects investors to resume efforts to deploy the record level of capital that has already been raised and allocated for European commercial real estate.
But the outlook for listed European real estate is 鈥渁s clear as mud鈥�, according to analysts at JP Morgan.
鈥淭he US election result doesn鈥檛 change anything for the fundamentals of listed property in Europe in our view,鈥� a note from the firm said.
鈥淥n an underlying property capital flow level, the result could push more money into Europe, but with upcoming elections in France and Germany what will the US result do for political risk appetite.鈥�
