With just days to go until the US presidential election, all eyes are on Washington as America faces an epic choice between two candidates who could not be more different.
The result will have global ramifications. On the environment. On traditional alliances. On societies. On money markets. And yes, on DUBAI real estate.
Blowing Our TRUMP-et 🎺
In a NewsBite article we published back in early August, we noted a steady decline in the value of the US Dollar compared to its currency pairs, which had begun in late May. We highlighted the attractive opportunities it was creating for those Dubai property investors with non-dollar denominated cash to hand.
We called it; since then estate agents across the Dubai market have indeed been reporting sizeable month-on-month sales volume growth. Because a cheaper dollar makes Dubai real estate more appealing.
It stands to reason that the opposite must ring true. That Dubai real estate suffers ↘ with a stronger Dollar 💲↗, because of the Dirham’s peg.
Winter Is Coming
Risk aversion is rising. Against a backdrop of mounting Coronavirus cases in the US and Europe, the economic picture for the northern hemisphere is starting to look very bleak this winter, creating a support line that’s underpinning the Greenback’s value.
Money market investors are waiting for the outcome of the election, refraining from making any moves until they have greater clarity on who’ll win the White House.
So far, markets have priced-in a Biden win, although Trump has repeatedly said he will contest the results of a narrow Biden victory. That would heighten risk-off sentiment. The Dollar would rocket taking the Dirham with it, making Dubai property instantly more expensive.
A decisive win for Biden as well as the Democrats taking control of the Senate, is considered the optimal outcome, as it would allow for policy stability and a sizeable fiscal boost to the US economy in 2021.
With that in mind, we’ve identified the four most likely outcomes of next week’s election, and how each of them is likely to impact Dubai house prices.
Fear of the Unknown
Despite the polls in Biden’s favour, there’s still 6 days left, and a strong argument to be made for Trump to trump his way into another four years. If he can retain the Senate too, markets would also welcome that scenario, the Dubai real estate market being one of them.
Because it isn’t so much the individuals rather than the avoidance of an uncertain outcome that matters most.
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