Trump’s return will transform US domestic policy and reverberate through the international system by up-ending trade, investment, and geopolitical risk patterns. These changes will affect private capital investors, including those operating in small-state international finance centres (IFCs), who must gauge their response.

They also provide the headline for five significant trends — Trump, Tariffs, Tax, Tech, and Trade – poised to take their place at the centre of the global investment stage through 2025 and beyond.

Trump: ‘America First’ And The Reconfiguring of Global Risk

The return of Donald Trump to the Presidency will herald a transformative pivot to a shifted global environment, now more nationalistic and protectionist. Trump’s “America First” agenda – built upon the principles of rewriting trade deals, breaking away from international accords and placing U.S. interests ahead of multilateralism – will bring geopolitical risks and opportunities back to the forefront of the 2025 agenda.

Trump’s presidency will make for a choppier investment environment for private capital investors. In his first term, we witnessed a transactional model of global relations manifested in trade wars, diplomatic tensions and bouts of financial volatility. If, in 2025, his policies are still focused on limiting foreign competition and combating global interdependence, investors should remain on guard for ripple effects.

On the upside, this political shift might be a boon for small-state IFCs. Countries with favourable tax policies, regulatory flexibility, and a track record of attracting capital in times of political instability will become ever more attractive to investors seeking safe harbours or alternative pathways into markets that are heavily impacted by shifts in U.S. policy.

Tariffs: We Are Still In The Age of Protectionism And Supply Chain Shocks

One of Trump’s most consequential legacies from his first term was his aggressive push to raise tariffs, including in his trade war with China. When he returns to office in 2025, tariffs will likely remain a significant tool of U.S. foreign policy. The immediate fallout will wash through international commerce, spanning matters as diverse as EVs, cell phones and agriculture, as Trump pursues more protectionist policies while limiting American reliance on foreign suppliers.

These developments will be a double-edged sword for small-state IFCs. Tariffs can disrupt global supply chains, rendering certain regions or industries less competitive and reorienting trade patterns. They can also boost inflation and prices in the short term, negatively impacting the cost of living. Still, investors could see new opportunities in jurisdictions playing a role as alternative manufacturing hubs or trade gateways. If manufacturing relocates, the investment that supports it will flow to the U.S., potentially via IFC conduits. Southeast Asian or African countries might also benefit as American companies seek to lessen their exposure to steep Chinese tariffs.

However, the spillover effects of tariffs – especially if they’re directed at a vital sector, like technology – could include market turbulence and price hikes. Private capital investors must brace for supply chain disruptions in sectors reliant on Chinese or other global suppliers and diversify their portfolios to minimise the fallout. Companies examining ways to move production away from tariff-heavy markets for their cost-effectiveness and efficiency will be in demand. At the same time, small-state IFCs with strong capital management and deployment capabilities can play a key role in meeting the growing demand for new investment capital flows as production shifts to new locations.

Tax: The New Global Tax Order And Its Impact On Investment Flows

Seismic change is underway on the global tax front, and Trump’s return will almost certainly challenge this process. Although the OECD’s promotion of a global minimum tax rate of 15% has been a strong theme over the last several years, Trump’s administration will likely re-examine the subject, particularly as he strives to keep U.S. businesses competitive internationally through a two-tier corporation tax system. Domestic ‘Made in America’ firms could benefit from a 15% CIT whilst foreign players may still have to bear the current 21% rate.

For small-state IFCs, Trump’s return may elevate interest in jurisdictions that offer favourable tax regimes for multinational corporations, low or no tax rates on capital gains, and/or more benign tax-neutral regimes. Small-state IFCs are well placed to offer both a capital-friendly tax environment and a robust and rich financial infrastructure to attract and channel capital flows from investors.

But Trump’s approach also risks forcing the U.S. into renegotiating tax treaties and pursuing more aggressive tax policies domestically. The great unknown is how markets will react to a perpetuation of the Tax Cuts and Jobs Act and a raft of new tax-cutting measures, adding to the steep tax cuts from the first Trump administration due to run out in 2025.

Much of the cuts, at least initially, will be funded by increased borrowing. Will the bond markets be prepared to bankroll the additional borrowing needed, given that the U.S. debt servicing is already set to exceed 6% of GDP? Interest payments will exceed military spending for the first time in U.S. history, and this will surely be a test for the mighty dollar.

Tech-tonics: Jump-starting Investment In Technology Will Raise Geopolitical Friction

With technology increasingly shaping the global economy, a China vs U.S. tech standoff will almost surely speed up the trend toward a technological decoupling of the two major global economies, one that will probably be most pronounced for China. The technological ‘Cold War’ that started during Trump’s first term — focused on AI, 5G and semiconductors — will continue through 2025, altering the flow of global investment and the nature of innovation ecosystems.

The changes could create a unique opportunity for private investors to ride the tech-driven growth wave, especially in the future mega-sectors such as artificial intelligence, quantum computing, biotech and its supporting infrastructure. The geopolitical and market risks of tech investments will also increase. Corporate adoption still lags personal consumption (75% of all ChatGPT subscribers are personal) and investment to date of $1.5trn shows lots of promise but little by way of tangible near-term profits. AI remains an exciting but nascent and rapidly evolving technology that still has, for many, to prove its real-world impact.

Among the things to keep an eye on will be the rise of tech startups and venture capital in smaller-state IFCs. A proactive approach by jurisdictions such as Singapore and the Cayman Islands has made them attractive destinations for fintech, blockchain and other technologies. These smaller centres could strengthen their positions as key players in the global tech investment firmament amid geopolitical tensions.

Trade: Increasingly Regional, National And Protectionist

Global trade winds will blow differently in 2025, beset as they are by fractured trading blocs and regional alignments. Bilateral trade deals – instead of multilateral agreements – may take precedence, increasing export tensions between the West and other powers, including China and Russia. In this environment, the future of the WTO is not assured.

Disruption may open new avenues for small-state IFCs to play an intermediation role in leveraging regional trade agreements. Traditional financial systems might find it challenging to meet the needs of the new economy. The rise of digital trading hubs in smaller IFCs will be a boon for investors as these hubs are gaining traction in regions such as southeast ASIA, Africa and the Middle East, where emerging markets are making inroads into conventional trade routes.

2025 will also see further evolution in trade finance. The shift towards digitised trade and persistent political friction will drive demand for more secure, transparent trade finance solutions, which small-state IFCs are well-placed to offer. The remainder of this decade will be critical for the embedding and establishment of all things crypto, with the tailwinds of a supportive U.S. president and a more benign regulatory environment. Understanding how these new trade routes and financial instruments will develop will be a key to accessing growth areas in an increasingly fragmented global marketplace for private capital investors.

Wrap-Up: The Times They Are A-Changin’

2025 will be a year of significant change in global events, trade and investment. The re-entry of Donald Trump into the White House will bring back his brand of nationalism, protectionism and a more transactional approach to foreign relations, all of which will have significant implications for the shape of investment markets. Private capital investors, including those operating through small-state IFCs, will have to alter their strategies in a world redefined by geopolitical risk, technological disruption, and new tax and trade paradigms.

Small-state IFCs offer a unique blend of regulatory flexibility, tax advantages, relative political stability, and investment potential. These make them an attractive option for investors looking for alternatives to larger, more volatile markets. Still, private capital investors will need to know how to prosper in an altered world of Trump, Tariffs, Tax, ‘Tech-tonics’ and Trade.

Adaptability, foresight and strategic diversification will be the keys to success in 2025.

By Geoff Cook, chair of Mourant Consulting

This was the tenth of 12 proposed measures which he highlighted was against the backdrop of a 48% leap in houses prices over the past decade across Europe.

It would be aimed at limiting property purchases by “non-resident non-EU foreigners. The government will increase the tax burden on such purchases, up to 100% of the property’s value”.

He was speaking at the forum ‘Housing, the Fifth Pillar of the Welfare State‘, alongside the senior leadership of his government, representatives from the construction sector, and social stakeholders, to present the main points of a plan which he said was inspired by models from countries like Denmark and Canada.

“The west faces a decisive challenge: to not become a society divided into two classes, the rich landlords and poor tenants”, he said.

This was “an unprecedented measure in our country’s history, already applied in other democracies like Denmark and Canada, and highly appropriate given the housing emergency situation,” Sánchez said, adding that in 2023, non-residents bought 27,000 properties in Spain, primarily for speculation.

But Sánchez did not detail how the tax would work or timeline for parliamentary approval, while the government said the proposal would be finalised “after careful study”.

In early reaction, Mauro De Santis Bo, financial adviser at GSB Wealth said: “With years of experience helping Britons relocate to Spain, we know how popular it is for its lifestyle and climate. However, Spain’s proposed 100% tax on property purchases by non-EU buyers could shift interest toward alternatives like Portugal, Cyprus, or Greece.

“Also, in response to the Prime Minister’s claim that people are buying for ‘mainly for speculation’, this has not been my experience, instead it’s about creating a home or enjoying retirement. We’ll be monitoring these changes closely to help clients make informed decisions and consider alternative destinations if needed.”

He is currently CEO of the Greater China business and will be taking over from Kevin Coppel who will retire from the partnership in March 2025.

Shute (pictured) joined Knight Frank last year and has more than 25 years of experience in the real estate industry, having held senior leadership roles across Australia, Malaysia, Hong Kong SAR, and the USA. Prior to joining Knight Frank, Shute served as the managing director of JLL in Victoria, Australia, and previously led CBRE’s operations in Hong Kong SAR and Taiwan from 2008 to 2016.

Knight Frank’s Asia-Pacific region consists of 11,000 people in 300 offices across 16 markets.

William Beardmore-Gray, senior partner and group chair, Knight Frank said: “With a proven track record of driving growth and delivering strong results across multiple markets, Craig’s leadership will play a key role in shaping the next phase of our APAC strategy. His appointment is testament to the partnership’s commitment to strengthening our presence across APAC, ensuring sustained and organic growth across the region.

“Kevin’s contributions to the success of our Asia Pacific operations have been significant. Under his leadership, the region has become one of the fastest growing and most dynamic areas of our global business, as illustrated recently by our acquisition of the McGrath business in Australia. As we look forward, I am confident that Craig’s extensive industry experience and strategic vision will help us continue our growth trajectory in this important region.”

Shute said: “I am honoured and excited by this opportunity to work with our valued clients, exceptional people, and businesses across Asia Pacific. We are different. Knight Frank’s entrepreneurial, unique partnership structure ideally positions us to provide superior services and advice to our clients and attract the best talent in the industry. This powerful combination will continue to see our brand expand throughout this diverse and ever-evolving region.”

• The US Sunbelt offers above-average rental yields driven by strong demand for housing and limited supply
• Insufficient construction activity in the multifamily segment despite increasing attractiveness of rental apartments
• Recording rental growth rates of up to 63% Sun Belt metropolises outperform the national average in the USA
• Owner-occupied homes are becoming less affordable for US buyers, thereby boosting demand on the regional rental housing market

The new research examines property prices, rental yields and regional investment opportunities for residential property in the United States. As the largest property market in the world, the USA holds an exceptionally high level of market liquidity and transparency compared to the DACH region.

The housing market in the United States is generally characterised by rising purchase prices and growing demand. Due to its central role in the national economy and its attractiveness for individuals and companies, the Sun Belt region in particular is the target of internal influx and population growth from abroad.

An analysis of construction activity in the ten largest metropolitan regions of the Sun Belt in the period from 2013 to 2023 shows that more households have moved in than apartments have been completed. With purchase price rises for apartments in multifamily properties of up to 140 per cent in parts of the Sun Belt, the affordability of residential property is also falling considerably.

Overall, this is ensuring robust and rising demand for rental apartments, particularly in the multifamily segment.

Prof Dr Steffen Metzner, head of research at the Empira Group said: “For investors, the rental market in the Sun Belt not only offers attractive yield potential, but also the opportunity to benefit from the structural advantages of this dynamic market.”

The consideration for the sale will result in cash proceeds of £1.16bn (after adjustment for net debt), of which c£500m will be paid at closing with the remaining consideration being paid over the next five years on a deferred non-contingent basis.

As at HY24, Cala had a Net Asset Value of £1.15bn and generated operating profits of £42m.

The disposal follows the group’s decision to create a Corporate Investments Unit as outlined at the Capital Markets Event (CME) in June 2024.

Disposal proceeds from the sale will primarily be used, as they become available, to reinvest in the Group in line with its strategy and the capital allocation framework set out at the CME.

The board will also consider the proceeds as part of the group’s announced intention to increase returns to shareholders through ongoing buybacks.

As signalled, the sale of Cala reduces the Group’s Solvency Capital Requirement (SCR) by c£100m after diversification.

The transaction is expected to complete in Q4 2024.

António Simões, group chief executive Officer of Legal & General said: “This transaction demonstrates continued momentum in executing our strategy, simplifying our portfolio to enable a sharper focus on our core, synergistic businesses. Cala has been an important part of L&G for over a decade, with profits increasing ten-fold since our initial investment in 20131.

“The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders. I would like to thank the whole Cala team for their contribution to the Group and wish them every success in the future.”

Kevin Whitaker, CEO of Cala said: “Today’s announcement is excellent news for Cala. The acquisition by Sixth Street Partners and Patron Capital demonstrates confidence in Cala’s business plan and growth potential, as our talented team continues to build high quality, sustainable new homes throughout the UK. L&G has been a great support to Cala throughout its investment and ownership. Since 2013, we have grown revenues and profits five- and ten-fold respectively, and tripled the number of homes we build each year.”

Julian Salisbury, co-chief investment officer of Sixth Street, said: “Cala has a bright future and we are proud to be entering this new chapter as stewards of a company with such a deep history and long track record of sustainable growth. We, together with Patron Capital, look forward to continuing to support Cala and its management team, not only with capital but also with the significant resources of our London-based real estate investment team led by Giulio Passanisi.”

Keith Breslauer, managing director of Patron Capital, said: “We are pleased to be able to back the Cala business once again. Cala is one of the UK’s leading housebuilders with a best-in-class landbank and a focus on building high-quality homes, being consistently ranked five-star for customer service. Furthermore, Cala is also a people business with a strong corporate culture and a business we know well, and
we look forward to working closely with Cala’s impressive management team and our partner, Sixth Street, to further
build the business and help tackle the undersupply of homes in the UK.”