Mark Stücklin
The recent antics of Donald Trump have made Spanish property a more appealing investment, not because Spain has changed, but because the US just got riskier. When everything is relative, Spanish bricks and mortar suddenly look like a safer place to park your money.
Trump’s tariffs spook the markets
In one of his signature performances, Trump unleashed a new round of tariffs in the name of “liberating” the US economy. Markets promptly tanked on what became known as Liberation Day. Then, just as quickly, he climbed down—an uncharacteristic retreat that spoke volumes.
Trump now says it can secure better trade deals with 100 countries in 90 days. They’re all queuing up to “kiss his ass”, he says with characteristic braggadocio. But outside the MAGA echo chamber, many don’t agree. To them it looks like the the financial markets (especially the bond market) called his bluff, and he folded. That will influence opinions going forward.
“Moron premium”
US Government bonds (Treasuries) have long been the benchmark for risk-free investment. The foundation stone of global asset allocation. But no more. As Katie Martin of the Financial Times put it, “Trump has added a political risk premium to US assets.” She goes on: “Parking money in America is no longer the routine, fuss-free, neutral option.”
This is a big deal. When the risk-free benchmark becomes riskier, everything changes. A so-called “moron premium” is starting to affect US assets. Investors are left wondering what exactly they can trust. The short-term market bounce after Trump’s climbdown was one thing. The longer-term trajectory of US public finances, trade, and credibility is quite another.
Predictable
All investments are relative. Risk versus reward. So when US assets become more volatile and politically tainted, the alternatives start looking better—even if they haven’t changed at all.
Take Spanish property. I’ve long suspected that many investors underestimate its risk premium. It’s not without its flaws: bureaucracy, legal complexity, and a market that’s not exactly transparent. But at least Spanish property risk is predictable, unlike Donald Trump.
Also, unlike a US Treasury bond, a home in Spain comes with utility value. You can actually use it. You can enjoy it. You can rent it out. And right now, it doesn’t come with a political circus attached.
The relativity of investment appeal
Has Spain become a better investment? Not especially. Has the US become more risky? Many more people now think so, which is what counts. And since all investments are relative, Spanish property just became more attractive by comparison.
So Spanish property is not is risk-free, but when the world’s largest economy starts to look like a riskier bet, a villa in Valencia or a flat in Barcelona starts to look more attractive. The Spanish property sector can thank Donald Trump for putting them in a more favourable light as a huge amount of global money starts thinking about looking for alternatives.
