Trump’s Policies Set To Ripple Through Global CRE

When the American economy sneezes, the world catches a cold.

When a new president gives it a boost via tax cuts and imposes tariffs on imports, real estate markets around the globe weigh the possibility of higher interest rates, altered investment flows and changing patterns of corporate occupation. 

Real estate investors from the UK to China via the Middle East are trying to work out whether President-Elect Donald Trump’s policies will match his campaign rhetoric and to what degree America’s economy might suck in real estate investment from other markets while pushing up global inflation and instigating higher-for-longer interest rates. 

“Expect President Trump’s policies to be America-first and business-first where tariffs will play an early role in foreign policy and trade negotiations,” said Tyler Goodwin, chief executive and founder of London developer Seaforth. 

“I would expect some of the campaign hyperbole to moderate as he builds his key cabinet posts around industry leaders who will also be expected to deliver further economic growth in America, which will include supporting American global business interests, including trade.”

In an economic forecast published the day of the election result, Oxford Economics outlined its base case was for what it called the “limited-Trump scenario.” It includes an extension of 2017 tax cuts, increased government spending and targeted tariffs on China, Mexico, Canada and the European Union, including the UK.

That could put U.S. GDP about 20 basis points higher than it would have been if current policies were continued in 2026 and 2027 before dropping sharply to about 50 bps lower than under current policies in 2028 and into 2029. 

The impact on inflation will be felt from about 2026 onward, Oxford said, and it will be about 30 bps higher than it might have been otherwise. That will partly be the result of tariffs but even more so the result of a hotter economy and reduced unemployment. 

As a result, Oxford sees U.S. interest rates falling to about 3.1% at the end of 2026 whereas they would have fallen to 2.7% under current policies before rising again to 3.5% at the start of 2028. It is still working on its “full-blown Trump scenario” of across-the-board tariffs on imports, it said. 

The major concern for real estate investors across the globe is the possibility of inflation caused by increased U.S. government spending and economic activity. That would, in turn, push up interest rates, with many central banks either explicitly following the Federal Reserve or at the least, shadowing it. 

It is of particular interest in the UK, where last week’s budget outlined increased government spending, tempering expectations over the pace of interest rate cuts. 

“Both the UK budget and the U.S. election result have led to concerns from the financial markets about inflationary policies and government deficits that have pushed out government bond yields,” said Charles Ferguson Davie, co‑CEO and chief investment officer at Moorfield Group, a UK value-add fund manager focused on rented residential sectors and storage. 

“A higher-for-longer interest rate environment means less real estate valuation yield compression and more expensive debt for governments, consumers and real estate investors to contend with.”

For investors, that makes it imperative to invest in real estate sectors that can benefit from inflation, which include rented residential, short-let industrial and hospitality. But whatever the sector, the notion that rates would fall and undo some of the valuation declines that have occurred across the world in the past two years seems even more uncertain now. 

Yet interest rates in different countries don’t move entirely in lockstep, and territories where rates do fall faster than the U.S. could be a beneficiary of capital flows.

“It will be interesting to see how global investors weigh up the U.S. and European cyclical real estate opportunity in response,” said Simon Martin, chief investment strategist and head of research at Tristan Capital Partners, an investment manager. 

“The European CRE recovery is being catalysed by the reduction in rates and the normalisation of the yield curve,” Martin said. “If European rates continue to normalise and U.S. rates tick up, then European CRE dealmaking may well benefit from even more momentum over the next 12 months.”

Should the U.S. economy be supercharged by tax cuts and domestic spending, local investors could concentrate on their home markets rather than investing abroad. In London, U.S. investment increased by two-thirds in the first half of the year, according to data from BNP Paribas Real Estate.

Where they choose to focus will have a big impact on the UK market.

“Protectionist economic policy being preached, but perhaps not enacted with as much vigour, all need to be carefully considered. But, overall, I think that the CRE operators in the U.S. woke up with a smile on their face [on the morning of the election result],” said Nick Leslau, chairman of Prestbury, an investor. 

“Perhaps not so much about the president-elect but about the opportunities that will be afforded them in a more dynamic, pro-business government, and perhaps where the green debate is not given such a critically prominent role in creating policy going forwards.”

Seaforth’s Goodwin added that gateway cities like London could be a beneficiary if increased profitability for U.S. investors caused them to look to diversify abroad. 

There is a similar question when it comes to corporate occupiers and their expansion into overseas markets and how it might affect take-up in various sectors. Policy that boosted U.S. growth at the expense of foreign markets could have long-term implications. 

“The U.S. is the world’s largest source of foreign direct investment, but a more U.S.-centric economic policy and the inherent uncertainty of change is likely to slow outward flows of FDI at least in the short term and negatively impact demand in global property markets,” Knight Frank Global Head of Occupier Research Lee Elliott said.

“Meanwhile, promised business tax cuts and steep tariffs on imports as well as deregulation could boost profitability for U.S. corporates. As well as elevating U.S. corporate shares, enhanced profitability may drive M&A activity over the medium term, which could drive real estate consolidation.”

Tariffs are also seen as having the potential to increase inflation in the U.S. and would have a detrimental impact on the economies they are levied upon. Goldman Sachs estimated that tariffs would decrease UK GDP by 20 bps in 2025 and in the Eurozone by 30 bps. 

London School of Economics academics said tariffs could cut Chinese GDP by 68 bps and U.S. GDP by 64 bps. 

Gaw Capital Chairman and Managing Principal Goodwin Gaw said that both U.S. political parties have a similarly cautious policy towards China, and in that sense, the election result doesn’t make a huge difference. But tariffs would have consequences for the U.S. and China. 

“Tariffs are likely to be inflationary, which will mean interest rates are higher for longer, which will affect real estate value recovery or cash flows,” Gaw said. “However, an expensive greenback will hurt U.S. exports, so I’m not sure which side will win [if the] goal is a lower USD or inflation-inducing tariffs.” 

Some investors in the Asia-Pacific region are optimistic about the impacts tariffs could have, partly because of President Trump’s personality and partly because, as opposed to the U.S., Asian economies have large savings pools rather than massive government, corporate and personal debt. 

“The president-elect loves making deals, so I am not too concerned about the custom duties and tariffs,” Bei Capital Chief Executive Collin Lau said. 

Generally, the expectations are a cut of short-term interest rates for the near term, lower taxes, higher inflation but increasing nominal GDP, higher fiscal deficits and thus possibly higher yields required for longer duration U.S. government and corporate bonds, Lau said.

“These together will allow Asian economies to tag along with lower interest rates but keep the inflation under control due to supply chain efficiency within Asia and also live with stable currency exchanges,” he said. “The end result is a more accommodating monetary policy for commercial real estate in Asia.”

And then there is war. It is impossible to say for certain at this juncture, but during his campaign, Trump was strongly pro-Israel and intimated that U.S. support for Ukraine in its war with Russia would be reduced. That could mean an end to hostilities in the form of Russia claiming large swathes of previously independent Ukraine. 

The impact on the populations of the areas currently at war cannot be predicted. But for real estate, the stability that an end to conflict brings can be positive. 

“Donald Trump’s promise of ushering in greater global stability is something we will be closely monitoring,” said Faisal Durrani, Knight Frank head of research, Middle East and North Africa. 

“Alongside the risk of a global economic slowdown or soft landing, the regional conflict has also been a key property market risk on our radar because of the potential impact it could have on oil prices. Higher oil prices could drive up global inflation and, subsequently, interest rates, curbing the appetite to purchase property while also making it more expensive to borrow to build.”

Tristan’s Martin added that European markets could benefit from a greater perception of stability from global investors due to an end to the war in Ukraine.

Anything that brings about greater stability is generally positive for property, Prestbury’s Leslau said.

“Geopolitically, bearing in mind Trump's foreign policy achievements during his last presidential stint, I would like to think this would on balance be a good thing for longer-term investment planning decisions. And what is good for general investment is usually pretty good for real estate,” he said.