Could The Donald Trump Brand Be Costing These Condo Owners Money?

Before becoming president, Donald Trump carefully manicured an image of "winning big" all the time, which by extension meant the people who bought his branded properties were also the ultimate winners. 

However, a recent analysis showing that Trump-branded condos are selling for less than comparable non-Trump-branded units suggests the luster of the Trump name may be fading and that well-heeled New York buyers are looking elsewhere.

The Trump Brand Has Lost Its Luster In Manhattan

The New York Times published multiple analyses of sale figures for Trump-branded condos that show they are losing value. One study found that in 2023, Trump-branded condos went from garnering a 1% premium compared to similar units to now getting 4% less than comparable non-Trump-branded spaces. It's part of a larger trend that began in 2016. 

Controversies And Lawsuits Take Their Toll

The dividing line in value seems to be before and after Trump's term as America's 45^th president. It was a tumultuous four years, marked by controversy in both his public and private life. Although Trump survived two impeachments during his term in office, he has come out on the losing end of two major lawsuits that left him facing nearly $500 million in legal judgments against him.

Perhaps the most damaging blow to the Trump real estate brand was Judge Arthur Engoron's recent ruling against him. That case, brought by New York State Attorney General Letitia James, alleged that Trump defrauded banks and tax authorities for years by radically inflating the value of his properties when seeking financing, while at the same time reporting them as being much less valuable on his tax records.

Among the most eye-popping things uncovered in that case was that Trump overestimated the square footage of his penthouse at Trump Tower by several hundred percent, which in turn allowed him to overestimate its market value to a similar extent.

It strains credibility to think someone could reasonably think their house is two or three times its actual size. However, if that house is in Manhattan, all that extra square footage translates to a much higher overall worth for the property.  

The Fallout Hits Trump Properties Where It Hurts

A developer's name and reputation matter in the world of luxury New York real estate. When any developer is found by a court of law to have engaged in fraudulent real estate dealings for decades, it's almost impossible for buildings with that developer's name on them to avoid taking a hit in value. In Trump's case, his name is emblazoned in extra-large letters all over his buildings. Larger than life is his brand.

Start generating passive income through real estate

Check out these featured investments from Benzinga's Real Estate Offerings Screener.

Even with that in mind, the decline in value has been shocking. The Times article cited an analysis by Ondel Hylton, senior director of content and research at City Realty. His analysis revealed condos at Trump Tower's Fifth Avenue location are selling for 49% less per square foot than they were in 2013. Looking across the Trump-branded portfolio in Manhattan, City Realty's data revealed a 23% drop in value from 2013-2023.

City Realty had a control group for this experiment: a group of four Manhattan condominiums where residents (presumably through votes on the condo board) had the Trump name removed. The value of condominiums in those buildings appreciated by 9% for the same 2013-2023 time frame, a number that nips the average 8% property value increase in the area.

Check out: The New Gold Standard: Why Investors Are Turning to Farmland for Better Returns

Academics Back Up The Analytics

It's not just the data analysis firms that are noticing this trend but the academics, too. Columbia University economist Stijn Van Nieuwerburgh's analysis was also cited in the Times story. After crunching the numbers, he found a 25% drop in value for Trump-branded properties in comparison to similar non-Trump-branded properties since 2013. He was definitive in his conclusions.

Van Nieuwerburgh told the Times, "This analysis clearly identifies the Trump brand is the reason for the value deterioration. Removing the Trump name from the building removes the loss associated with the name." 

While some of the value declines may be attributable to other factors, the data paints a clear picture, and it's not a pretty one for Trump or anyone still in a Trump-branded building.

A Ray Of Light For Trump

One thing to consider is that Trump is no longer just a New York real estate mogul. Trump-branded properties exist all over the world, and this most recent analysis only focused on the Manhattan Trump condos. To date, no similar analysis has been run on other Trump-branded properties around the world, and they may still be appreciating as expected. In the meantime, Mar-a-Lago still looks like a pretty nice place to live.

Read Next:

• Gold has long been considered the ultimate safe-haven asset, but a growing number of investors are now turning to farmland for better returns and greater protection against inflation and economic downturns. See how farmland is becoming easier than ever to invest in. 
• Miami is expected to take New York's place as the U.S. Financial Capital. Here's how you can invest in the city with as little as $500 before that happens. 
• Investing in real estate just got a whole lot simpler. This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, and you only need $100.