With Donald Trump’s re-election in the U.S., economists are forecasting potential instability for the European economy. The anticipated impacts of protectionist policies are expected to affect global markets. As Europe prepares for possible trade tensions, the question arises: Could European real estate become a refuge for U.S. investors?
Following Trump’s initial election victory in 2016, some Americans invested in European real estate, seeking stability and aligning with their values. This trend is likely to resume, particularly in locations like Portugal.
Europe is increasingly viewed as a stable destination for international real estate investors, extending beyond traditional markets like Germany, France, and the Benelux countries. For those seeking secure assets in a democratic and stable environment, Europe offers a promising option, with Portugal standing out due to its location, digital infrastructure, and economic stability, though its tax policies could benefit from further refinements.
Several factors influence the real estate market, including income growth, interest rates, demographics, and construction costs. Anticipated trade wars and increased spending on security may hinder European income growth. Higher inflation in both the U.S. and Europe could limit interest rate reductions, potentially affecting transaction volumes.
In this environment, investors are likely to focus on specific market segments like health, logistics, industry, renewable energy, and data centers. New housing construction may see limited growth, potentially creating social challenges and requiring political solutions to address housing shortages.
A second Trump administration’s focus on deregulation and technological innovation could strengthen U.S. competitiveness, potentially drawing capital away from Europe. While U.S. institutions may stabilize markets, global capital flows could remain volatile, and unpredictable policy decisions could contribute to market uncertainty. However, uncertainty can also benefit real estate markets, as property is often viewed as a safe asset in turbulent times, provided underlying economic conditions remain reasonably stable.
The main risk for European real estate lies in global inflation. Rising inflation could diminish the appeal of real estate as a safe investment. However, if managed effectively, inflation could also encourage investors to turn to real estate as a hedge against currency devaluation.
In conclusion, while Donald Trump’s re-election presents challenges, it could also create an opportunity for European real estate to attract U.S. investors seeking protection from economic uncertainty. Countries like Portugal are well-positioned to benefit, provided economic risks, particularly inflation, are managed and a favorable environment for long-term growth is maintained.
Paulo Lopes is a multi-talent Portuguese citizen who holds a Master of Economics from Switzerland and studied law at Lusófona in Lisbon – CEO of Casaiberia in Lisbon and Algarve.
