A US media report has 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 like Philippines (USD 3 million), India (USD 2.3 million) and Turkey (USD 1 million).
Real estate experts in India told Moneycontrol that majority of the 2.3 million dollars (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 project in Pune and Mumbai which are complete and the rest from the projects in Delhi NCR (Gurgaon) and Kolkata.
“Till date, only the Pune project located in Kalyani Nagar, Pune and the Lodha Trump Towers, Worli are complete and ready for possession. Around Rs 500 crore would have perhaps been earned by US realty firm from the deal it entered with Panchshil Realty in Pune and Lodha Group in Mumbai. The remaining Rs 100 crore would have come from the projects in Gurgaon and Kolkata,” experts told Moneycontrol.
An email sent to Tribeca Developers, which brought the Trump brand to India, went unanswered.
In most deals pertaining to branded residences, 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 fees may get reduced if property prices were to depreciate, explains Anckur Srivasttava of GenReal Advisers.
Some global branded residences majors take a fees as advance or signing value which gets 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 experts said.
The New York Times report published over the weekend had said that “He (Trump) reported paying taxes, in turn, on a number of his overseas ventures. In 2017, the president’s USD 750 contribution to the operations of the US government was dwarfed by the USD 15,598 he or his companies paid in Panama, the USD 145,400 in India and the USD 156,824 in the Philippines.”
“He reported paying taxes, in turn, on a number of his overseas ventures,” it said, adding, “In 2017, the president’s USD 750 contribution to the operations of the US government was dwarfed by the USD 15,598 he or his companies paid in Panama, the USD 145,400 in India and the USD 156,824 in the Philippines.”
Meanwhile, Trump dismissed the report as totally fake news at a White House press briefing on Sunday.
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“I paid tax…you’ll see that as soon as my tax returns — it’s under audit. They’ve been under audit for a long time,” Trump 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, global fashion houses such as Versace and Armani, have also collaborated with Indian developers to build luxury homes.
In case of branded residences, global brands, fashion houses or for that matter hospitality chains lend their brand to the Indian developer and charge a management, consultancy or a licensing fee, say experts.
“Global brands provide their name, intellect, design, quality and global network that includes connects with leading architects, designers, vendors, international clients who can be potential buyers in India and also help local developers strategise better in terms of sales and marketing abroad,” explains Amit Goyal, CEO, India Sotheby’s International Realty.
In case of global real estate brand Trump Towers, only the Pune project is completed and people have moved in. 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 Organisation. The project is also expected to have a 35,000 sq ft area of amenities. These apartments are priced between Rs 5 crore and Rs 10 crore.
It had also hoped to generate roughly over a billion dollars in terms of sales potential from all its properties in India.
In Pune, the global brand had licensed the Trump name to Panchshil Realty, in Mumbai to 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.
Kolkata-based firm ITC Ltd is constructing its first branded residence in Colombo, Sri Lanka for which it has roped in global luxury brokerage firm Sotheby’s International to sell the project, which comprises 132 luxury apartments, said one person familiar with the matter. Each unit is priced at $1.2 million. Hotel Leela Venture Ltd, which operates the Leela chain of hotels, is also developing four luxury projects across Bengaluru, Mumbai and Delhi.
According to a report by Savills there are now more than 430 branded schemes globally with a combined total of 65,000 units. Asia Pacific, led by Thailand and Vietnam, currently has the most schemes in planning and under construction (23% of pipeline). The average price premium for branded residences over non-branded stands at 35 percent.
In 2017, the court of chief metropolitan magistrate in North West Delhi had made tennis star Maria Sharapova a party to a complaint by a homebuyer, who invested in a luxury housing project in Gurgaon endorsed by and named after the Russian and for which construction never took off.
The court had named Sharapova in the complaint list and has ordered an FIR against her and the companies Homestead Infrastructure Development Private Limited, Homestead Infrastructure Maintenance Private Limited and Homestead Arabic Homes Private and its directors.
Some real estate experts are of the view that even though some branded residences projects may not have taken off in India due to liquidity issues and subsequent delays, there is still demand for projects that priced right.
Anckur Srivasttava of GenReal Advisers believes that the branded residences story in India is not yet over. “A certain section of homebuyers may still want to buy into such projects provided they are offered at a value-to-money price and offer differentiated fit-outs and there is hope that they would be completed. However, in cases where there is a 10-20 percent premium, the formula may not take off.”