There has never been a worst market for real-estate in India, and yet The Trump Organization chose to launch two of its most prestigious projects in the midst of one of the worst slowdowns in real-estate in the country. BusinessToday.in Editor Rajeev Dubey met the CEO and the head of The Trump Organization, Donald Trump Jr. and his partners in India, Kalpesh Mehta, Mr Patodia and Mr Vinod Dugar from the RDB group for a chat.
Mr Trump, let me start with you, why is it that The Trump Organization chose to launch two of its luxury projects right in the middle of the slowdown at a time when we have been hit by demonetization, GST ? You know the inventory is one of the highest in the country right now. You have also seen that the Mumbai project is still to be sold fully. So how did you launch it in the middle of this slowdown?
Well real-estate by its nature has a long cycle, right? You start a project; you can't just necessarily put things on hold for years, to watch for things to improve. Now, what we were able to do is we were able to come up with incredible projects, great locations, and unique features. Here in Kolkata, we have the first residential building with floor to ceiling glass, unobstructed views, and overlooking parks. So, you can still differentiate yourself in a bad market, in a difficult market. You can still make something that's better. And our shares have proven that we have been able to do that successfully. So, by differentiating ourselves, by being unique, by being able to truly build a better project, a true ultra-luxury product, you are able to pick off what's left at the market. Now, that may be a smaller world, but there are still people looking, there are still people buying, we are just able to give more to them.
Those were some really interesting ads that came out - the full page ads that said the buyers are going to meet you personally. Is that something unusual, or do you do that in other launches as well?
No, not at all unusual. Frankly, when I saw the articles coming out in a negative sense, I said, I would be the first real-estate developer in the history of real-estate to not meet with their buyers. I mean, that's what it is. I mean us as a brand! You have to get to know your buyers. These are people, in many cases that follow us around from project to project, investing in various things that we have done in America and around the world. To not meet with them would, frankly, be unheard of. I think even in India, as we have launched our projects, I have been coming here, doing the exact same things for years and certainly, well before the politics. So, I don't know if anything has changed other than the narratives, which seem to be conveniently used to manipulate.
So, do you personally meet every flat owner?
No, I don't meet personally, but only if you throw a party for the buyers. We had an incredible party last night, there were buyers and there were 500 other people, people from the real-estate community and people who are big in the town and it is probably a natural thing that we have done for every project that we have launched in the 40 years of our company's history.
Let me ask you a few things about being a president's son. What is the most awe inspiring feature of being a president's son?
It is incredible to be a fly on the wall, watch history being made made, and right, to be able to have participated in the campaign, to be a part of, perhaps, the greatest political upset in the history. That is amazing. And to be able to see someone truly making a difference. I mean in America we are so used to our politicians talking really well. They say a lot, they don't actually do anything, but they say a lot. And so to see someone, who is in there, making a difference, whether it's a historic tax reform, to watch that as an American is truly inspiring.
You run The Trump Organization, siloed from the presidency. At least that's how you have created trusts and there is a self-imposed embargo. Yet, there is still chatter about Mr. President running it by remote. What do you have to say about that?
It is ridiculous, candidly. When you look at the gravity of the situation around the world and everything he has to deal with on a daily basis. The notion that we would sit there and talk to him about sales and projects and pick his brain for that, I would love be able to do it. But the notion of we will even think about doing it is ridiculous.
Do you still consult him?
I wouldn't now. He has got too much on his plate. Unfortunately, I barely get to see him. So, we are not talking about business, when we do.
How has it changed his life as a president since before the campaign and as he was running The Trump Organization?
I mean, you probably see it almost as well as I do. It's obviously very different. It's a different set of roles, it's different circumstances obviously you are dealing with. You are dealing with people's life, it's not just business where the deal is only money. But I mean, what he is doing now, is changing the world. So, I imagine the gravity of that certainly weighs on him.
How is The Trump Organization being run differently from what it used to be earlier? For instance, now with you in charge...
I think it's a good question. It's very different, obviously. I spent 10 years, for example in India, building relationships and friendships, but now we say, we can't do new international deals. That's very different, that's a big part of what I did. I spent a decade nurturing relationships, and now to say hey, we are not gonna do that means that we are much more on a management mode. We are gonna maintain the existing assets that we have, but that's a big hit, people don't talk about the opportunity cost, of what that is, the sacrifice to not do new deals and continue the business that way. So, our job now is more to maintain those assets, we can do some stuff within the US. If I have a meeting with someone who has got a speeding ticket, it's on the front page of The Washington Post because, there's a natural proclivity to try to hit, to dig, whenever they possibly can, as you have seen. So, it is very different today, than it would have been two years ago.
And what's the role of the trusts really?
The role of the trust is to keep again the separation between church and state.
If you look at the business itself in the country, one of the biggest hits that it took was because of derailments due to demonetisation. How did you see it from outside and what do you make of the demonetization move specifically?
You know, I am not gonna get into macro-economic policy right now, but I think in the end a lot of roles that were put into place, were frankly for me as an outsider-looking-in a good thing. The way things were done from both a government level as well as a developer stand point, didn't land a lot of confidence as a consumer and as a developer from outside of India. It sort of left a lot of ambiguity. Although it has created a sort of difficulty in the short term, I think in the long term, it's gonna create a level of transparency, and that's gonna create confidence. To be able to let people say, hey I want to invest in this; I want to buy in real-estate - that perhaps looked at a little different before that transparency was enacted.
What do you consider are your biggest strengths?
My boyish good looks and charm. I think it depends on the situation.
I was coming to a point that essentially, you have built a profile for yourself, as a political figure as well. You are a business figure, you are a political figure, you are a social media figure. Are you possibly headed for a presidency bid as well in some point of time?
I don't rule anything out, because you rule something out and then you change your mind 20 years later, and they say you are a liar. So, it's difficult to do that, I am not a political figure, though I am vocal, because I believe in a lot of stuff. So, I will use that, I will use that platform to hit back, for example, yesterday I did an interview and was asked what differentiates India from the rest of the world. So, I gave a from-the-heart kind of answer, and I really meant it.
Because I have been for a long time, I have been doing this for over a decade. I was a believer of Indian market, stalking about this thing, long before others were, so I gave this reply from the heart that what is amazing about the country and the culture is the spirit of the people. That even the most destitute have a smile on their face, there is a joy of life here that I haven't seen in any other part of the world. This was the answer that was genuinely from the heart, from the actual experience. Not just talking about it, not just pondering, but from what I have seen. And The Washington Post article says, 'Donald Trump likes poor people, because they smile'. It's just not genuine, it's not just honest. But I have a platform where I can fight back, and whether people like it or not, I have some of the genetic proclivity to fight back. My father does and will. I see so much of dishonesty on a daily basis and it really, is sickening.
You have been here multiple times. How have you seen the change in India? You've mentioned somewhere, that you have seen India changing, and you have been coming here at least for a decade, and the President has been here, now Ivanka has been here as well. The question is how have you seen India changing?
I have seen a change in multiple levels. When I first came to India, I met someone who are Indian businessmen in New York and we were talking and they said we have a great piece of land, and I said ok let's go look at it. I get there, well, it's not really their land. It's their friend's land. So, there is an entrepreneur spirit. You have to be able to navigate that. Everyone has got a deal, and everyone's got something different. So, I spent the few years figuring that out, and navigating those ways. And now, after those years I was able to breakthrough and meet some incredible people like Kalpesh, who are again not just a partner but a true friend. So, I have been able to read through some of that.
I have seen actions taken to create a transparency in the market, certainly in real-estate, where a developer could be four-letter word. People did not have a lot of confidence on whether they are going to get what they are being sold. So, when I see some of the governmental policies related to that create some difficulties for the developers, I understand that as a developer in the end, they will weed out the bad players. In the end, they will create a consumer confidence that buyers will believe in what they are buying and what they are going to get. And that's gonna be important for expired money coming back in. That's gonna be important for outside investors to be able to invest in the Indian market place, which will make it a more of a global market place that it's rapidly becoming. So all of those things, in the longer term are gonna have a very positive effect on the market and consumer confidence.
Does India figure in your family discussions, now that so many of your family members have been here?
We have always talked about it. For me it's been a big market. Eventually, I look forward to getting back into it, when we are allowed to.
You launched in Pune, and that's an essential question - why Pune and not one of the metros where you would expect more luxury projects coming up? Of course now it's Kolkata, there's Delhi and Mumbai where you already have a project.
Pune was first because it was not just about doing a deal, it was not just about getting a deal in India in the market places, it was about getting the right deal and getting a deal with the right partners. Over there are just incredible people, incredible builders, so that is a project you could take out of Pune and put in New York. You can put it any of the other great markets. And it would be a comparably build product, that doesn't exist in a lot of other places and so, it's about bringing true luxury to the Indian market place. That's what we have done over decades. So, it wasn't about saying ok check I got a box, I did it in Mumbai, it was about getting the right project with the right people, who are gonna execute and deliver an incredible product and that's was they have done. If you look at the building it's spectacular.
If you look at the Delhi project also, for that matter. How do you see the growth prospects in the real-estate market in India when you compare it with the global market, especially with the other markets that you see? Where are we right now? When you look at the US market 20 years ago, or how would you compare it?
It's difficult to compare the markets exactly. But when I look at the opportunity here, when we look at the 1.34 billion people, you have consumption levels that are relatively low. Even relative to let's say some of the BRIC countries. When some of that starts getting in line with the rest of the world, the intelligence and the potential that is in this country that I have witnessed firsthand, is unleashed and unlocked. I really think that there is no stopping; I think it's incredible for me as an outsider-looking-in. For me that has always picked my interest as a developer and as a real-estate guy.
And is this your biggest real-estate outside of the United States by the number of projects or by revenue?
Not necessarily by revenue, because owning projects are gonna be very different.
What happens now that you have an embargo, you will not be able to set up new projects in India, as long as the President is in power? So, how did you say that you are the opportunity cost? What did you mean?
That's correct. Well that's what it is. I mean I am taking three to seven years off from my market, but then again, I have taken a decade to build the relationships. And now that I have the relationships, we were working on many deals, maybe some of them would have easily gone across the line, but they weren't inked by the time my father took off, so we just had to say that hey we can't do it. It was a pretty substantial cost for the country for not doing those projects, in the future. Now, I fully understand that, we fully accepted that and we look forward, when we can get into and eventually do those deals.
RERA has been implemented, GST, demonetisation are in place. Where does the real-estate market industry go from here?
I think the market starts getting more institutionalized. It starts getting cleaner, as Don said some of the players who weren't able to deliver are getting naturally weeded out. And it is starting to come back for the guys who can deliver. With a brand like Trump, where there is innate credibility and confidence that the buyers have, that there is a high level of scrutiny that's gonna be paid to the project, if you have a great product, you will sell well. In this otherwise dead real-estate market, two Trump projects were launched, have done Rs 1,100 crore sales in just four months.
Kolkata is 70% sold out, Delhi-NCR, which is a dead market; we sold Rs 700 crore in just little over six weeks. So, the market is tough, RERA, GST, demonetization have all hit the market. But for good players and good products I think, it has started to come back. I think the feature is strong; fewer numbers of players will capture large markets. For these two market shares, it is a short window, but has captured 95%.
Similar, for credible players, India is a very inspirational country now. So, there is a latent demand for right product, right brand, right pricing, right ticket size, right locations. So, I think because of all this, and the Trump brand, the credibility which we have, and the lifestyle which they offer it's been a incredible journey for us. From here, the markets in different segments will definitely go up. Especially the affordable government housing, where the government in focusing, it is a compelling reason for people to come back and buy.