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Trump Card in Indian Real Estate market

Donald Trump

Republican presidential candidate Donald Trump speaks to supporters during a rally, Tuesday, June 16, 2015, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)

Even though Donald Trump, in India, is referred more for his fiery speeches and controversial statements as the US Presidential Candidate than the global business tycoon, it did not stop the Indian real estate companies to develop projects with his name. Real estate firms Lodha Group and the Panchshil Group are both developing their own Trump Towers in India. A 75-storey tower called the Lodha Trump Tower is being raised in the upmarket Worli area of Mumbai, while Panchshil Group is developing two 23-storey Trump Towers in Pune, in the state of Maharashtra. Both Lodha Group and Panchshil Group tied up with the Trump Organisation for the licensed use of Trump’s brand name in their projects. This association happened long before Donald Trump disclosed his Presidential Candidature; Lodha Group tied up in the year 2013 and Panchshil Group in the year 2014.

Technically, Trump Organisation has not invested in these projects. It is only the brand name, the ‘Trump Towers’ that is allowing Panchshil Group and Lodha to command a premium as high as 25% compared to other projects. Trump earns billions of dollars by lending his name to various projects. Apart from residential complexes, Trump also has host of hotels, resorts as well as casinos under him.  Both the companies would pay an undisclosed sum to the Trump Organisation for licensed use of his brand name.

It has been seen that projects associated with leaders and global personalities often become hot cakes in the markets and get sold instantly. It is this phenomenon that inspired Lodha and Panchshil Group to associate with Donald Trump. Homestead India too, used Michael Schumacher and Maria Sharapova to market its projects. Like Trump Organisation, both these sport icons also lend their names to Homestead India projects. In another instance, Lodha Group sold Armani Homes at its World One project. Many developers are now selling Disney themed projects. Realty firm Supertech Ltd had tie-up with Disney India in the year 2013 to develop a Disney-themed housing project. However, the company is facing tough times due to its project Supernova.

Developers do these stunts to market their project at a premium. At times they succeed, it is ultimately the location, price range and neighbourhood that decide sale of their projects. Experts too believe that brand names are secondary in Indian market conditions. “Indians are not swayed by brand per se as here real estate sells on basis of the location and the neighbourhood” shared Pankaj Kapoor, CEO, Liases Foras in a media story. Indian real estate market is sentiment-driven; investors look for returns three-four years down the line. Home buyers, on the other hand, look for location, specifications and safety. Associations with global brands are just marketing gimmicks and can be a ‘short-term’ fad. However, with regard to Donald Trump, it would really be interesting how the things turn out in US; any development there shall have an impact in Indian market too.

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