“Things could get messy”: Jefferies analyst on Trump
“Things could get messy” for both the US and UK real estate markets, Jefferies analyst Mike Prew has predicted in response to Donald Trump’s election victory.
The bottom-line impact could be rising bond yields and as a result a reduced gap in the spread with property yields, making the sector less attractive, he said in a note.
“Add to that a post-election Fed rate rise in December, then things could get messy for real estate,” he said.
“Things could get messy” for both the US and UK real estate markets, Jefferies analyst Mike Prew has predicted in response to Donald Trump’s election victory.
The bottom-line impact could be rising bond yields and as a result a reduced gap in the spread with property yields, making the sector less attractive, he said in a note.
“Add to that a post-election Fed rate rise in December, then things could get messy for real estate,” he said.
This could be transmitted to other global markets with the result of a drop in real estate returns.
In the UK, there could be another run on the open-ended real estate funds in 2017 in response to the greater market uncertainty, adding to a London office occupational slowdown post-Brexit.
However, Prew said there could be upsides for some markets following the election result.
“The real winner will be Canadian immigration and the residential markets of Toronto, Montreal and Vancouver,” he said.
Far Eastern investors with economies “safe from the turbulence” and “significant current account surpluses” could emerge as the corporate real estate buyers and purchaser of REITs outright, Prew added.
The oil price rising sustainably over $50 per barrel could see sovereign wealth funds return to real estate when the price is right.
The result could also have an upside for emerging markets including South Africa, with significant rand shareholder interests in UK REITs.
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