Expectations of a strengthening dollar, as a result of newly elected President Trump’s reflationary policies and the potential impact of protectionist measures, could act as a boost to European real estate values.
As the US administration acts to penalise nations which it deems hostile, whether in terms of immigration or trade, including its neighbour Mexico and the world’s second-largest economy China, the value of the dollar is likely to rise: China’s response to punative trade measures may include allowing the renminbi to fall, further accelerating the dollar’s appreciation.
China has an estimated US$3 trillion in currency reserves, most of it invested in dollar-denominated assets such as Treasury bonds. A stronger dollar places the Chinese government in a yet more advantageous position.
Investors who have hitherto placed their trust in the US markets may now turn to the less volatile European landscape, where the rule of law and the integrity of countries’ constitutions are suffering fewer challenges than in some areas of the United States.
As a property tycoon, President Trump will appreciate the opportunities that may now emerge for American investors.
