9 November 2016

TRUMP PRESIDENCY: WHAT IT MEANS FOR THE INDIAN REAL ESTATE MARKET?

News

With the unexpected news of Donald Trump winning the 2016 United States Presidential Elections, a republican presidency has finally become a reality after eight years of democratic rule. Trump being an outsider with lacking any specific plans to revive the US economy has ensured there is an uncertainty at this point of time on how his presidency would affect trade with India and how that in-turn will impact the Indian real estate markets.

Donald Trump came to power on the promise of renegotiating trade agreements such as NAFTA and TPP. His support base has been impacted by the loss of American manufacturing jobs. It is not clear how much of the election rhetoric will get subdued in his presidency. 

Research View

As Asian markets have reliance on the American presidential election cycle, the stock markets will be volatile for a few days. We feel that it will affect both the manufacturing and the services sector negatively. The proposed tariffs on various sectors can be negative for our “Make in India” campaign. If the proposed 20% tax on imports and 15% tax on companies for outsourcing jobs (as outlined in his book “Time to Get Tough”) is put in place, it may reduce India’s software exports too.  Trump’s stance on H-1B visas is well known. Scrapping this visa or restrictions on issuance of H-1B visa including a very high visa application fee will lead the India based software companies to either reduce workforce or absorb them in other processes in mid to long-term. Eventually, site based hiring and project based hiring by several IT-ITeS companies will negatively impact profitability and subsequent expansion plans of some large occupiers. That said, with turmoil brewing in both United States and Europe, the prospects of location attractiveness for India as a stable investment destination will improve globally. Investments in India shall take a jerk and we might see reduced cash flows from foreign investors in Indian markets. However, the real estate market would be more likely to react on recent currency demonetisation by Modi government to curb black money. 

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