Glass Half Full. Not surprisingly, politics dominated the start to the New Year. The optimism that permeated the investment/corporate community after the election of Donald Trump somehow managed to survive in First Quarter (i) an ill-fated immigration ban, (ii) a half-hearted attempt to “repeal and replace” the Affordable Care Act and (iii) a never-ending investigation into the potential collusion between members of the victorious Trump campaign and Russia.
Global property securities produced a 2.3% total return to start 2017, lagging the broader equity market, but outperforming bonds. A weaker USD provided a boost to returns outside of the U.S. in the quarter. While there was a focus on Donald Trump’s initial months in office and prospects for policy change to boost economic growth, the quarter ended with some doubts about the “Trump bump” since little has been accomplished thus far. To be fair, expectations regarding the timing for change and realizing any impact may have been unrealistic. Although the unpredictability of geopolitical events around the world remains a risk, global growth has continued to hold up and the current environment of steady growth and low rates can still be favorable for real estate provided that demand and supply remain balanced. Worries about rising interest rates remain a potential headwind, but changes thus far have not been significant and to the extent future increases are measured and a result of improving growth, it would not necessarily be all bad news for real estate.