President Donald Trump’s business acumen cannot be underplayed. It is not in vain that he is known as a real estate mogul. His proposals have spelled more boom than doom for the housing market. It is almost clear what his presidency means for the real estate and even though industry professional bear divergent views, one thing they agree on is an improvement in the industry.
Despite other political highs and lows that have plagued his administration, real estate investors remain optimistic albeit cautiously about Trump’s business-friendly agenda and how it would benefit the commercial real estate. As the real estate industry gears towards 2019, the convictions have gone stronger.
Some professionals agree that one way Trump’s presidency has benefited the real estate world is by restoring the confidence of the American worker. It goes without saying that in business parlance, confidence is crucial and it’s a factor driving people to large purchases. Americans are not afraid to take mortgages, and there are more job openings for the working class. Many of those working in real estate are positive about the potential for a growing real estate economy under the incumbent president.
Taxes and Numbers
Corporate tax cuts have resulted in an impactful change for both sellers and buyers of luxury real estate. Indications are rife that 2019 is going to be stronger than 2018. Trump has spurred what experts say to be one of the longest cycles of economic expansion in U.S. history. Rising labor productivity and wages are crucial indicators that drive the U.S. economy to a more positive trajectory. The Acts and Tax Cuts proposals passed at the end of 2017 and were primarily applauded as it benefited the commercial real estate sector. In addition to stimulating the economy in the near term, the new tax law is expected to provide a boost to property owners, developers and multifamily developers in particular.
Investments in Infrastructure
The president had proposed an infrastructure investment plan encompassing $200 billion in federal incentives and financing to spur $1.5 trillion of additional investment from states, cities and the private sector. This plan was put on hold until after the recently concluded mid-term elections, but even before it was shelved, the plan’s biggest obstacle is the Congress who before the mid-term polls had only authorized a $20 billion infrastructure investment. This is a fraction of the $200 billion that would have attracted (roughly $1.5 trillion).
A significant infrastructure investment could not only directly impact the economy concerning job creation today, but could also improve productivity which is long term. When there are standard and well working or managed bridges, roads, airports and railways, the wheels of the economy are oiled and ready to go round. The influence that infrastructure has on commercial real estate is enormous. One publication sites a study by EY and the Urban Land Institute which placed infrastructure – that is telecommunication, utilities, amenities and transportation included – as the most pertinent factor that influences real estate development and stirs investment decisions in cities all over the globe.
Research by JLL found that office buildings near public transit, for example, command rents that are nearly 80 percent higher than those farther away. While many factors contribute to the value of properties, there is a strong correlation between infrastructure and the increased property values.
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