With Democratic party candidate Joe Biden winning the US election, what’s next for Donald Trump? Will he start selling his name again to scores of real estate ventures overseas, especially hotels, branded luxury apartments and golf courses that helped put the brand in the limelight before he was elected in 2016?
Reports in the American media have hinted that he may. Indian real estate developers and consultants are also of the view that the Trump brand may look at lending its name to more luxury projects in India.
A leading real estate developer told Moneycontrol that his company may consider having a golf course under the Trump Golf brand in India. The global brand has some of the world’s most iconic golf properties and championship courses around the globe.
“They definitely could. Luxury demand is back with a bang in India with homes becoming the cornerstone of lifestyle upgrades for high networth individuals in the post-pandemic reality,” said an expert, adding, “They may also move on it fast because it seems Donald Trump is likely to make a pitch for the presidency again in 2024.”
A recent report by Anarock has said that since the beginning of the festive quarter, South-Central Mumbai localities alone have witnessed luxury home sales worth Rs 500 crore (in October) on the back of a stamp duty cut and festive offers. In 2019, the corresponding period saw luxury sales worth approximately Rs 150 crore, thus improving by 230 percent in a year.
A good time to revive talks
The Trump Organization was prohibited from striking new brand tie-ups during Trump’s tenure as the President. Donald Trump Junior and Kalpesh Mehta (Trump representative in India) have an active relationship and India is a growing market for luxury.
“This four-year window might be an ideal period for them to revive talks, which were put in cold storage when he came to power, and explore new ones,” says Amit Goyal, CEO, Sotheby's International Realty.
A leading real estate developer told Moneycontrol that his company is keen on tying up with Trump’s Golf Course brand for a project in India.
“We are keen on doing a branded golf course project with the Trump brand if a good opportunity or a land bank comes along,” he said.
The residential sector has been performing well post the pandemic and the branded residences segment, too, is selling well both in the US and Asia. “During Covid-19, people have realised the need for bigger houses with world-class amenities and at this juncture, branded residences may actually be an opportunity,” he said.
Risk-free deals for Trump
A New York Times report on Donald Trump’s post-White House plans has hinted that he may begin selling his name again. His family business will also be free to make up for lost time by once again looking overseas, where hotels and golf clubs helped drive its growth before his election in 2016.
The fastest way for the Trump Organization to raise money is to flip the switch on its international deal machine, licensing the Trump name to real estate projects like hotels and residential towers, the report said.
When Trump entered the White House in 2017, Trump Organization executives said the company had left behind more than two dozen such branding deals, including in China, Israel and across South America. As Trump leaves office, he has become popular in some countries, and his brand is widely recognised, the news report said.
The branding deals are largely risk-free for the company because they do not require capital investments and generally make between $500,000 and $1 million a year, at least initially. The payments often decline after units in residential buildings are sold, unless the Trump Organization makes parallel agreements to manage the properties, the report said.
Ventures in India
The Trump ventures in India include four luxury residential projects and an office tower, all branded with the Trump name under licensing deals. Of the four Trump properties launched in India, only two properties — in Pune and Mumbai — are complete. The others, located in Kolkata and Delhi-NCR, are still under construction
In Pune, the global brand had licensed the Trump name to Panchshil Realty, in Mumbai to the Lodha Group and in Kolkata, the Trump Organisation 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.
The global real estate brand Trump Towers has only one completed project in India. The project is located in Kalyani Nagar, Pune, and comprises of two glass facade towers of 23 stories each, with 46 single-floor 5 BHK residences.
The brand made its debut in the Delhi-NCR market in 2018, with a fourth property after Mumbai, Pune, and Kolkata. It made its debut in North India through realty companies M3M India and Tribeca Developers.
M3M and Tribeca are developing 250 ultra-luxury residences 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.
The company had hoped to generate roughly over a billion dollars in terms of sales from all its properties in India.
A US media report recently revealed that in his first two years in the White House, US president Donald Trump’s revenues from abroad totalled 73 million dollars, much of which was 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).
Real estate experts in India had told Moneycontrol that the majority of the $2.3 million (around Rs 20 crore) has come through the sale of Trump properties in India worth over Rs 600 crore. This has largely been received from the Trump Towers projects in Pune and Mumbai, which are complete. The rest is from the projects in Delhi NCR (Gurgaon) and Kolkata.
“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,” experts had told Moneycontrol.
An email sent to Tribeca Developers, which brought the Trump brand to India, remains unanswered.
How it works
In most deals pertaining to branded residences such as these, 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, explains Anckur Srivasttava of GenReal Advisers.
Some global branded-residence majors take a fee as an advance or signing value, which is then adjusted with the 3 percent that is due to the brand from the local developers. For example, if there is a sale of Rs 500 crore in a particular project, as much as Rs 15 crore would have to be paid to the global brand. There is no capital investment by them but they do invest in terms of time and resources. Their fees could be in the range of 4 to 5 percent for lesser-known local developers, real estate experts said.
There have been quite a few branded residences projects that have come up across India in the last few years. 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.
“Global brands provide their name, intellect, design, quality and global network, which includes connects with leading architects, designers, vendors, and international clients who can be potential buyers in India. They also help local developers strategise better in terms of sales and marketing abroad,” explains Amit Goyal, CEO, India Sotheby's International Realty.