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Posted by: Prashant Gopal on August 19, 2008
Donald Trump Jr., The Donald’s 30-year-old son and the Trump Organization USA’s executive vice president of development and acquisitions, recently announced that he’s launching a $1 billion Indian hedge fund that will focus on luxury real estate investment.
He got the idea last November after speaking at a real estate conference in Mumbai. At the time, India’s real estate market was in the fifth-year of a boom and international funds were investing heavily in apartment buildings, hotels, and shopping centers across the country.
The market has changed quite a bit since then. Inflation and interest rates are climbing and shares of Indian builders, home price appreciation, and demand for land are slowing.
Of course, this might be a good time to jump in and pick up land at distressed-sale prices. But he will be competing against established players (including U.S. companies such as Wachovia, Trinity Capital, Vornado Realty Trust, and Tishman Speyer). Dubai firms have been investing heavily in Indian estate for years now and have good connections with landowners and government officials and a deep understanding of the country’s shadowy world of land acquisition and development.
Trump says his fund will start slow, investing first in luxury real estate in Mumbai before expanding to cities such as Bangalore, Hyderabad, and Delhi where the IT sector is strong.
India’s population of U.S.-dollar millionaires is growing faster than any other place in the world, according to a recent study. And Mumbai has some of the most expensive real estate in the world.
“The fund will be for acquisitions of real estate in the high end and across the spectrum,” Trump told a reporter at Bloomberg. “We’ll start it off relatively small and grow it as we get more familiar with the Indian market. Our entry has to be in Mumbai, and that’s where everything is going on right now in terms of high-end real estate.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.