Donald Trump has proclaimed his optimism about the future of India, pointing to two real estate projects in the country that bear his name.
“I am involved in two massive developments in India, you probably know, very successful, wonderful, wonderful partners, very beautiful,” Mr. Trump said. “I must say I became involved because I have great confidence and I have great confidence in India.” The Trump Organization licensed the Trump name to Indian builders who have been constructing luxury residential buildings in Mumbai, India’s commercial capital, and the nearby city of Pune.
About half of the 46 apartments in the Trump Towers in Pune, on which construction was completed earlier this year, have been sold so far, according to Panchshil Realty, the developer of the project. At the Trump Tower in Mumbai, a project announced in 2013, 226 of the nearly 400 apartments in the development–which is still under construction–have been sold, said a spokeswoman for Lodha Group, the developer.
In India, apartments typically go up for sale before construction begins. “Market sentiment is little down” but there is demand for quality projects, said Sagar Chordia, executive director of Panchshil Realty. Mr. Chordia said Mr. Trump’s name has helped him charge premium prices. The apartments are selling for around 25,000 rupees ($375) per square foot, versus 15,000 rupees per square foot for a comparable luxury project in the area, according to real estate consultancy JLL India.
Mr. Trump’s presidential bid is helping generate visibility, Mr. Chordia said. “It becomes the talk of the town,” he said. He said he isn’t disappointed by the vacancy rate because there is a limited set of buyers for luxury apartments.
“Demand for the Trump brand in India remains strong both with development partners and with unit purchasers,” said a statement from Tribeca Developers, which represents Trump in India. It said that besides the Pune and Mumbai buildings, three more Trump projects will likely be announced in India next year. “India probably has the highest number of Trump-branded real estate projects outside of North America,” the statement said.
The 75-storey Trump Tower Mumbai is being built by the Lodha Group. It boasts mainly three- and four-bedroom apartments, which cover an area of 2,000 square feet to 2,400 square feet. Lodha is quoting sales prices of 45,000 rupees ($676) per square foot for apartments in the building. That compares with about $700 per square foot for a comparable luxury apartment in the area, according to JLL. Some luxury developers ask as much as $980 per square foot, JLL said.
A spokeswoman for the Trump Organization said developers in Mumbai had offered limited inventory for sale in phases. “Our approach has worked well reflected by our ability to sell almost 60% of the inventory in just three sale windows,” she said. The spokeswoman didn’t comment on sales at the Trump Towers in Pune. A spokeswoman for Lodha said Trump Tower Mumbai is commanding a premium price in the area. “We have witnessed an overwhelming enquiries being generated from consumers across the globe,” she said.
The Mumbai project has a price premium of around 35% compared with other towers being built by Lodha in the same complex, according to Tribeca Developers. In the summer, Lodha placed large hoardings in Mumbai with a picture of Mr. Trump and catchphrases such as “Trump Is Back” and “Where Power Resides.” On a visit to Mumbai in 2014, Mr. Trump said he wanted to invest more in the country. When asked how much, he said: “I don’t know. I have a lot.”
Like similar projects around the world, the Trump Organization gets a fee for the use of its brand name, while local developers pay for construction. The Trump Organization has more than a 100 such licensing deals across the world. In some cases, Trump also gets a percentage of sales. Developers of the Indian towers didn’t say if Trump gets a cut of sales, and what the licensing fees were. A spokeswoman for the Trump Organization didn’t comment on the licensing fee or other incentives from these deals.
In April, Trump announced a tie-up with Indian developer Ireo to build a commercial tower in Gurgaon, a suburb of New Delhi. Mr. Chordia, of Panchshil Realty, said he is in talks to launch a second Trump residential project in Pune. India is one of “the biggest markets for them, so they can’t ignore it,” said Mr. Chordia.
Author: Shefali Anand
Credits Wall Street Journal