What Does President Donald Trump Mean For The Australian Property Industry?
Real estate mogul and celebrity billionaire Donald Trump has claimed the United States Presidency in a stunning and historic result.
In what will go down as one of the most bizarre and controversial presidential campaigns in US history, there is now no doubt that Mr Trump will be President.
Global financial markets are badly rattled, with stocks and commodities slumping, along with currencies fluctuating wildly around the world.
Nervous investors are piling in to supposed haven assets, boosting the Japanese yen, gold and government bonds.
The Australian share market has lost about $34 billion in value on Wednesday, in a highly volatile day. The Australian market's SPI 200 futures index is down 1.8 per cent.
Across the Asia-Pacific region, shares also tumbled. In Japan, the Nikkei slumped 5.8 per cent, while the Hang Seng in Hong Kong sank 3.5 per cent on fears of a radically different geopolitical and economic landscape.
So what does a Donald Trump Presidency have to do with the Australian property industry?
It's hard to know the extent to which the Australian property industry will be affected by this unprecedented result.
At the very least, the election of Donald Trump as President will likely impact confidence in the short-term, but in the long-term, it is anyone's guess what the implications and ramifications will be.
We've put our minds to some areas that we think may be affected.
Infrastructure, Infrastructure, Infrastructure.
In his short and unscripted victory speech, it became very clear that infrastructure will be central to his administration's policy agenda.
For the Australian urban development industry, there may be some lessons to learn from the infrastructure projects that are delivered under the billionaire builder.
We'll be watching closely the structures and partnerships that the Trump administration will employ to deliver "only the best" infrastructure projects.
Free Trade Agreements.
The US is one of Australia’s largest trading partners. The Australia-US Free Trade Agreement has eliminated barriers to trade between the countries, further deepening their economic ties.
Trump has been outspoken about his opposition to free trade agreements, including the Trans-Pacific Partnership (TPP) which is now a threatened species.
The United States is the second-biggest spender on Aussie property with $7.1 billion worth of applications ticked off by FIRB in 2016.
It is not yet known whether there will be any impact on foreign direct investment into Australia's real estate sector.
The Sharemarket
Australian shares are expected to take a nosedive when the markets open in the morning, with the dollar falling and potential interest rate rises to follow.
Investors are particularly worried about Mr Trump's protectionist trade policies triggering "a global trade war," according to AMP Capital chief economist Shane Oliver.
"Australian shares would be particularly vulnerable to this given our high trade exposure," he said.
The economic implications for the US and rest of the world are mixed, with many Trump policies, including big tax cuts and increasing defence and infrastructure spending expected to provide an initial boost.
"Longer term though, the budget will likely blow out and protectionist tariff hikes would likely set off a trade war along with much higher consumer prices and immigration cut backs would boost costs," Dr Oliver said.
Real Estate - A Safe Haven Investment Location?
A potential unintended benefit of stock market volatility may be an increased allocation of investment into 'bricks and mortar'.
A volatile stock market, global economic uncertainty, a low interest-rate climate and political uncertainty all bode well as factors underlying a surge in real estate.
It seems a fitting outcome for a moment in history defined by a property developer.
Adam Di Marco is the founder and publisher of The Urban Developer. He is also a director of Brisbane-based property investment and development firm, Marquette Properties.
