Greatest Real Estate Opportunities Have Moved Overseas

Trump: Greatest Real Estate Opportunities Have Moved Overseas
By Matt Valley

Jun 4, 2008 4:23 PM

Once the place for the world’s great investors to park their money, the United States is no longer the kingpin for generating business opportunities and has lost respect around the globe, says famed real estate developer Donald Trump, who is convinced that the situation is not irreversible.

“I look at what’s going on in the rest of the world – Russia, India, China. You don’t hear about the United States in the same breath. When the great funds of the world come to me, they want to do a job in India, they want to do a job in other countries,” remarked the charismatic Trump during a luncheon speech Monday before several hundred hotel industry professionals at the Waldorf=Astoria. The appearance of the chairman and president of The Trump Organization marked one of the highlights of the 30th annual New York University International Hospitality Industry Investment Conference that attracted approximately 2,400 attendees.

“The problem that I see with the United States is that we’re no longer respected, we really aren’t,” lamented Trump, pointing out that there is plenty of blame to go around, starting with the political leadership. “I think that [perception] can be changed. We have the greatest people, the greatest businesses.”

One important issue that needs to be rectified, Trump says, is the U.S. trade deficit with China. Trump’s solution? “Put John Gray in charge of negotiating terms with China. Guess what? I think we’d do very well.” Jonathan Gray, of course, is a legendary tough-as-nails negotiator in his role as co-head of the real estate arm for The Blackstone Group. Trump’s suggestion drew a big chuckle from the audience.

The problem is that the U.S. has diplomats negotiating trade agreements with China and Japan, not seasoned business professionals and deal makers, argues Trump. “I’ve watched this for years, where Japan would just rip us. By the way, they [the Japanese] tell me, ‘I can’t believe we’re getting away with it.’” It’s much the same with the Chinese, says Trump.


When Trump talks, the industry listens. The Trump Organization owns several pieces of high-end real estate in New York, including Trump International Hotel & Tower, Trump Tower, and 40 Wall Street. The company also is one of the world’s largest operators of hotels and casinos, including three casino hotels in Atlantic City. Fortune magazine ranks The Trump Organization No. 31 on its list of the 35 largest private U.S. companies. The Organization generated $10.7 billion in revenues in 2007.

The company increasingly is developing projects overseas. The Palm Trump International Hotel and Tower in Dubai is a 48-story mixed-use condo-hotel and residence with a 300-room five-star hotel and 360 residential apartments. The $600 million development, a joint venture with Dubai-based Al Nakheel, is expected to be completed sometime in 2009.

“From the standpoint of everybody in this room, you go where the action is, but personally I’d rather not fly to the Middle East. I’d rather not fly to Dubai.” Trump is quick to add, however, that he cherishes his business relationships with his partners in Dubai.

The financing climate is the worst that Trump has ever encountered. The global credit crunch has a silver lining for the hotel industry because it will limit supply growth, Trump says, a starkly different situation than in the early 1990s when a supply glut existed.

Trump related the story of an office developer who can’t get financing despite the fact that a tenant with a Triple-A credit rating has committed to the space. “The banks don’t have money. They’ve hurt themselves, and what they’ve done is inexcusable, and now they’re starting to hurt the world,” says Trump. The European financial markets, for example, are starting to feel the effects of the subprime residential mortgage fallout.

Still, there are pockets of vigorous real estate investment activity in the U.S. market, most notably New York where investment capital continues to stream in from abroad. “But part of the reason that New York is working is the dollar is so low,” says Trump. If the dollar were to suddenly rise, the New York economy could experience some hiccups, he says.

brought to you by Sean McAlister