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As India's economy sags, even the Trump brand is struggling
THE apartment buildings rise 23 stories into the skyline, a pair of elegant, jet-black towers buffered from the street by security guards and high fences. The name "Trump" is displayed in big, gold block letters.
But within the Trump Towers complex in Pune in western India, employees say that most of the US$2 million apartments are vacant. The pool is frequently empty, sales have slowed and buyers rarely visit.
The Trump brand once seemed promising to Indian developers. But it, too, is struggling to surmount one of the country's worst economic slumps in years.
Pankaj Kapoor, the managing director of Liases Foras, an Indian real estate research company, said: "In the past, the Trump name may have helped attract investors, but gone are those days."
As Donald Trump prepared to run for president, Indian real estate magnates made a bet that licensing his name would sell apartments.
Now, India has more Trump-branded projects than any country except the US - six residential towers in four locations, including Pune, a quiet industrial city of more than three million people.
But as Mr Trump arrived in India on Monday to meet Prime Minister Narendra Modi, his first official visit as president, he entered a country caught in a grave slowdown.
As the Indian economy faces its lowest growth rate in more than a decade, developers have abandoned residential projects and slashed prices to attract buyers.
It is not just the Trump brand that is suffering from weak demand. Thousands of apartments are vacant nationwide or trapped in construction delays. Prices have stagnated. Debt-strapped builders cannot secure loans.
Real estate agents and developers sold about 40 per cent less square footage last year than in 2014, said Prashant Thakur, the head of research at Anarock Property Consultants, a real estate research firm.
At Trump Towers Pune, which were completed a few years ago as the first project in India to bear the Trump name, only seven of 46 units are occupied, said building employees and others with knowledge of occupancy and sales.
The real estate market is now so weak, the Trump family's partners in Pune decided to not even attempt - at least for now - to sell half of the luxury apartments in the complex, which retail for about 35 per cent more than comparable properties.
"Despite the slowdown in India, Trump is still the most sought-after luxury residential brand in the country," Kalpesh Mehta, the developer of unfinished projects in Kolkata and Gurugram, said in a statement.
In most cases, the Trump Organization does not invest in such towers, but instead licenses its name in exchange for royalties, fees that are mostly paid as the individual units are sold.
The company's most recent annual financial disclosure, put out in 2018, reported that it had earned perhaps as little as US$200,000 last year on all four of its projects in India.
The maximum revenue reported at Trump Organization from the four India projects dropped from US$6 million in 2017 to US$2 million in 2018, although some income from India might be counted as contributing to other accounts.
In 2018, Mr Trump's son, Donald Trump Jr, visited Mumbai, India's seaside business capital, to attend a glittering sales party near the construction site for the Trump Tower there, a golden-hued, 400-unit building with over 75 floors; its residents will have access to a private jet service.
Amruta Fadnavis, the wife of a former chief minister for the state of Maharashtra, which includes Mumbai, predicted in a speech at the party that the Trump brand would propel the project to success.
"Because of this tower, it will boost the confidence of international investors," she told the crowd, a Who's Who of fashion designers, government officials and real estate titans.
The visit coincided with an extensive advertising campaign. An ad in the Times of India occupied two full pages, with a large photo of the younger Mr Trump, and asked: "Trump has arrived. Have you?"
But early sales figures are only one part of the story, real estate analysts said. Mr Kapoor of Liases Foras said real estate developers sometimes offer a variety of incentives, including price discounts, to boost numbers.
Ritesh Shah, a diamond trader, said he and more than 50 others received a 10 per cent to 15 per cent group discount when they purchased apartments, around 2014, in the planned Mumbai tower, where units start at about US$1.1 million.
He thought the strength of the Trump brand would help fast-track construction in a city where building delays are common, and expected a 60 per cent or 70 per cent appreciation in value by the time the tower opened.
In light of the tough economy, he said he now only expects to break even. The completion date for the tower was pushed back from 2018 to this year.
"Because it's Trump, the tower will appreciate, but a lot slower than what we had thought," he said.
By many measures, Pune has been hit notably hard.
In the past decade, as the city experienced a boom in the information technology sector, luxury buildings were constructed swiftly, with the spacious apartments in Trump Towers Pune being among the more extravagant options.
A promotional video for the towers pieces together footage of an airplane, a speedboat and a fizzing glass of champagne.
Buyers included the famous Bollywood actors Rishi and Ranbir Kapoor, and Rajesh Uttamchandani, a founder of major Indian lighting firm Syska.
Between 2018 and 2019, the number of unsold luxury apartments in the city jumped by 56 per cent. For the third quarter of 2019, Pune property prices dropped by 3.5 per cent, the worst performance among India's big cities.
Anil Deshmukh, a real estate agent in Pune, said that sheer brand might was not enough to overcome challenges to India's property market, and a turnaround was unlikely for the next five years.
Would Mr Trump's first official visit to India help? "If the promise of investment follows, that could give consumers new confidence," he said. NYTIMES