While President-elect Trump maneuvers his transition from candidate to president, the real estate industry is starting to sort out whether his policies will be good or bad for business.
Thomas Mitchell has written an excellent summary for Inman readers. One question that is still unsettled is that of overseas buyers: Will offshore buyers flee Trump’s America or embrace it?
This is important because just one group of overseas buyers, those from China, bought at least $350 billion in U.S. real estate between 2010 and 2015.
That means they paid $21 billion dollars of income to real estate agents, if you estimate that those buyers paid a 6 percent commission on every transaction. I’m sure no one in the industry wants to give up that cash flow.
If Trump is as successful at managing the economy as he has been running his campaign, we can expect foreign investment to surge. He said he would win the race to the White House, and he won.
Economic promises
On the economic front, Trump has promised to create 25 million jobs in the next 10 years and to double economic growth to 4 percent. If he succeeds, it is safe to say that foreign and local buyers both will be lining up at open houses.
With that kind of job growth, you could expect an American property boom like we haven’t seen in decades.
There’s no certainty, of course, that his promises will come to fruition. In the meantime, we already know how foreign buyers feel about Trump. We know because we asked them.
We, at Juwai.com, surveyed more than 500 Chinese international property buyers just before the election.
- On the question of who is most likely to implement policies that benefit Chinese investors, 54 percent choose Hillary Clinton, while 46 percent chose Trump.
- 39 percent believe Chinese investment will increase under a Trump administration.
- Almost half believe investment under Trump will increase “significantly.”
During the campaign, neither candidate set out a policy on this issue. We can make some guesses, however, by looking at President-elect Trump’s business activities.
Wealthy investor migrants
Through the Trump Organization, for example, he has deep international business ties and ongoing contracts with overseas financiers and developers.
He also is involved with at least one development project that is using the EB-5 investor visa fundraising program. That suggests he will support the renewal of that program.
Trump’s son-in-law, Jared Kushner, is developing 50-story Trump Bay Street, a luxury rental apartment in Jersey City, New Jersey. The project has raised $50 million from loans obtained through EB-5 visa applicants. That accounts for about a quarter of the total project cost.
Are Chinese buyers worried by the many anti-China statements Trump made during his campaign? From the results of our survey, apparently not. They recognize that Trump is a businessman and feel that they can invest in a country he runs.
The conclusion we draw from our survey of Chinese buyers is that they will not desert the U.S. market. Nor do I see any reason to expect other international buyer groups to pull back immediately after the election.
If Trump can maintain or improve our economic growth rates, we see the potential for huge gains in international investment. Creating jobs, tax revenue and real estate agent commissions would be good for the country.
Matthew Moore is president of the Americas for Chinese international real estate website Juwai.com. You can follow him on Twitter or Linkedin.