With the Republican and Democratic national conventions happening this week and next, U.S. politics is taking center stage. Players in the global, high-end real estate world are carefully considering how a Trump or Clinton presidency might impact their business.
Although Republican presidential nominee Donald Trump has spent his career and built his brand developing, investing in and managing high-end residential and commercial properties, he’s new to the political world, and “people putting investment capital into large projects are nervous about any unknowns,” said Edward Mermelstein, a Manhattan-based international real estate attorney.
That means that if Mr. Trump is elected, “there is definitely going to be a pause,” Mr. Mermelstein said, as people hold off on supporting new developments or buying high-end properties while they wait to see how the early days of the presidency go.
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There is an expectation, however, that long term, “a Trump presidency would be extremely positive for the real estate world,” Mr. Mermelstein said. This is because a reduction in taxes for the wealthy and a lower capital-gains rate, both typical of a Republican platform, would increase high-end real estate spending.
But, “this is not a typical Republican platform,” said Rick Pretsfelder, a partner at real estate firm Leslie J. Garfield & Co., also based in Manhattan. While lowering taxes for the wealthy should, by default, help the high-end real estate sector, Mr. Pretsfelder worries that some of Mr. Trump’s trade policies, if they were implemented, would lead to a trade war and cause the economy and global real estate to contract.
Another aspect of a Trump presidency that might spell trouble for the global real estate stems from the way he talks about immigration, said Nela Richardson, the chief economist for Redfin, a national real estate brokerage.
When Ms. Richardson considers South American investors who buy in Miami or Chinese investors who buy in New York or San Francisco, she wonders whether the hostility Mr. Trump expresses toward globalization will turn them off. “Will foreign buyers feel welcome in the U.S., given certain policies that have been tossed around?” she asked. “Or will they just see this as an economic opportunity and ignore the rhetoric? That’s a question that I think will be worth watching.”
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Bottom line: A Trump presidency is hard to predict.
Meanwhile, presumptive Democratic presidential nominee Hillary Clinton is considered a known political quantity who is likely to continue the economic status quo if she wins the election, Mr. Mermelstein said.
But there’s a catch, according to Ms. Richardson: Mrs. Clinton hasn’t been talking about housing either. This means that neither candidate has named any explicit policy initiative that would excite—or worry— people in the luxury real estate world.
The end result? More uncertainty. But, experts said, uncertainty is part of every election, and buyers so far are not expressing any hesitation tied directly to the presidential race. “I have not sat with any one client who is considering buying and says that their biggest concern is this election,” said Santiago Arana, a managing partner at Los Angeles-based The Agency.
Mr. Arana, who comes from a political family in Bolivia but has been in real estate for 12 years, said he expects that any impact the election has on luxury home sales will be short lived.
“People may sit down and watch for the first two or three months and see what changes are going to happen,” he said, “but then everything will reactivate and life will go on.”
Here’s a look at other news from around the world compiled by Mansion Global:
Australian luxury market falls as Alan Bond house sells at reduced price
The asking prices for some of Australia’s most prestigious properties have been slashed by millions of dollars, Domain.au reports. The former Perth home of failed tycoon—and Van Gogh Sunflowers owner—Alan Bond sold for A$3.95 million, below the original asking price of A$4.75 million. The town of Cottesloe, the Perth suburb where the home is located, has seen home prices drop 13.5% over five years, according to Domain Group data. (Domain)
High U.K. home prices kept singles out of the market in 20-year trend
Single people represented 14% of first-time buyers in the U.K. in 2014-15, down from 29% in 1994-95, according to the British government’s newly released English Housing Survey. “First-time buyers are older, richer and more likely to have children than in the past,” said Neal Hudson, associate director of residential research at Savills. “With high house prices relative to incomes, this is likely to continue." (Financial Times)
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Shanghai faces future home shortage as developers vie for scarce land
Competition for land among developers will likely send home prices skyrocketing in Shanghai, a market that is already seeing a severe shortage of parcels for new residential properties. Home prices rose 50% between the second half of last year and the first quarter of 2016, fueled by fears of a shortage of new homes in China’s biggest metropolis. (South China Morning Post)
Vancouver property boom threatens city's pre-eminence as shipping port
The Port of Vancouver, Canada’s biggest, is being squeezed as demand for property for housing, offices, even movie sets, is booming. The regional port authority estimates that Vancouver may run out of industrial land within 10 years, and some of the port’s $200 billion in annual trade may move elsewhere. That could leave the city as a “lifestyle bubble” for retirees and tourists, according to a report prepared for the port authority. (Bloomberg)
Sri Lanka's capital Colombo enjoys surge in new luxury housing
Luxury apartments are cropping up all across the Sri Lankan capital of Colombo, a rapidly emerging hot spot for business and tourism. Meanwhile, many longtime residents are being driven to Colombo's less expensive outer suburbs. Condo prices are a bargain compared with many parts of the world, according to data from consultants KPMG, with super luxury apartments selling for US $230 to US $385 per square foot (Lanka Business Online)
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Homebuilding revives in Spain after 2008 real estate bust
Residential construction in Spain is surging back eight years after the market went bust in 2008. Foreign investment is pouring into developments in Madrid and Barcelona, and with the number of building permits on the rise, more growth is likely to come. Demand is strong for both luxury apartments and homes for middle-class families in cities across the country and in areas with strong industry. (Reuters)
Silicon Valley workers balk at high home prices, telecommute from many states away
Tech workers are finding they don't have to put up with sky-high prices and small homes in Silicon Valley—many firms are letting their workers telecommute from places as far away as Michigan, Bloomberg Business Week reports. One in four online home searches in the San Francisco Bay Area is now focused on a remote location, according to real estate brokerage Redfin. (Bloomberg)
Frank Lloyd Wright homes fail to make UNESCO list
The World Heritage Committee of UNESCO, the United Nations Educational, Scientific and Cultural Organization, added 21 sites to its list of world heritage monuments—but homes designed by famed American architect Frank Lloyd Wright were not among them. The panel asked for more information about the Wright homes, including Fallingwater, Taliesin West and the Hollyhock House, They will likely be resubmitted next year. (Curbed)