While there will be few tears lost to hear that Donald Trump’s net worth has fallen from $3.7 billion 12 months ago to “just” $3.1 billion today, it is the president’s property assets which seem to have been hit hardest. The reduction in his net wealth sees him drop from position 156 in the Forbes Rich List from 2016 down to 248 today. So, what has happened to the Donald Trump’s real estate assets and what does this tell us about the state of the New York property market?
Heavily weighted towards New York City
It is common knowledge that Donald Trump’s property assets are heavily weighted towards New York City where he has enjoyed the good times but suffered during the struggles. It would appear Manhattan markets are under pressure resulting in a fall of nearly $400 million in the president’s Manhattan property exposure. He has felt particular pain with his Fifth Avenue assets but to be fair he has also seen a decline in his golf property assets in Miami, Ireland and Scotland. Whether this is a result of the president’s controversial tenure is debatable but he has certainly not done himself any favours on the worldwide stage.
As a side note it is worth mentioning the $66 million expenditure on his presidency campaign together with settlement of a $25 million lawsuit relating to Trump University. Researchers at Forbes have been putting together the “rich list” for many years and have an uncanny knack of having their finger on the pulse.
New York property market
As Donald Trump has taken a serious hit on his New York City property assets over the last 12 months, it is worth having a look at the market today. An array of changing regulations and a lack of so-called trophy buildings has seen a significant drop in commercial sales of late. Investors are also concerned that the property market cycle could be nearing a short to medium term peak hence some have decided to sit on the side lines.
There were hopes that Donald Trump would have put more meat on the bone with regards to his recent taxation proposals but so far nothing has really been forthcoming. Indeed, many were hoping that a more favourable tax regime would emerge for US real estate investors under the current president, bearing in mind his specific skills and experience in this area, but again nothing has been confirmed.
Is real estate topping out?
New York City contains some of the most expensive real estate markets in the world. This is a market which flies when the economy is doing well and investors are confident but can turn on a sixpence when valuations get stretched. While there is no doubt that the real estate boom/bust cycle is more towards the top end, many experts believe there is still significant upside even from current levels. We only need to look at the US stock market to see sceptics washed away in a tide of optimism. This is even more impressive when you bear in mind that traditionally stock markets are thought to look at least nine months ahead.
If the New York real estate market really is turning down then this could be a signal that there are troubles ahead for general US real estate in the short to medium term. Is this a sign that investors are losing patience? Have they given up waiting for tax incentives and real estate led policies? Only time will tell but a $400 million hit on the Forbes List will certainly make Donald Trump sit up and listen to investor feedback.