With the inauguration of Donald J. Trump right around the corner, there's been a lot of negativity surrounding what some call "controversial" policies he's proposed for his administration. Come January 21st a new era in leadership will begin, and hopefully with very positive indicators for the real estate industry. Here's a short and candid look at the greater impact of a Trump presidency based on the man's true reach. For some, the god's of real estate may have just blessed America.
Donald Trump is a builder, a project developer, maybe even what you could call an alpha developer, an entrepreneur who has transformed nothing into veritable gold many times over. In the run-up to his inauguration, the core business acumen of the man has been lost amid an avalanche of partisan politics. What's most interesting about Trump is the fact so few people really understand who he is. While there's no room here for biography, Trump's family, his German roots especially, burrow deep into entrepreneurial endeavors. His grandfather and his father were both successful speculators, and his own brand is unmistakable worldwide. From renovating Manhattan high-rise towers to creating golf resorts in Scotland, Trump represents a particular breed of American speculator. Politico Magazine has called Trump's coming administration; "America's First Real Estate Presidency". The story's author, Jack Shafer frames the situation:
"The White House has been home to lawyers, generals, professors and career politicians, but never a real estate sharpie like Donald Trump."
While the Politico piece is decidedly anti-Trump, the core reality is that his presidency will absolutely be affected by a real estate mindset. Risk being a central variable in all Trump business activities, it seems fair for investors to anticipate a bullish market with big "ups and downs", where the potential for huge gain and huge loss reign. There are several components we might examine to get a better handle on what's in store the next 4 years, but the investment standpoint seems most interesting. If I predict a boom market for US real estate for 2017-2018, I think I'm pretty safe in doing so. Here's why.
This Fortune story talks about Russian interest on investing in American real estate at unprecedented levels. As a "for intance", Global real estate consultancy Knight Frank reported a 35% surge in Russian inquiries on U.S. properties compared to last year. A lot has been made of the relationship in between Trump and Russian President Vladimir Putin, but the reality of American-Russian detente during Trump's era may prove profitable on all sides. While the Democrats and Republican detractors of Trump harp on the billionaire's worldwide business connections and businesses, the real estate capital Trump is affiliated with can superpower America developments and property values.
This article on NBC News frames several key Trump associations that could spell big positives for American developers. The piece talks about Trump's family's ties to Dubai Billionaire Hussein Sajwani, and the incoming president's worldwide real estate holdings from Vancouver to South Korea and back. If George Bush was good business for the US energy sector, then Donald Trump could bring in a bonanza for stalled projects in America. Another facet of this potential reaches beyond Trump cabinet nominees and their luxury digs. Foreign investment in the US market being key for my property rush theory here, let's take a look at something Kenneth Rapoza at Forbes ( The BRIC Breaker) discussed recently, the investor visa, or EB-5 visa that has infused the market since the 1970s.
At the negative media turn, Donald Trump's plan to build a wall on the Mexican border has been all the rage as a political football. The reality of the "legal" EB-5 visa program is another huge potential for American real estate in the coming years though. The EB-5 visa program has now expired even before the end of the Obama presidency, but it represents a huge potential for a Trump White House. For those unfamiliar, EB-5 requires foreign investors to put up at least $500,000 in a project. It can be a new project or one that is getting rehabilitated and was built no earlier than 1990. The investment must lead to 10 new full-time jobs, and the program assures the investor and his immediate family US citizenship. Considered a "job creating" vehicle unlike similar programs, a revamped and promoted EB-5 could energize massive influx in project or property investment. As Forbes' Rapoza remarks:
"No one knows how belligerent Trump will be on the immigration front. But if Trump sticks to his talk about creating jobs, and bringing in foreign investment, then there is nothing better in current immigration law than the EB-5."
Having a real estate mogul in the White House can only be considered a positive cue where the industry is concerned, this is the bottom line. The Street agrees, reporting that the outlook for REITs is positive heading into 2017 in part based on the coming Trump presidency. While the negatives and conflicts of interest brought to the forefront by the Trump presidency to come should not be overlooked, the potential positives bear witness to opportunities too. If I were a project developer in need of a shot in the arm investment wise, Donald Trump would be my Pied Piper come January's end, one look at the Trump Organization should be sufficient for most visionaries. At least this is my view. I leave you with a quote from Trump himself:
"In the end, you're measured not by how much you undertake but by what you finally accomplish." Donald J. Trump