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News Release


Expecting the unexpected

​Like the Brexit referendum – elections have the capacity to surprise.

After Brexit, we wrote about potential winners and losers in the Asia Pacific real estate markets when there is a shift in the political environment.

Much will be written about the election of Donald Trump to the Presidency of the United States, and the extent to which polling failed to see the appeal of the Trump campaign, much the same way Brexit was unexpected.

So what does this result mean for Asia pacific investors and real estate markets?

"Robust Asia growth amid heightened uncertainty" is the title of the IMF Asia Economic Outlook Report issued post Brexit in October. Regardless of political shifts in other regions, here in Asia Pacific we continue to see growth based on domestic demand, demographics and urbanization.  Increasing volatility and risk should push investors towards greater diversification.

Yields are increasingly global, rent growth is local. That provides sufficient reason in the longer term for diversification into Asia Pacific real estate for investors seeking the rent growth driven by demand for space by both local and foreign MNC.

Currency volatility

In the short term, the most immediate transmission mechanism is currency – where we might expect some volatility, as the news is digested and risk is assessed. At time of writing, the US do​llar is down, we may expect to see the Yen appreciate as it could be viewed as a safe haven.  In the medium term, some commentators suggest that the Presidency, House and Senate all under Republican control, would strengthen the US dollar.

In the current climate, currency movements might be sufficient to prompt some international investors to execute deals before the market gets more expensive; however there may also be a period of pause.

If the US dollar falls, here in Asia Pacific, Hong Kong whose currency is linked to the US dollar, is likely to become even more appealing to mainland Chinese, as we were already seeing a resurgence in real estate demand in the territory.  Over time the Hong Kong government may  enforce stricter cooling measures, having just doubled stamp duty just prior to the US election.

After Brexit- despite the fall off in volumes before the vote, weakness in the Pound prompted some Asia Pacific investors to re-enter the UK market, providing a post referendum boost.

If the fall in the US dollar is sufficient, after an initial lull to digest the news, Asia Pacific investors may see US real estate as cheap and in turn drive volumes. In both the UK referendum and the US election, immigration featured; that has not deterred Asian investors from re-entering the UK market; it is too early to make that call for the US.

Capital flows within Asia Pacific

One side effect of the US result may be to reinforce a trend we had already started to identify; the rise of cross border capital within Asia Pacific. We have seen China and Singapore funds moving into Australia, and Japan. Given the diversification benefits of growth here, we may expect to see increasing movements of global funds into Asia Pacific.

Interest rates

Will we see rates lower for longer from the Fed? Again, following Brexit, the Bank of England cut rates and introduced stimulus measures. Janet Yellen was widely expected to raise rates in December. If there is a similar level of financial market turmoil, we can expect the US rate hike to be deferred, and real estate yields here to remain stable, or continue to compress under the weight of capital aimed at Asia Pacific real estate.

Impact on China

The US election results will have only a small impact on China in the short term. This was apparent in China's stock market performance – while other major markets gyrated wildly, China's stock market was relatively stable.  In the mid-to-long-term, the protectionist trade policies that Trump proposed in the election campaign could impact China's exports, but China has not been export dependent for over a decade. Also, the effect on China's real estate market will be limited. China's property market currently is driven by local demand; even MNCs in China generally focus on serving domestic consumers.  From a broader perspective, if the US does adopt protectionist measures, China now is energetically pushing development projects like 'One Belt, One Road' that will help it strengthen economic relationships with other countries, helping to underpin China's growth and domestic commercial property demand.  China and the US have a mutually beneficial economic relationship in both trade or investment, and economic interests will determine whether protectionist proposals become reality.

For Chinese investors, uncertainties in global politics and economics indicate that outbound property investment activity could be restrained in the short term, echoing the effects we saw immediately after the Brexit earlier this year.  But investor confidence will return after they digest the news. In the first three quarters this year, Chinese investors' outbound investment was up nearly 30% over the same period in the year before. Based on transactions currently underway, this year's total outbound property investment may even achieve a new record high.   Regardless of whether the US dollar strengthens or weakens, we anticipate that over the next 2-3 years Chinese outbound property investment will remain on an upward trend.  This stems from the fact that the main purpose of Chinese investors' outbound investment is to diversify their portfolios geographically. That said, as different countries' fundamentals change, naturally there may be some gradual changes in investment destinations.​

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About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. As of September 30, 2016, its investment management business, LaSalle Investment Management, has $59.7 billion of real estate assets under management.  JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information,

JLL has over 50 years of experience in Asia Pacific, with 36,000 employees operating in 94 offices in 16 countries across the region. The firm won 15 awards at the International Property Awards Asia Pacific in 2016 and was named number one real estate investment advisory firm in Asia Pacific for the fifth consecutive year by Real Capital Analytics.​  

​In Greater China, the firm was named ‘Best Property Consultancy in China’ at the International Property Awards Asia Pacific 2016, and has more than 2,200 professionals and 14,000 on-site staff providing quality real estate advice and services in over 80 cities across the country.