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Trump Trumps in Baja

Condo hotel project is getting worldwide attention

Donald Trump's announcement of the 17-acre land purchase and groundbreaking of Trump Ocean Resort Baja, the first branded condo hotel on the northern edge of Playas de Rosarito in northern Baja California, was like a shot heard around the world.

The announcement, picked up by the industrialized nation's news media, quickly ran from Japan, South Korea and Taiwan in the Far East to Spain, Germany, France, England, Italy and other European countries as well as throughout the NAFTA partner nations, the United States, Canada and Mexico.

Within hours after the announcement, phone calls began arriving at the headquarters of S & P Destination Properties, the Canada-based marketing company contracted by the partnership between the Trump Organization and Irongate real estate developers based in Los Angeles. The first were from business reporters. After their stories hit the street and evening radio and television news, the calls were from potential buyers from a plethora of countries.

The news was received with great fanfare by coastal developers from Tijuana to Ensenada. Their reaction was not fear that such potent competition was going to take over the market. Rather, the feeling was that the high-profile presence and publicity of Trump in Baja would translate into world acceptance of the Baja coastal corridor as a destination for both visitors and investors.

That Trump's condo-hotel resort will undoubtedly be a first choice among the higher end buyer/investor is accepted as reality. However, the Trump project will consist of just three 25-story towers with a combined 526 units, hardly enough on its own to serve the Southern Calfornia market, which with 20 million residents also is one of the world's wealthiest in terms of per capita income.

The presence of Trump in Baja will attract far more buyers than the Trump project can accommodate, creating a demand for all other projects that meet the buy safe requirements and offer sound construction and amenities that safeguard and increase property values.

The Trump first phase, the middle tower, will have units ranging from one bedroom of 532 square feet to 2,200-square-foot penthouses with prices ranging from $250,000 to more than $1.5 million. The second and third towers probably will be more expensive.

The Trump Ocean Resort Baja promises to be a luxury destination hotel in keeping with the other projects for which Trump has become famous. For Irongate, this is the second project in which it has teamed with Trump. The first, Trump Towers Waikiki, a 38-story, luxury condo hotel resort with 464 rooms and suites, sold out in one day on Nov. 10.

S & P Destination Properties, the same company that sold the units in Trump Towers Waikiki for $700 million, a record, was contracted to lead the marketing effort in Baja. S & P's Brendan Mann, who is handling the Baja marketing effort, says there is a great deal of interest on the project from the Japanese, who were the main buyers of the Waikiki units. There is an expectation their purchasing presence will be significant in the Baja project.

It makes sense. Tijuana International Airport is starting direct flights to Tokyo, and by far the biggest maquiladoras in Tijuana are owned by Japanese or South Koreans. Additionally, there are large contingencies of Japanese executives living in San Diego and working in Japanese-owned businesses. Plus, Korean-Americans and Korean nationals in Los Angeles are already important investors in Baja coastal properties, says Luis Bustamante, president of CreditmexUSA.com. He says sales to Koreans in some projects closest to the U.S. border have been in excess of 20 percent.

Mann says S & P is working with several Baja real estate brokerage firms to provide an opportunity for local citizens to be the first to invest. This became evident at a reception held on the site at Punta Bandera, hosted by S & P and local brokers. Most invitees were local Mexican businesspeople. In discussing the project with a number of them, I came away with the feeling that there was much interest and a number of them would be investing.

Jason Grosfeld, a principal of Irongate, says the project will have direct consequences in San Diego as well as other regional destination centers such as Palm Springs. The Trump towers will have executive convention and conference space competing directly with luxury hotels in San Diego.

Mann feels the Trump Baja towers will have a marketing advantage because the location is ocean front with spectacular views, pricing will be a bargain compared to San Diego luxury hotels and the fact that Trump, with worldwide reservation systems in place, can successfully compete for business.

Trump's presence in Baja opens a new dimension and series of opportunities on both sides of the border, and that is welcome news.

Patrick Osio Jr. can be reached at patrick@transbordercommunications.com