While the level of excitement around the President Donald Trump's stalled infrastructure agenda has ebbed, investors still are displaying "cautious optimism" about the overall real estate market, according to consultancy RCLCO's mid-year survey of sentiment in the real estate market, ForConstructionPros reported.
Even with the modest investor outlook, the diminished "Trump bump" effect was clear. The percentage of those expecting the new administration to have a positive impact on the real estate market fell 23 percentage points in the last six months to 36% of respondents, and the share of those who expect Trump to have a negative impact rose 10 percentage points to 28% during the period.
Aside from the president's influence on the market, RCLCO said the downward movement of its Real Estate Market Index began in 2015 and is indicative of a mature real estate cycle.
During his 2016 campaign, Trump made stump speeches that were music to construction industry ears. Reduced regulations, streamlined permitting for federal projects, a massive $1 trillion infrastructure program and lower taxes won many contractors and construction-related business owners over, and their enthusiasm was reflected in skyrocketing stock prices immediately after the election for companies like Caterpillar, John Deere and Vulcan Materials Co.
Real estate investors, too, responded to the election results positively. In a January Altus Group survey of U.S. real estate executives, respondents named infrastructure assets as a top investment. In an imaginary investment scheme that is part of the survey and that is meant to gauge investment priorities, participants allocated 15.5% of their funds to infrastructure, a 215% increase from the previous year.
The Trump administration has rolled back several regulations since the president took office, but the transformative infrastructure program he campaigned on has yet to materialize. So far, he has proposed leveraging $200 billion in federal dollars over 10 years to get the program off the ground and to encourage private investment. Democrats have consistently said they want to see a bigger dollar commitment on the part of the administration and will oppose privatization of major infrastructure assets.
Private investment is at the core of Trump's 2018 budget, which reduces Department of Transportation funding by 13% and proposes eliminating programs like the Transportation Investment Generating Economic Recovery (TIGER) grants. That's left questions lingering as to just how much the administration intends to invest in infrastructure, and how, exactly, they'll spur private-sector interest in financing projects through mechanisms like public-private partnerships.