Donald Trump to Panama: 'You're hired!'
In an interview, two of Donald Trump's children outline the firm's investment vision for Panama, unveiling the first Trump tower outside the US.
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The young Trump executives appear confident that the project will open on time in July and become the new benchmark for luxury development in Latin America. It’s also an important building for the Trump Organization, whose years-delayed hotel and tower proposal for Dubai has yet to break ground, but is now launching two major global developments in 2011 with this hotel and another in Toronto.Skip to next paragraph
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“We think this will be very viable and increasingly so after the Panama Canal expansion is completed [slated to conclude in 2014],” Ms. Trump told the Monitor.
Sky-high prices don't scare investors
Despite the optimism, doubts remain about the project’s financial sustainability. The building is estimated to be 10 to 20 times more expensive than any other skyscraper being built in Panama City. Plus, while most buildings in the city have 80 to 85 percent salable unit space – allowing developers to finance construction with presales – the spacious Trump Ocean Club’s total unit space is less than 50 percent, according to chief developer Roger Khafif.
That posed a major challenge when it came to pricing units to make the Trump project feasible. After crunching the numbers, the organization lunched pre-sales in 2006 with prices set three to eight times higher than the going market rate in Panama City. “We’re priced higher than Miami,” Mr. Khafif says.
But the sky-high prices didn’t scare away investors, even in a country in which some are waiting for the real estate bubble to pop. Not only did the Trump Ocean Club reach its goal of selling 60 percent of the building within the first year of pre-sales, but it has since hiked its prices four times, increasing its original price offerings by 30 to 40 percent. Khafif says investors have committed to buying everything from a $360,000 fully furnished “bay loft” unit, to $12 million for the entire 69th floor.
Still, some local real estate insiders think many of the pre-sale investors might be speculators, rather than future tenants.
Ivanka Trump admits there is always a risk that buyers won't come through at closing time, but says she’s confident that the grandeur and exclusivity of the building puts it in a class of its own.
“In any project, you don’t know until closings the composition of the buyers or their sentiment,” she says. “But with that said, I think this is a very unique project that may never be built again in Panama. It’s really unparallel to anything that currently exists in the market and I believe that people appreciated our vision.”