The presidency of Donald Trump continues to weigh heavily on the minds of global real estate investors, with over 36 percent of the 340 delegates surveyed at ANREV’s annual conference citing it as their biggest geopolitical worry today.
Populism, the rising political trend globally that was reflected in the outcome of the 2016 US presidential elections, is the second biggest risk, as per 33.5 percent of the institutional investors and investment professionals. However, it is not solely a US-focused risk.
Rising protectionism is being seen in the UK, in Australia, in New Zealand and elsewhere. In the UK, with Brexit and the shift towards more protectionist trade and immigration policies, tax hikes are continuing for foreign landlords,” Kin Song Lim, chief executive of Rockworth Capital Partners, recently told PERE.
“In Australia, we are seeing a tightening of ownership laws, particularly for new developments, and the increases in taxes for offshore buyers as well as absentee liabilities for land tax. In New Zealand, one of the first things the new Prime Minister Jacinda Ardern put in place was a ban on foreign home buyers after a price surge in residential property. All of these factors could have an impact on how receptive countries are to foreign investment. It is a risk that is perhaps not as widely understood or accounted for yet.”
Also of particularly concern among investors is also President Trump and North Korean leader Kim Jong-un’s continuing war of words and the threat of a military escalation. At the conference, 15.6 percent cited this issue as a geopolitical concern.
The delegates’ view also resonated with the participants at PERE’s annual Asia roundtable held last month in Hong Kong.
“Can we name more than one,” Elysia Tse, head of research and strategy, Asia-Pacific at LaSalle Investment Management commented when asked about geopolitical risks during the roundtable. “With the time frame of the next 12 months then one is geopolitical risk, that could shake up the direction of global capital markets and in turn affect pricing. I don’t know what form that might come in, however. Maybe North Korea, but quite frankly if that is a risk I think it’s a tail risk. It’s a low probability, high impact event and is not just a risk for Asia, it’s a risk to everyone in the world.”
On some of the key Trump policies that pose a risk to the real estate industry, Terence Tang, managing director, capital markets and investment services for Asia at Colliers International said: “The biggest risk is the US President’s stand on foreign policies, particularly the geopolitical risk with Korea. His choice of some of the key Federal appointments such as the Federal Reserve chair will also impact Asia Pacific real estate markets in terms of the direction of travel of interest rates.”
Meanwhile on the economic front, majority of the conference participants (61.1 percent) ranked an asset price bubble and the risk of a market correction as the topmost concern.