Donald Trump has become the first US president to be impeached twice as the House of Representatives on January 13 charged him with “inciting an insurrection” after his supporters stormed the Capitol a week earlier. His real-estate empire is feeling the heat as well after the rioting that struck at the heart of the American democracy. The Trump brand has been tarnished, some say forever.
Real estate firm JLL has dropped out of its involvement with the effort to sell Trump’s Washington hotel, Professional Golfers' Association of America (PGA) stripped his golf course in New Jersey from hosting the 2022 championship, e-commerce company Shopify stopped helping run the online Trump Store, banks have refused to lend and New York City was considering terminating his contract to operate the Central Park skating rink.
Will Indian real estate companies that have tie-ups with the Trump Organisation also revisit their business arrangements and junk projects bearing the brand name of the outgoing US president?
Also read: Donald Trump 2nd impeachment: Issue goes to Senate for trial
The India venture
Trump’s ventures in India include four luxury residential projects and an office tower, all carrying his name under licensing deals. According to real estate experts, the sale of Trump properties in India could have generated around Rs 600 crore in a real estate market that is estimated to be worth around Rs 12.7 lakh crore.
Real estate experts say while it is “too soon” to gauge the impact, projects that are already complete or ready to move in are unlikely to be affected. New projects, however, may feel the pinch on account of perception, they say.
Of the four Trump properties in India, two—in Pune and Mumbai—are complete. The ones in Kolkata and Delhi-NCR are under construction.
The global luxury real estate brand’s India entry didn’t go to plan. In 2011, 26 years after the original Trump Tower opened in New York City, it tied up with Mumbai-based developer Rohan Lifescapes for its first project in the country but the 65-storey work in the city’s south could not take off due to pending approvals.
In 2013, the Trump Organization tied up with Mumbai-based Lodha Group to develop the Trump Tower in Mumbai. A year later, Donald Trump visited Pune to inaugurate the first of the Trump Towers in India.
The Trump Organization was barred from striking new deals during Trump’s tenure to prevent a conflict of interest. With barely a week to go, Trump will be back to being a property tycoon once Joe Biden moves into the White House on January 20.
In Pune, the global brand licensed the Trump name to Panchshil Realty. The project in Kalyani Nagar, comprises two glass facade towers of 23 stories each, with 46 single-floor 5 BHK residences. The company is yet to respond to Moneycontrol’s queries.
For the Kolkata project, it has partnered with Unimark Group to build a 400,000 sq ft residential project, with the signature Trump Tower on the city’s EM Bypass stretch.
These companies have long-term agreements with the Trump brand and there were no changes, sources said.
The Delhi-NCR market was the last Indian market it entered in 2018. The Trump brand made inroads in the north Indian real estate market through M3M India and Tribeca Developers.
Tribeca Developers, founded by Kalpesh Mehta, has the exclusive rights to market the Trump project in Gurugram. Mehta has an “active relationship “ with Donald Trump Junior who has been taking care of the real estate business in his father’s absence.
According to Tribeca Developers website, Tribeca has worked with the Trump Brand for the last seven years and has been instrumental in creating the largest portfolio of Trump properties outside of North America.
An email to Tribeca Developers remained unanswered.
M3M and Tribeca are building 250 ultra-luxury residences in Gurugram under a brand license from The Trump Organization. The project is also expected to have a 35,000 sq ft area for amenities. These apartments are priced between Rs 5 crore and Rs 10 crore.
Pankaj Bansal, director at M3M India, told Moneycontrol that there was no change in the company’s arrangement with the Trump brand.
“As we speak, we are not in any discussions with the Trump brand for any new projects. Trump is a brand that signs only one project per city. Today our understanding of the business remains the same, our partnership continues as it was, there is no change. One-third of the structure is complete and we will be delivering the project by next year's end,” Bansal said.
Real estate experts say it is too early to evaluate the impact of the events in the US on Indian projects that bear the Trump name.
“To some extent, it may have an impact as perception does matter but it is too early to comment on the degree of the impact. Sales may get impacted to some degree unless it is a ready-to-move-in project,” a real estate expert said.
Marketers, not builders
Experts also say that the arrangement that the brand has in India is different from its businesses in the US. “They are the owners of their projects in the US. In India, they are only marketing partners. In India, brokers are working with Indian developers and as long as there is no issue with the local developer, there may not be a problem,” said another expert.
In most branded residences' deal, there is an upfront sign-up fee, a construction-linked fee and an incentive fee, depending on the value realised by the developers. Some documents also mention that the fees may be reduced if property prices depreciate.
In the last few years, several branded residential projects have come up in the country. Besides Trump Towers, Four Seasons Residences, Grand Hyatt, Ritz Carlton and global fashion houses such as Versace and Armani have also collaborated with Indian developers to build luxury homes.
In India, the popularity of the branded residences is the result of “herd mentality”, say insiders. “Some buyers bought into the project because it was a global name and there was a perception that it would be designed better,” said a broker who deals with premium housing projects. Most launches were overhyped and people bought into them because of “herd mentality” as their friends or competitors had done that too, the broker said.
The coronavirus outbreak has changed property buying. Ready-to-move-in units are in demand and whether the developer is global or local is secondary.
“Today, you buy what you see, what is before you. The brand is only on paper,” the broker said.
The Trump Organisation had hoped to generate roughly more than a billion dollars in sales from India.
A US media report said in 2020 that in his first two years in office, Trump’s revenues from abroad totalled 73 million dollars, much of which came from his golf properties in Scotland and Ireland.
It also said that some of the revenue came from licensing deals in countries such as the Philippines ($3 million), India ($2.3 million) and Turkey ($1 million).
The bulk of the $2.3 million (around Rs 20 crore) from India came through the sale of Trump properties in India, real estate experts said. Most of the money came from the Trump Towers projects in Pune and Mumbai.
“Till date, only the Pune project, located in Kalyani Nagar, and the Lodha Trump Towers, in Worli, are complete and ready for possession. Around Rs 500 crore would have perhaps been earned by the US realty firm from the deal it entered with Panchshil Realty in Pune and the Lodha Group in Mumbai. The remaining Rs 100 crore would have come from the projects in Gurgaon and Kolkata,” an expert said on condition of anonymity.