This week two of his three children, who all serve as executive vice presidents to The Trump Organization, traveled here to unveil the first international building in their family’s real estate empire: The Trump Ocean Club, not just the largest building south of the border, but the world's first Trump tower outside America.
“This building is a very important bridge for us as we begin to expand internationally, not just through South America, but the world,” Ivanka Trump, and executive vice president of development and acquisitions, told the Monitor during an interview in the hotel's partially finished "sky lobby" looking out over the ocean bay and city skyline.
Fittingly, the Trump’s “bridge” to the global market is a country that for the past century has formed a bridge of its own between two hemispheres and two oceans. And now, as this robustly growing country of 3.5 million people tries to bridge from its olive-drab, banana-republic past to a first-world nation, it’s thankful for the Trump brand.
“It means we are world class,” boasts Panamanian Tourism Minister Salomon Shamah. "Before Panama was watching the rest of the world, and now the rest of the world is watching us."
Laying down Trump in Panama
But why Panama? The Trump family's first exposure to Panama came in 2003, when Panama City hosted the Miss Universe Pageant, which is owned by Mr. Trump. His daughter says she was immediately taken by the vibrancy, culture, and climate of a city on the rise, where skyscrapers stretch and twist upwards like concrete plants competing for sunlight. Indeed, the team saw an opportunity to "trump" opponents.
At a cost of $400 million, the nearly completed 70-floor, sail-shape building overlooks the Pacific on Panama City’s crowded Punta Pacifica neighborhood. With 2.8 million square feet of construction space – complete with five-star hotel, luxury spa, casino, restaurants, office space, and residential units – The Trump Ocean Club has already sold 95 percent of its units to wealthy buyers from more than 40 countries.
“We are building landmarks. And this one is going to be one by which all the others are judged,” says Eric Trump, the other executive vice president of development and acquisitions of the family business.
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.
“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.”