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Speaker 1: Hey there, I'm Joe Wisenthal and I'm Tracy Allaway. We

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Speaker 1: wanted to let you know that if you're a fan

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Speaker 1: of the show, there's more to Odd Lots than just

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Speaker 1: the podcast.

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Speaker 2: That's right. In addition to this, we have a blog,

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Speaker 2: a newsletter, and a discord.

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Speaker 1: Yep, go check them out. You can find the blog

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Speaker 1: a newsletter at Bloomberg dot com slash odd Lots, and

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Speaker 1: you can chat with fellow listeners twenty four to seven

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Speaker 1: at discord dot gg slash od Loots.

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Speaker 3: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 1: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 2: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 1: Tracy, we did that episode recently on the big potential

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Speaker 1: development in northern Egypt. Yes, and I'm sort of fascinated

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Speaker 1: as a topic by these like huge, gleaming megacities, many

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Speaker 1: of them being built in the Middle East, tons of

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Speaker 1: money pouring into these sort of just absolutely jaw dropping skyscrapers,

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Speaker 1: luxury buildings, things like that.

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Speaker 2: Yeah, I think we spoke a little bit about it

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Speaker 2: on that episode, but it's sort of the Dubai blueprint

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Speaker 2: that seems to be being copied and multiplied across the

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Speaker 2: Middle East, and the question that always comes up is, well,

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Speaker 2: how big can these markets actually be? Like how much

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Speaker 2: demand is there for multimillion dollar properties in tax havens?

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Speaker 2: And it seems like the answer is more than you

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Speaker 2: would think.

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Speaker 1: These cities are kind of weird to me because I

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Speaker 1: never get the impression that And you lived in Abu Dhabi,

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Speaker 1: so you could correct me if I'm wrong, But does

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Speaker 1: it seem like there's like that much going on? Even

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Speaker 1: when I see like photos of people there, like friends stopping,

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Speaker 1: They're like, it always looks a little quiet. Am I wrong?

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Speaker 2: The way I used to describe living in Abu Dhabi?

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Speaker 2: And I should just add a massive caveat here, which

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Speaker 2: is I left in twenty eighteen, and my understanding is

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Speaker 2: that since then Dubai has been booming. In particular, there's

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Speaker 2: been a lot of immigration from Russia, lots of people

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Speaker 2: moving there as part of the tech industry as well.

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Speaker 2: But the way I used to describe living in Abu

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Speaker 2: Dhabi was it was kind of like living in the

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Speaker 2: suburbs of Texas in the sense that it's very hot.

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Speaker 2: Everyone drives everywhere. You don't really see people walking around

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Speaker 2: on the streets that much, and you spend a lot

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Speaker 2: of time at the shopping mall or the swimming pool.

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Speaker 1: It doesn't sound so bad. I'd take it.

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Speaker 2: It's a nice lifestyle. But yes, there isn't a ton

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Speaker 2: going on, although they have made efforts to change that.

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Speaker 2: They've opened museums and things like that.

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Speaker 1: Yeah. No, But to the point though, like when you

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Speaker 1: see the price tags on what a penthouse in one

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Speaker 1: of these buildings are going for, or just you know

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Speaker 1: how much money is being developed or to some of

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Speaker 1: these buildings, Like it's absolutely eye popping.

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Speaker 2: You see these headlines and it's not just like one

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Speaker 2: apartment sold for one hundred million, it's like five apartments

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Speaker 2: sold for one hundred million. And I think that's the

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Speaker 2: surprising thing. The other thing that's been happening. I don't

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Speaker 2: know if you saw that in Dubai they opened that

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Speaker 2: Mercedes Benz tower. Did you see that? No, I'm trying

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Speaker 2: to This is a difficult topic for me because I

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Speaker 2: think my personal taste veers so far away from this direction.

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Speaker 2: I'm not even gonna mention the fact that I obviously

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Speaker 2: couldn't afford any of these properties. But it's an interesting one.

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Speaker 2: I don't know. It's kind of gleaming. It's got lots

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Speaker 2: of lights. If you look at photos of the interior,

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Speaker 2: it's very modern. It's very clean and light, and it

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Speaker 2: has magnificent views of the Dubai Skyline. I'm not entirely

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Speaker 2: sure I would want to live there, but again it's

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Speaker 2: a moot point because there's no way that I would

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Speaker 2: ever be able to afford it.

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Speaker 1: It definitely now, I looked it up and it definitely

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Speaker 1: looks a lot different than what I imagined where I've never been.

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Speaker 1: But what I imagine your place out in the middle of

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Speaker 1: nowhere in Connecticut.

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Speaker 2: Probably the polar opposite.

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Speaker 1: Okay. I want to learn more about this sort of

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Speaker 1: this world of real estate for the ultra rich around

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Speaker 1: the world, and some of these cities and the business

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Speaker 1: behind these extraordinary gleaming towers. Some of them are a

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Speaker 1: nice cone shape, some of them look a little bit

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Speaker 1: like Jenga towers of some sort. I'm really excited. We

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Speaker 1: do have the perfect guest. We're going to be speaking

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Speaker 1: to Hitten some Tani. Here's the founder of ten thirty one.

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Speaker 1: It's a new real estate media company, former editorial director

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Speaker 1: at the Real Deal, and knows real estate really well,

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Speaker 1: and people who know real estate say to read hit tend.

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Speaker 1: So thank you so much for coming on odlats.

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Speaker 4: My pleasure, guys, thanks for having me.

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Speaker 1: What's going on? What's the deal with all these big towers.

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Speaker 4: The way to think about this market is, it's not

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Speaker 4: really a local market anymore. I think historically when we

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Speaker 4: think about luxury prices in New York, in Dubai and Aspen,

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Speaker 4: we sort of compare them locally. So I haven't opened

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Speaker 4: an economics textbook in a long time, but there used

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Speaker 4: to be this concept of local maximums that no longer applies.

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Speaker 4: The markets that the very very top I'm not talking

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Speaker 4: about what the well healed would buy, but what the

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Speaker 4: well healed sort of many many echelons higher than that

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Speaker 4: would buy has blended. It's become a global little I

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Speaker 4: call it the parallel universe of this luxury market.

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Speaker 2: Okay, so give us some examples of the numbers around

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Speaker 2: this particular segment of luxury real estate, because again, we're

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Speaker 2: not talking about like an apartment in New York that

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Speaker 2: maybe costs two million dollars. We're talking yeah, we're talking

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Speaker 2: about apartments that cost like fifty one hundred million. What

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Speaker 2: have we seen recently in terms of transactions.

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Speaker 4: So the Ali Baba co founder bought a penhouse in

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Speaker 4: two twenty Central Park South on Billionaire's Row for one

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Speaker 4: hundred and ninety million. That was already an apartment that

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Speaker 4: a hedge funder, Daniel Oak, had paid ninety three million

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Speaker 4: for just a year and change ago. So there is

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Speaker 4: you can't really that's one hundred percent premium on a

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Speaker 4: pad like that. Larry Ellison in Florida had bought a

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Speaker 4: Florida estate for one hundred and seventy odd million and

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Speaker 4: the previous buyer had paid ninety four million. Talking about

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Speaker 4: these numbers that are just that defy reality and you

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Speaker 4: can't track it. You can't really map it and say,

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Speaker 4: you know, it's growing ten percent a year. We're talking

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Speaker 4: about a price appreciation of fifty to seventy five to

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Speaker 4: more than one hundred percent within a year. Sometimes, why

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Speaker 4: is there so there's been It's a hard thing to

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Speaker 4: track because there isn't really any great data that exists

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Speaker 4: in this global sphere. But it seems like there's been

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Speaker 4: a new kind of feudalism that's happening, which is global

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Speaker 4: billionaires are now untethered to places like New York, and

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Speaker 4: they're looking to portfolio shops. So they're thinking more about

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Speaker 4: their purchases in terms of Okay, I'm a captain of

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Speaker 4: the universe, right, and I want to have my pad

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Speaker 4: in New York where I take my meetings. I want

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Speaker 4: to have my estate in Florida. I also want my

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Speaker 4: ski shale and aspen. And guess what I'm willing to

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Speaker 4: pay Not just a little more than the local king

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Speaker 4: of the hill, I'm willing to pay double. So I

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Speaker 4: don't really have competition in that market.

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Speaker 2: So who's developing these properties? Are there ultra luxury specialists

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Speaker 2: or is it you know, the existing sort of normal

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Speaker 2: luxury real estate developers are just building more specialized apartments.

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Speaker 2: Who's actually doing it?

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Speaker 4: Yeah, So one thing about developers as sort of a

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Speaker 4: species is they're really really good at rejigging their portfolios

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Speaker 4: to cater to current to man. So in many cases,

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Speaker 4: developers who who are building, you know, twenty million dollar

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Speaker 4: apartments are saying, you know, why not go for the

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Speaker 4: fifteen million dollar apartment? And in some cases there is

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Speaker 4: a one sort of a unique class of spec home

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Speaker 4: developer who was saying Okay, there's x amount of billionaires

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Speaker 4: in the world, there's x amount of the kind of

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Speaker 4: product that they want, let me go and build. So

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Speaker 4: there's a guy called Todd Glazier out of Palm Beach

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Speaker 4: and he just built. He bought an island. It's called

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Speaker 4: Tarpin Island. It's the only private island in Palm Beach.

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Speaker 4: He paid eighty five million for the property and then

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Speaker 4: he listed it at one hundred and eighty five million,

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Speaker 4: after obviously adding tons of bells and whistles. We're talking

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Speaker 4: about thirteen hundred feet of frontage on the water.

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Speaker 2: What are the profit margins like on this kind of property,

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Speaker 2: because I have to imagine at some point there there's

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Speaker 2: a ceiling of how much it would cost to build

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Speaker 2: these things, and so if you're just selling it for

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Speaker 2: more and more money, presumably the margin is getting fatter

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Speaker 2: and fatter, and that's part of what would be driving

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Speaker 2: this activity. But again, I don't know. I'm happy if

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Speaker 2: my ceiling isn't falling down. So there are probably some

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Speaker 2: very expensive options out there for multimillionaires that can boost

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Speaker 2: the price or the cost of building. But I have

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Speaker 2: to imagine the margins are part of what's driving this.

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Speaker 4: The margins are incredible, right, you could make up to

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Speaker 4: sixty seventy million dollars if you do it right. But

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Speaker 4: you have to take into account the incredible risk. You're

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Speaker 4: carrying a spec home. You're hoping that there's a buyer

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Speaker 4: that's out there for it. You're paying a ton of

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Speaker 4: money to buy the property, and there's you know, carrying costs,

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Speaker 4: financing costs, construction costs, and we have seen some pretty

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Speaker 4: bad flameouts. Los Angeles is a great example of this,

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Speaker 4: where there was a guy called Nil Niami who was

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Speaker 4: trying to sell a home for five hundred million dollars

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Speaker 4: and he called it the one and foreclosure upon foreclosure,

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Speaker 4: upon foreclosure. I think he's lost pretty much all his empire.

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Speaker 1: Tracy, did you ever watch that documentary The Queen of Versailles?

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Speaker 2: Yes, that was great. That was at the time America's

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Speaker 2: or the world's most expensive house. Is that right?

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Speaker 1: Yeah? I thought of all the various films and documentaries

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Speaker 1: that were sort of related to the financial crisis, I

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Speaker 1: actually thought that that was the best one because it

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Speaker 1: really got into the financing chain behind this guy who

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Speaker 1: is trying to build like a half a billion dollar

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Speaker 1: home in Florida, and how like changing fortunes quickly changed

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Speaker 1: his ability and I went Bagram. Do you know what

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Speaker 1: happened with that one?

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Speaker 4: I do not do not with that one. But I

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Speaker 4: can say that the more success a developer has in

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Speaker 4: a space like this, lenders start to think of it

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Speaker 4: as an asset class. So if someone like a Todd is,

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Speaker 4: you know, building a home making a forty percent markup,

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Speaker 4: et cetera, then he might find a conventional lender. He

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Speaker 4: may not need that wildcatting lender anymore. He might be

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Speaker 4: able to find a conventional lender or partners to fund

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Speaker 4: these kind of deals because he could show that there's

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Speaker 4: to create an asset class. It's very difficult, but if

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Speaker 4: you do it, and you're the first one or one

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Speaker 4: a few, you can make a lot of money.

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Speaker 1: If I think of like I want to buy a

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Speaker 1: nice condo here in New York City. I like my apartment.

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Speaker 1: You know, it has a decent amount of space, has

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Speaker 1: two bathrooms. It seems it's enough for me. And then

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Speaker 1: I'm you know, I have friends who have like much

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Speaker 1: nicer places than some of them, like have a backyard,

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Speaker 1: and you know that seems nice too. But when we're

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Speaker 1: talking about like the fifty million dollar property, what's in

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Speaker 1: there and what is like if you want to sell

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Speaker 1: to that market, what does it have to have?

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Speaker 4: Well, size is very important, right so there generally a

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Speaker 4: lot of these homes will be if you're talking apartments,

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Speaker 4: we're looking at five thousand and seven thousand square feet

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Speaker 4: of indoor space, a couple thousand square feet of exterior

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Speaker 4: space as well. Private elevators are typically a given, and

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Speaker 4: then depending on the market, it can go completely crazy.

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Speaker 1: Sare go, what's the craziest Just tell us some craziestrea.

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Speaker 4: Yeah, some markets of helipads, for example, some homes of helipads.

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Speaker 4: Some of them are not operational helipads, but still a

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Speaker 4: billionaire wants a helipad. Sometimes waterfront living is key and

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Speaker 4: what tends to happen with some of these billionaires. And

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Speaker 4: I think this portfolio shopping point is very important. Larry

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Speaker 4: Allison Malibu, he made his first purchase back in the

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Speaker 4: I think in the late nineties or early two thousands.

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Speaker 4: Since then he's bought thirty five parcels. So when you're

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Speaker 4: when you're when you're spending money like that on luxury

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Speaker 4: real estate, you have the ability to not only influence

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Speaker 4: the homes, but the entire landscape of the area. So

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Speaker 4: he essentially is responsible for changing the retail makeup of

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Speaker 4: Malibu as well. So don't think just about the homes,

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Speaker 4: think completely about the sort of the the area as well.

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Speaker 4: That's important.

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Speaker 2: Oh, that's interesting. So you can make an investment if

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Speaker 2: you're a billionaire in a particular area, and then kind

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Speaker 2: of develop that area and presumably make more money on

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Speaker 2: your investment.

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Speaker 4: Absolutely, and Ken Griffin what he's doing in Miami is

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Speaker 4: probably a good example of this, right. He has been

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Speaker 4: buying up well, he said it was for his mom,

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Speaker 4: but it's probably for him. He's been buying up trophy

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Speaker 4: home after trophy home after trophy home. Now pool together

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Speaker 4: that portfolio. The thing about kings of the hill, and

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Speaker 4: you guys know this better than I do, is that

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Speaker 4: you're a king of the hill until the next king

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Speaker 4: of the hill shows up, right, So Ken Griffin was

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Speaker 4: the alpha citizen of Miami. Guess who showed up recently?

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Speaker 4: Jeff Bezos. Oh, Jeff Bezos just dropped. I think it

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Speaker 4: was ninety million yesterday. I was telling you Joe on

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Speaker 4: an Indian Creek mansion, which is his third purchase in

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Speaker 4: that area.

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Speaker 1: From the perspective of the billionaire, these kings of the universe,

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Speaker 1: what is the appeal of Like I could see having

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Speaker 1: a place in Miami, in a place in Dubai, and

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Speaker 1: a place in London, in the place in New York,

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Speaker 1: in a place in Malibu, in a place and why

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Speaker 1: three in Miami.

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Speaker 4: I think a lot about it as the new feudalism. Right,

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Speaker 4: You're trying to build this enormous land bank in some

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Speaker 4: of the world's most coveted markets. There's also, I mean,

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Speaker 4: we can't really deny this. There is some element of

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Speaker 4: Schnitzel measuring here as well. Right, there has to be

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Speaker 4: a little bit of that.

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Speaker 2: I'm sorry Schnitzels.

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Speaker 4: I don't know how censored Bloomberg gets. That's what I went.

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Speaker 4: I think there is an element of one upping the

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Speaker 4: other person here. So if Ken Griffin goes and buys

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Speaker 4: a sixty million dollar home, guess what you're going to

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Speaker 4: see someone like Bezos come in. I think Dubai is

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Speaker 4: a great example of this, if I could get into

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Speaker 4: one specifically. Yah, By the way I grew up there

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Speaker 4: so plenty of things we could talk about later, Mokashambani,

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Speaker 4: Indian tycoon, comes in and he buys a home for

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Speaker 4: I believe it was eighty million dollars, sets a record.

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Speaker 4: This is Palm Jamera, which is that man made island

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Speaker 4: off the coast trace. I'm sure you've probably been there.

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Speaker 4: So he pays eighty million, smashes the record by a

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Speaker 4: factor of two. Some mystery buyer comes in a few

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Speaker 4: months later and pays eighty three million for a home

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Speaker 4: also on Palm Jamera. Now someone like Ambani, that doesn't

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Speaker 4: really sit well with them, and so he comes back

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Speaker 4: a few months later and he pays one hundred and

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Speaker 4: sixty three million for another home on Palm Jamera. So

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Speaker 4: that's why I think it's it's not always investment. It

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Speaker 4: might just be like, hey, I am I am the guy.

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Speaker 2: Here, since you brought up Palm Jamera. I mean this

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Speaker 2: is like the original almost extreme luxury development that and

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Speaker 2: what was the one that was shaped like the world.

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Speaker 4: Yeah, it was just called the World the world that

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Speaker 4: turned into like the Ponzi of all possible.

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Speaker 2: Yeah, so this is exactly what I was going to ask. So,

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Speaker 2: I mean Palm Jamia, there were eyewatering prices being paid

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Speaker 2: for those properties, same thing for the world, but then

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Speaker 2: it all kind of collapsed. There was a big bust

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Speaker 2: in those luxury property markets, at least in Jubai, and

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Speaker 2: then it kind of came back. Are these markets still

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Speaker 2: cyclical or have we kind of gone beyond that level?

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Speaker 4: It's very hard to tell. It's a great question. It's

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Speaker 4: very hard to tell in a market like Miami or

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Speaker 4: in Dubai. Are we just looking at a wildcatting situation

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Speaker 4: or is there something else one statistic that might give

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Speaker 4: us some context here. Pre twenty twenty one, there were

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Speaker 4: four sales of twenty five million in in any given

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Speaker 4: year in Dubai. In twenty twenty three we had fifty six, Right,

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Speaker 4: So who are we, as snobby New Yorkers to think?

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Speaker 4: Is this a market that has legs or not? I

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Speaker 4: think the Manhattan market was responsible for the bulk of

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Speaker 4: ten million dollars plus sales for the longest time. It's

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Speaker 4: hard to crunch the numbers because again there is no

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Speaker 4: repository of this, but I would imagine that ratio has

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Speaker 4: gone way down. And to your point, I think in

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Speaker 4: these luxury markets there is a very strong sense that

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Speaker 4: without rule of law, without some recourse in Dubai or

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Speaker 4: the UA in general has had pretty spotty sort of

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Speaker 4: issues around credit and debt and all of that. I

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Speaker 4: think the government there too, its credit has been taking

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Speaker 4: some really strong steps to make sure, Hey, this should

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Speaker 4: function like any other market, the courts and there should

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Speaker 4: be recourse and all of that. So I think with that,

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Speaker 4: there will always be a few scams like the world.

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Speaker 4: But to your point about Palm, even though the market

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Speaker 4: collapsed for a while, I'll give you a personal anecdote.

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Speaker 4: An uncle of mine had bought a home on Palm

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Speaker 4: for one point five million way back, something like one

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Speaker 4: point five million dollars or one and change. He recently

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Speaker 4: moved out of his own house to rent a villa

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Speaker 4: somewhere else because the Russian is offering him one third

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Speaker 4: of his purchase price in rent wow a year. So

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Speaker 4: that kind of gives you a little bit.

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Speaker 1: It's a great cap rate right there.

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Speaker 4: There you go.

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Speaker 1: But actually, I'm glad you brought up rule of law

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Speaker 1: because this is where I want to go next, which

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Speaker 1: is that like, look, some places are just really nice,

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Speaker 1: like Aspen. I've never been there, but I'm sure if

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Speaker 1: you like to ski, and I'm sure, it's very nice.

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Speaker 1: I like Miami. It's very nice by some measures in

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Speaker 1: New York obviously the greatest city in the world. But

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Speaker 1: you know, when you think about extreme wealth, particularly in

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Speaker 1: certain countries that don't have great rule of law, or

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Speaker 1: where perhaps if you're out of favor with the leader,

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Speaker 1: you can risk confiscation. So you know, maybe alter rich

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Speaker 1: people in China or alterra rich people in Russia, et cetera.

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Speaker 1: One way that they might want to sort of prote

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Speaker 1: some of their wealth to put money in a foreign

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Speaker 1: bank account. But there are limits to that obviously, and

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Speaker 1: that's not always trivially easy. How much is this about

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Speaker 1: or how much are some of these flows? Essentially, I

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Speaker 1: don't know rule of law arbitrage, where it's like how

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Speaker 1: much can you get your wealth into a system that

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Speaker 1: more or less has predictable rules.

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Speaker 4: Real estate has historically been a very lax kyc type market, right,

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Speaker 4: So to your point, I think capital flight is definitely

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Speaker 4: a big thing. We saw the Dubai property market just

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Speaker 4: absolutely take off once the war in Ukraine happened. A

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Speaker 4: lot of Russians, and I would say the way I

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Speaker 4: think of it as Russian adjacent Kazakhstan, etc. A lot

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Speaker 4: of that money flowed into Dubai because the Yuei took

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Speaker 4: a very hands off approach to judging anyone in this war,

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Speaker 4: So that turned out really well. The earlier example we

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Speaker 4: talked about, which was the Ali Baba co founder, if

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Speaker 4: you remember the other guy, he sort of went away

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Speaker 4: for a while, Jack Ma, Yeah, right, he kind of

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Speaker 4: not disappeared, but he was off. He fell out, he

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Speaker 4: did disappear. Yeah, So I don't I'm not in Joe

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Speaker 4: size head, but I'd imagined that part of the reason

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Speaker 4: that he's willing to pay double what was already in

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Speaker 4: crazy price at two twenty Central Park South, A lot

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Speaker 4: of that is predicated on this tracy.

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Speaker 1: One thing that makes me wonder is whether the high

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Speaker 1: price itself becomes part of the selling point, because the

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Speaker 1: higher the price, the more capacity the market has to

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Speaker 1: take off some of your liquid wealth.

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Speaker 2: Oh yeah, absolutely, I think that's part of it. And

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Speaker 2: it's funny. This conversation just jogged my memory. Do you

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Speaker 2: guys remember rf knock fee from a braage?

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Speaker 4: It's a key mad Yeah.

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Speaker 2: So, Abroge used to be one of the world's biggest

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Speaker 2: private equity funds. With specialism in emerging markets based in Dubai,

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Speaker 2: and basically they went bust. And r If, I think

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Speaker 2: is still being prosecuted for fraud and is being extradited

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Speaker 2: to the US, or was at some point. But when

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Speaker 2: all of that was going down, I was in Nabu

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Speaker 2: Dhabi and I was writing a lot about this, and

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Speaker 2: it turned out that his house in Dubai. RF's house

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Speaker 2: was on like the same block as a bunch of

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Speaker 2: like dictators houses they had all moved. I can't remember

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Speaker 2: the specific ones, but think African dictators, and they had

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Speaker 2: all bought properties in this one particular neighborhood for the

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Speaker 2: exact presumably reasons that we were talking about.

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Speaker 1: Right.

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Speaker 4: Former Prime Minister of Pakistan, Pervesbashariff also at a house there.

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Speaker 2: Yeah, So the other thing I wanted to ask is,

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Speaker 2: you know, in the intro I mentioned that Mercedes Benz

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Speaker 2: Tower in Dubai and this seems to be becoming more

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Speaker 2: of a thing as well, these idea of branded luxury

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Speaker 2: real estate properties. And I have to say, when I

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Speaker 2: think branded property, the thing I usually think of is

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Speaker 2: the Margaritaville retirement communities in like Florida. But this is

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Speaker 2: a whole other level, and it seems to be becoming

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Speaker 2: more of a thing. What's going on there?

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Speaker 4: So there are I think Jesshi, of two hundred active

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Speaker 4: branded condo projects in the world, forty percent of them

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Speaker 4: are in North America, and then they're dispersed in places

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Speaker 4: like Dubai, et cetera. What happens I believe it's connected

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Speaker 4: to the initial point I made about this dispersion of

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Speaker 4: global wealth. And so a billionaire who is from New

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Speaker 4: York understands fifty seventh Street. They wouldn't understand what Palm

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Speaker 4: Jamera is. They might understand what Cavali is, or Mercedes

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Speaker 4: Bench or Bugati. So there is this coalescing around brands

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Speaker 4: that are already known, and you're piggybacking off a luxury

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Speaker 4: brand to create both legitimacy and exclusivity.

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Speaker 1: That's super interesting. So the Mercedes brand becomes away, It's like, well,

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Speaker 1: I know, Mercedes makes good stuff. They take care of

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Speaker 1: their brand pretty well. They're probably not going to slap

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Speaker 1: their name on some garbage project. What is the role

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Speaker 1: of the brand though, as in the construction of it,

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Speaker 1: did they have input, do they have designed It's purely

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Speaker 1: a licensing deal, but they probably do a lot of vetting,

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Speaker 1: like talk to us about the business from the brand side.

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Speaker 4: Fair enough, I will say say, it is not a

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Speaker 4: coincidence that a lot of these branded projects are in

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Speaker 4: markets where there is a history of pretty sloppy construction

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Speaker 4: and defects and lawsuits and all of that. Right, so

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Speaker 4: this is kind of the way to say, hey, we're

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Speaker 4: different from the other guys. But so the brand's role.

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Speaker 4: I was talking to a couple of developers about this

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Speaker 4: in one open the kimono on how these deals actually work,

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Speaker 4: and he said, some brands will get really fastidious about

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Speaker 4: the facade. They care about what it looks like on camera,

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Speaker 4: in the artworks and marketing materials, and they will weigh in.

433
00:21:29,480 --> 00:21:31,879
Speaker 4: They'll sit with your architect, they'll make you fly to

434
00:21:31,960 --> 00:21:35,000
Speaker 4: Milan or Stuttguard or wherever, and they'll really weigh in

435
00:21:35,040 --> 00:21:37,800
Speaker 4: on this stuff. Others are much more obsessed with the interior.

436
00:21:37,880 --> 00:21:40,919
Speaker 4: So brand, bride brand, It really depends on that. But

437
00:21:41,119 --> 00:21:44,639
Speaker 4: in general, the developer is paying between one and a

438
00:21:44,680 --> 00:21:46,679
Speaker 4: half to three and a half percent, depending on how

439
00:21:46,920 --> 00:21:50,439
Speaker 4: the deal is structured, to license the brand's likeness for

440
00:21:50,640 --> 00:21:53,600
Speaker 4: twenty five year deals that can be extended and that's

441
00:21:53,600 --> 00:21:56,280
Speaker 4: how it works. So the developer is running point on everything.

442
00:21:56,760 --> 00:21:59,840
Speaker 4: The brand can choose how nitpicky it wants to be,

443
00:22:00,280 --> 00:22:01,879
Speaker 4: and that is all kind of laid out in the

444
00:22:01,920 --> 00:22:02,560
Speaker 4: agreement too.

445
00:22:02,920 --> 00:22:06,000
Speaker 2: How did those partnerships actually come into being? Is it

446
00:22:06,040 --> 00:22:10,440
Speaker 2: the developers approaching the brands or the brands approaching developers.

447
00:22:10,440 --> 00:22:11,440
Speaker 2: How did they actually meet.

448
00:22:11,680 --> 00:22:13,520
Speaker 4: So one of the pioneers of this is a guy

449
00:22:13,680 --> 00:22:15,800
Speaker 4: that I hope we can bring into the studio someday.

450
00:22:15,800 --> 00:22:19,040
Speaker 4: His name's Gildsert. He's a Miami developer and he created

451
00:22:19,040 --> 00:22:21,000
Speaker 4: this thing called a Porsche Design Tower, which is this

452
00:22:21,240 --> 00:22:24,560
Speaker 4: black obelisk type building Sunny Aisles Beach, which is a

453
00:22:24,640 --> 00:22:28,600
Speaker 4: very Russian heavy market in South Florida, and I think

454
00:22:28,640 --> 00:22:31,920
Speaker 4: he approached Porsche and they created a partnership. It worked

455
00:22:31,920 --> 00:22:34,000
Speaker 4: out really well, and then you just saw a huge

456
00:22:34,000 --> 00:22:36,920
Speaker 4: wave of these in the US in other markets. It's

457
00:22:37,000 --> 00:22:39,560
Speaker 4: unclear whether the brand is trying to plant a flag

458
00:22:39,680 --> 00:22:42,440
Speaker 4: and then they find the right developer. Not quite sure,

459
00:22:42,480 --> 00:22:45,320
Speaker 4: but in general I would imagine it's the developer kind

460
00:22:45,320 --> 00:22:48,119
Speaker 4: of driving this. And you see everything from brands that

461
00:22:48,160 --> 00:22:50,600
Speaker 4: makes sense. There's an adult chain Gabana tower coming up

462
00:22:50,640 --> 00:22:51,160
Speaker 4: in Miami.

463
00:22:51,440 --> 00:22:53,399
Speaker 1: Correct sense, We got them.

464
00:22:53,600 --> 00:22:55,760
Speaker 4: Well, when you look at it, it will absolutely make

465
00:22:55,840 --> 00:22:59,600
Speaker 4: sense to some that are a little bit more inexplicable.

466
00:22:59,640 --> 00:23:02,400
Speaker 4: There is uh a tower in Dubai that's coming up

467
00:23:02,800 --> 00:23:05,439
Speaker 4: that is designed by a guy called Jacob the Jeweler.

468
00:23:05,840 --> 00:23:07,080
Speaker 4: Is anyone familiar what you know?

469
00:23:07,200 --> 00:23:08,560
Speaker 1: Tell us about Jacob the Jeweler.

470
00:23:08,640 --> 00:23:11,040
Speaker 4: So, Jacob the Jeweler is sort of the celebrity jeweler

471
00:23:11,080 --> 00:23:14,800
Speaker 4: that known for those statement pieces, very flashy, et cetera.

472
00:23:14,840 --> 00:23:17,800
Speaker 4: And he's teamed up with a developer in Dubai called

473
00:23:17,840 --> 00:23:20,320
Speaker 4: Bin Bin Rutti I think is the name. They're also

474
00:23:20,359 --> 00:23:22,840
Speaker 4: doing a Mercedes tower and they're they're building something together.

475
00:23:22,920 --> 00:23:24,840
Speaker 4: So some of these I don't know how they're going

476
00:23:24,880 --> 00:23:25,080
Speaker 4: to go.

477
00:23:25,160 --> 00:23:27,080
Speaker 1: How many did you say? There's two hundred?

478
00:23:27,160 --> 00:23:32,520
Speaker 4: They're shy of two Hundreddulgien, Gabana, Mercedes, Benz. I believe

479
00:23:32,520 --> 00:23:35,919
Speaker 4: there's a Kovali tower. Yeah, And Surfside is going to

480
00:23:35,920 --> 00:23:38,800
Speaker 4: get a Kovali tower made by one of another huge

481
00:23:38,920 --> 00:23:43,120
Speaker 4: Yui developer called Demac. There is god, I'm sure there's

482
00:23:43,119 --> 00:23:47,320
Speaker 4: a Fendi tower as well. Bentley has a tower as well, Aston.

483
00:23:47,040 --> 00:23:52,440
Speaker 1: Martin Residencesani Really Yeah, Bentley Tower. I had no idea

484
00:23:52,440 --> 00:23:53,080
Speaker 1: about any of.

485
00:23:53,000 --> 00:23:57,920
Speaker 4: This, And then obviously there's the more conventional Ritz Carlton,

486
00:23:58,080 --> 00:23:58,520
Speaker 4: all of those.

487
00:23:58,600 --> 00:24:00,880
Speaker 1: Oh, the Bentley Tower looks like it's gonna be nice

488
00:24:01,080 --> 00:24:03,240
Speaker 1: twenty twenty six. When I was a kid, I used

489
00:24:03,240 --> 00:24:06,560
Speaker 1: to vacation with my family over Christmas and sunny aisles

490
00:24:06,760 --> 00:24:09,120
Speaker 1: and it was nothing like this. In fact, the old

491
00:24:09,280 --> 00:24:13,199
Speaker 1: like eighties like postcards is really kind of said what

492
00:24:13,400 --> 00:24:16,000
Speaker 1: happens though, Like this is like, you know, people talk

493
00:24:16,040 --> 00:24:20,639
Speaker 1: about gentrification. This is like gentrification on steroids, right, Like,

494
00:24:20,920 --> 00:24:23,760
Speaker 1: what is the effect in local communities or people who

495
00:24:23,800 --> 00:24:26,720
Speaker 1: just lived in these areas when suddenly a neighborhood or

496
00:24:26,720 --> 00:24:30,520
Speaker 1: an area becomes the arena for a billionaire uh Schnitzel

497
00:24:30,600 --> 00:24:31,240
Speaker 1: size content.

498
00:24:31,960 --> 00:24:34,880
Speaker 4: Well, I think we have a more proximate example, right,

499
00:24:34,920 --> 00:24:37,320
Speaker 4: what the Hamptons used to be versus what it is today.

500
00:24:37,640 --> 00:24:40,000
Speaker 4: So there's two ways to look at it. One, life

501
00:24:40,000 --> 00:24:42,160
Speaker 4: as we know it is completely warped in those markets.

502
00:24:42,200 --> 00:24:44,119
Speaker 4: If you're in a certain part of Dubai, you are

503
00:24:44,119 --> 00:24:46,200
Speaker 4: paying double triple what you used to pay even five

504
00:24:46,280 --> 00:24:49,400
Speaker 4: years ago, undeniable. On the other side, if you were

505
00:24:49,440 --> 00:24:52,919
Speaker 4: a property owner in some of those places, you probably

506
00:24:52,920 --> 00:24:55,320
Speaker 4: made a really good amount of money. So I mean,

507
00:24:55,400 --> 00:24:59,040
Speaker 4: is it like, are we what is the like? What

508
00:24:59,119 --> 00:25:02,119
Speaker 4: sort of chain are we against? Are we against capitalism?

509
00:25:02,240 --> 00:25:05,040
Speaker 4: It's kind of a philosophical question, but yeah, life in

510
00:25:05,080 --> 00:25:07,800
Speaker 4: a lot of these markets, Miami, affordability is at an

511
00:25:07,800 --> 00:25:09,720
Speaker 4: all time low. Right, This is a big thing that's

512
00:25:09,760 --> 00:25:12,440
Speaker 4: come up over and over. Rent prices have gone up

513
00:25:12,520 --> 00:25:15,200
Speaker 4: forty over the last couple of years. I think there

514
00:25:15,280 --> 00:25:19,080
Speaker 4: is some softening now, but life for the average Joe,

515
00:25:19,119 --> 00:25:21,800
Speaker 4: not you, but the average show is a lot harder

516
00:25:21,840 --> 00:25:23,800
Speaker 4: than it used to be.

517
00:25:38,440 --> 00:25:41,760
Speaker 2: I want to go back to the question that we

518
00:25:41,880 --> 00:25:45,160
Speaker 2: started with in the intro, which is clearly people are

519
00:25:45,160 --> 00:25:48,640
Speaker 2: making a lot of money off of the ultra luxury segment.

520
00:25:49,160 --> 00:25:53,760
Speaker 2: And clearly we've seen efforts to replicate the Dubai model,

521
00:25:54,080 --> 00:25:56,360
Speaker 2: particularly in the Middle East, but you know some other

522
00:25:56,440 --> 00:25:59,600
Speaker 2: places are trying it now as well. How big can

523
00:25:59,640 --> 00:26:03,120
Speaker 2: this more market b Is there room for everyone? Can

524
00:26:03,160 --> 00:26:08,080
Speaker 2: we have multiple gleaming, shiny Kvali branded cities in the

525
00:26:08,080 --> 00:26:11,960
Speaker 2: Middle East and have enough multimillionaires to fill them all up.

526
00:26:13,520 --> 00:26:16,359
Speaker 4: That's an incredible question because I think you have to

527
00:26:16,480 --> 00:26:19,600
Speaker 4: have a baseline level of desirability in a city to

528
00:26:19,680 --> 00:26:23,760
Speaker 4: make it work. So somewhere like Zada or Alula, which

529
00:26:23,840 --> 00:26:25,840
Speaker 4: is that city in Saudi Arabia they're trying to build.

530
00:26:26,280 --> 00:26:28,280
Speaker 4: It's going to be a long road before they can

531
00:26:28,320 --> 00:26:31,320
Speaker 4: try to offer a tower like this, right. But to

532
00:26:31,400 --> 00:26:34,160
Speaker 4: your broader point, there's so much money in the world.

533
00:26:34,240 --> 00:26:36,480
Speaker 4: The rich are just getting a lot richer night Frank

534
00:26:36,520 --> 00:26:39,359
Speaker 4: had a statistic where they basically they define people. I'll

535
00:26:39,400 --> 00:26:41,840
Speaker 4: try at Wheorth there's thirty million and up that jump

536
00:26:41,880 --> 00:26:44,360
Speaker 4: by four percent over the year. There's more than six

537
00:26:44,440 --> 00:26:46,920
Speaker 4: hundred thousand such people in the world. And again, they're

538
00:26:46,920 --> 00:26:49,720
Speaker 4: not tethered to their local markets anymore. So if you

539
00:26:49,760 --> 00:26:52,600
Speaker 4: think of it as like a billionaire hedge fund titan

540
00:26:52,880 --> 00:26:56,000
Speaker 4: who's tired of sort of schlepping through New York, they

541
00:26:56,000 --> 00:26:58,640
Speaker 4: have a lot more options in terms of building new

542
00:26:58,680 --> 00:27:01,600
Speaker 4: cities from scratch. It's really hard. Dubai has a history

543
00:27:01,640 --> 00:27:05,479
Speaker 4: of being like a mercantile hub. I think Miami, if anything,

544
00:27:05,520 --> 00:27:07,800
Speaker 4: is the more interesting example where it went from sort

545
00:27:07,800 --> 00:27:12,240
Speaker 4: of a backwater for you know, vacationing Americans to becoming

546
00:27:12,280 --> 00:27:16,000
Speaker 4: this global hub. It's always attracted shady money from Venezuela

547
00:27:16,000 --> 00:27:18,320
Speaker 4: and Latin America. But we're looking at something very different.

548
00:27:18,359 --> 00:27:21,159
Speaker 1: Now, let's go back to this idea of like a

549
00:27:21,200 --> 00:27:24,040
Speaker 1: real estate market. I mean you talked about, you know,

550
00:27:24,080 --> 00:27:28,679
Speaker 1: going back several years, the most expensive wrong of properties

551
00:27:28,720 --> 00:27:32,840
Speaker 1: in New York would somehow be connected still to the

552
00:27:32,840 --> 00:27:34,919
Speaker 1: New York City property market, right Like that's like the

553
00:27:34,960 --> 00:27:36,800
Speaker 1: sort of the old paradigm that you know, you have

554
00:27:36,880 --> 00:27:40,160
Speaker 1: this like spectrum within New York, And now the idea

555
00:27:40,480 --> 00:27:43,960
Speaker 1: is it's a it's global, and so the very top

556
00:27:44,000 --> 00:27:46,760
Speaker 1: echelon of New York City properties are the top echelon

557
00:27:46,800 --> 00:27:50,879
Speaker 1: of Miami properties don't necessarily have to be connected either

558
00:27:51,000 --> 00:27:54,080
Speaker 1: cyclically or price wise to the local market. But it's

559
00:27:54,160 --> 00:27:56,520
Speaker 1: just like this, like this sort of like clear break

560
00:27:56,600 --> 00:27:58,600
Speaker 1: from how these markets used to work in the past.

561
00:27:58,840 --> 00:28:01,800
Speaker 4: I think. So I think that this will prove itself

562
00:28:01,840 --> 00:28:04,040
Speaker 4: out in the data over time. But let's say you

563
00:28:04,119 --> 00:28:08,679
Speaker 4: went from Manhattan's first the record sale that I remember

564
00:28:08,800 --> 00:28:11,920
Speaker 4: was this fertilizer billionaire paid eighty eight million at fifteenth

565
00:28:11,920 --> 00:28:14,880
Speaker 4: Central Park West. The next record was set by Michael Dell,

566
00:28:14,920 --> 00:28:17,400
Speaker 4: who paid one hundred point four million, so still kind

567
00:28:17,440 --> 00:28:19,760
Speaker 4: of within the range. The next one was what Ken

568
00:28:19,800 --> 00:28:21,760
Speaker 4: Griffin two hundred and thirty eight million, right, and that

569
00:28:21,880 --> 00:28:24,480
Speaker 4: changed everything. So the way I think about it is

570
00:28:24,560 --> 00:28:27,080
Speaker 4: if a Michael Dell is willing to pay one hundred

571
00:28:27,119 --> 00:28:30,479
Speaker 4: million in New York and the highest priced home in

572
00:28:30,520 --> 00:28:35,040
Speaker 4: Boston is thirty million, a developer might be like or

573
00:28:35,080 --> 00:28:37,320
Speaker 4: a sponsor someone who has a great home might be like,

574
00:28:37,400 --> 00:28:38,960
Speaker 4: you know what, I could probably get Dell to pay

575
00:28:39,000 --> 00:28:39,840
Speaker 4: forty five for this.

576
00:28:40,600 --> 00:28:40,800
Speaker 1: Right.

577
00:28:40,920 --> 00:28:44,920
Speaker 4: So it's hard to say when it changed, but I

578
00:28:44,920 --> 00:28:48,120
Speaker 4: think the pandemic was absolutely a catalyst for this. Where

579
00:28:48,160 --> 00:28:52,040
Speaker 4: you saw numbers just doubling six months, eight months a year,

580
00:28:52,080 --> 00:28:54,440
Speaker 4: you would see that now the depth of the market

581
00:28:54,480 --> 00:28:56,760
Speaker 4: is the eternal question, right. There are going to be

582
00:28:56,800 --> 00:29:01,000
Speaker 4: some developers who price accordingly, who buy land accordingly, who

583
00:29:01,080 --> 00:29:04,120
Speaker 4: build and finish out apartments and homes to this level,

584
00:29:04,520 --> 00:29:07,080
Speaker 4: hoping to find that billionaire who then never shows up.

585
00:29:08,200 --> 00:29:11,840
Speaker 2: It's so weird talking about these numbers because they're so

586
00:29:12,160 --> 00:29:14,880
Speaker 2: detached from the day to day reality of most people.

587
00:29:14,880 --> 00:29:18,560
Speaker 2: It's almost like talking about monopoly money or something like that.

588
00:29:20,360 --> 00:29:23,440
Speaker 2: You mentioned the pandemic, just then what are the risks

589
00:29:23,760 --> 00:29:28,200
Speaker 2: to this trend or this sort of like it almost

590
00:29:28,240 --> 00:29:32,040
Speaker 2: feels like it's reinforcing, So you know, the wealthy get wealthier,

591
00:29:32,080 --> 00:29:33,880
Speaker 2: they have more money to spend on these things, and

592
00:29:33,920 --> 00:29:37,720
Speaker 2: so we see more of this luxury property being developed.

593
00:29:38,240 --> 00:29:40,800
Speaker 2: Is the risk something like a pandemic that would curb

594
00:29:41,000 --> 00:29:44,400
Speaker 2: individual mobility even if you're a billionaire, or is it

595
00:29:44,480 --> 00:29:46,960
Speaker 2: something like I don't know, global text.

596
00:29:46,800 --> 00:29:48,960
Speaker 1: Or anger and some revolution.

597
00:29:49,240 --> 00:29:53,520
Speaker 4: I don't know, So I don't think mobility has ever

598
00:29:53,560 --> 00:29:55,440
Speaker 4: been an issue for billionaires. Right, even at the height

599
00:29:55,440 --> 00:29:57,480
Speaker 4: of the pandemic, you had a barrier stern link camping

600
00:29:57,520 --> 00:29:59,760
Speaker 4: out in Miami Beach and you had people flying all over.

601
00:30:00,160 --> 00:30:03,600
Speaker 4: So I think this class of people is somewhat insulated

602
00:30:03,640 --> 00:30:09,360
Speaker 4: from mobility issues. Now, absolutely these countries could come up

603
00:30:09,400 --> 00:30:12,960
Speaker 4: with some sort of pricing or taxation mechanism that would

604
00:30:12,960 --> 00:30:16,120
Speaker 4: make this more difficult. Kycs are another problem if there

605
00:30:16,200 --> 00:30:19,640
Speaker 4: is somehow, some kind of global consortium saying we need

606
00:30:19,680 --> 00:30:22,640
Speaker 4: to know who this is, how much they've paid, and

607
00:30:23,280 --> 00:30:25,960
Speaker 4: sort of where that money came from. But the odds

608
00:30:25,960 --> 00:30:29,000
Speaker 4: of that happening are really slim. Markets like South Florida,

609
00:30:29,040 --> 00:30:32,959
Speaker 4: markets like the UAE and other countries that want this

610
00:30:33,080 --> 00:30:35,800
Speaker 4: kind of wealth to sort of insulate themselves from the

611
00:30:35,840 --> 00:30:39,480
Speaker 4: humdrum of the average folk. It's very unlikely that they're

612
00:30:39,480 --> 00:30:41,760
Speaker 4: going to collude and come up with like a I

613
00:30:41,840 --> 00:30:45,480
Speaker 4: don't know, some sort of international organization of sorts.

614
00:30:45,280 --> 00:30:48,720
Speaker 1: Out of curiosity. Is crypto money big enough that it

615
00:30:48,840 --> 00:30:50,479
Speaker 1: moves the dial in some of these markets?

616
00:30:50,520 --> 00:30:52,480
Speaker 4: One hundred percent. I think there was a big wave

617
00:30:52,600 --> 00:30:56,120
Speaker 4: of crypto money coming into absolutely in South Florida, certainly

618
00:30:56,120 --> 00:30:59,000
Speaker 4: in the Middle East, and the volatility I think the

619
00:30:59,560 --> 00:31:02,480
Speaker 4: beyond and I think about this a lot. How much

620
00:31:02,560 --> 00:31:05,280
Speaker 4: money do you need to able to be able to

621
00:31:05,320 --> 00:31:08,240
Speaker 4: afford a forty million dollar apartment? And the answer is,

622
00:31:08,240 --> 00:31:08,600
Speaker 4: what are.

623
00:31:08,480 --> 00:31:10,600
Speaker 1: The condo feesh yeah, what are the fees on that?

624
00:31:10,760 --> 00:31:13,680
Speaker 4: Well, not not even the fees. I don't actually know

625
00:31:13,720 --> 00:31:16,440
Speaker 4: the fees, not even the fees. It's more about like

626
00:31:16,520 --> 00:31:19,320
Speaker 4: how much liquid do you need? Right? And so, when

627
00:31:19,400 --> 00:31:21,720
Speaker 4: you've made your money, when it's easy come, it's easy go.

628
00:31:21,960 --> 00:31:24,920
Speaker 4: So people who've made their money in the last year,

629
00:31:25,040 --> 00:31:27,800
Speaker 4: eighteen months, they made it through crypto, they're much more

630
00:31:27,800 --> 00:31:31,120
Speaker 4: willing to pay forty million, even if they just have seventy.

631
00:31:32,240 --> 00:31:32,400
Speaker 2: Right.

632
00:31:32,440 --> 00:31:35,560
Speaker 4: It's that sort of threshold of yeah, you know, I

633
00:31:35,640 --> 00:31:36,640
Speaker 4: made the money, yolo.

634
00:31:37,760 --> 00:31:40,880
Speaker 2: I'm guessing they have a whole support network of people

635
00:31:40,960 --> 00:31:43,600
Speaker 2: who are actually looking after the apartments as well when

636
00:31:43,640 --> 00:31:45,640
Speaker 2: they're not there, which would seem to be a lot

637
00:31:45,640 --> 00:31:46,040
Speaker 2: of the time.

638
00:31:46,280 --> 00:31:49,200
Speaker 4: Yeah, I think the infrastructure around this new market is fascinating.

639
00:31:49,240 --> 00:31:52,080
Speaker 4: So you do see brokers who are now on what

640
00:31:52,120 --> 00:31:55,040
Speaker 4: I call the circuit so Skiing and Aspen, the F

641
00:31:55,120 --> 00:31:57,360
Speaker 4: one race in Melbourne, et cetera. And this is where

642
00:31:57,360 --> 00:32:00,400
Speaker 4: the buyers are right, they're following. They've kind of created

643
00:32:00,400 --> 00:32:03,720
Speaker 4: this lifestyle traveling around with these people, and so they

644
00:32:03,760 --> 00:32:06,800
Speaker 4: can often shepherd in not only deals in their market,

645
00:32:07,080 --> 00:32:09,240
Speaker 4: but then connect them with the brokers and the property

646
00:32:09,280 --> 00:32:11,520
Speaker 4: managers and the wealth managers and all that. So there

647
00:32:11,520 --> 00:32:15,280
Speaker 4: will be this new class of not billionaires, but millionaires

648
00:32:15,320 --> 00:32:18,760
Speaker 4: whose sole job is to cater to the international property

649
00:32:18,800 --> 00:32:20,680
Speaker 4: portfolios off the billionaires.

650
00:32:20,960 --> 00:32:22,880
Speaker 1: I've never gone to an F one race. I'm not

651
00:32:22,920 --> 00:32:25,360
Speaker 1: really into F one, but I also feel like I

652
00:32:25,440 --> 00:32:27,040
Speaker 1: only want to do it if I can be in

653
00:32:27,120 --> 00:32:29,360
Speaker 1: some like billionaire box. I don't just want to be

654
00:32:29,360 --> 00:32:31,400
Speaker 1: in the stand, like I only want to get a

655
00:32:31,440 --> 00:32:35,240
Speaker 1: really great view the brokerage community around this. Are there

656
00:32:35,560 --> 00:32:41,040
Speaker 1: legacy brokers building out tiers or divisions, or are there

657
00:32:41,080 --> 00:32:44,720
Speaker 1: new entrants into the space that are disrupting the traditional

658
00:32:44,720 --> 00:32:45,560
Speaker 1: industry in some way.

659
00:32:45,880 --> 00:32:48,120
Speaker 4: It depends on the market. So in Palm Beach, a

660
00:32:48,160 --> 00:32:50,480
Speaker 4: lot of the because this kind of real estate is

661
00:32:50,480 --> 00:32:52,560
Speaker 4: such a high touch business, you often have to take

662
00:32:52,760 --> 00:32:55,760
Speaker 4: twenty calls a day from the billionaire in places like

663
00:32:55,800 --> 00:32:58,680
Speaker 4: Palm Beach, which is traditionally sort of an enclave, but

664
00:32:58,760 --> 00:33:01,040
Speaker 4: not a dynamic market in the way it's been. I

665
00:33:01,040 --> 00:33:05,800
Speaker 4: think there's been what more than ten twenty eight nine

666
00:33:05,800 --> 00:33:07,840
Speaker 4: figure sales recently. I don't have the stats in front

667
00:33:07,880 --> 00:33:10,200
Speaker 4: of me, But in markets like that, it's the old

668
00:33:10,280 --> 00:33:12,120
Speaker 4: sort of guard that is cleaning up. So there's a

669
00:33:12,120 --> 00:33:16,000
Speaker 4: guy called Larry Mownes, who I believe has brokeered pretty

670
00:33:16,040 --> 00:33:18,520
Speaker 4: much all the one hundred million dollar deals in the

671
00:33:18,600 --> 00:33:21,640
Speaker 4: last few years. Then you have some of the new people,

672
00:33:22,120 --> 00:33:26,000
Speaker 4: the brokers who've built this infrastructure that combines media and

673
00:33:26,080 --> 00:33:29,600
Speaker 4: combines glopzo Ryan Starhant I believe it's sold something for

674
00:33:29,720 --> 00:33:32,239
Speaker 4: one hundred and twenty million in Palm Beach. So you

675
00:33:32,320 --> 00:33:35,960
Speaker 4: are getting these upstarts coming into these markets, but oftentimes

676
00:33:35,960 --> 00:33:37,920
Speaker 4: they are teaming up with the old hand.

677
00:33:38,440 --> 00:33:42,240
Speaker 2: What's the next leg of this trend? So you know,

678
00:33:42,280 --> 00:33:45,880
Speaker 2: we talked about going from luxury to ultra luxury. So

679
00:33:45,960 --> 00:33:49,080
Speaker 2: maybe before you would have a really nice apartment, but

680
00:33:49,160 --> 00:33:51,440
Speaker 2: now you have a really nice apartment with a helipad.

681
00:33:51,720 --> 00:33:55,000
Speaker 2: Or maybe you had a nice non branded apartment and

682
00:33:55,040 --> 00:33:59,080
Speaker 2: now you have a Mercedes Benz apartment or whatever. What's

683
00:33:59,120 --> 00:34:02,440
Speaker 2: the thing that people are where. I'm trying not to

684
00:34:02,520 --> 00:34:06,959
Speaker 2: say Schnitzel, but what's the next competitive like goll Or

685
00:34:07,000 --> 00:34:07,600
Speaker 2: Target here.

686
00:34:08,280 --> 00:34:09,759
Speaker 4: I think there's actually going to be a little bit

687
00:34:09,760 --> 00:34:12,320
Speaker 4: of a throwback to the roots, and I think rustic

688
00:34:12,400 --> 00:34:14,160
Speaker 4: luxury is going to be quite a big trend.

689
00:34:14,200 --> 00:34:18,080
Speaker 1: Now you're speaking more traces, Yeah, I like this. What

690
00:34:18,120 --> 00:34:18,719
Speaker 1: does that look like?

691
00:34:19,200 --> 00:34:22,560
Speaker 4: Examples sort of I haven't seen a listing that sort

692
00:34:22,560 --> 00:34:25,480
Speaker 4: of falls into this, but a giant sort of an

693
00:34:25,520 --> 00:34:28,960
Speaker 4: old school treehouse or oh that's not the right now. No,

694
00:34:29,000 --> 00:34:31,080
Speaker 4: I don't have a true but I'm talking about a

695
00:34:31,080 --> 00:34:33,720
Speaker 4: log cabin, let's say in a prime market like Aspen,

696
00:34:33,800 --> 00:34:36,160
Speaker 4: for example, that may have sold for a couple million

697
00:34:36,239 --> 00:34:39,160
Speaker 4: back then. But now, guess what. Jeff Bezos wants to

698
00:34:39,200 --> 00:34:42,040
Speaker 4: return to his roots, wants to find some nature. He's

699
00:34:42,080 --> 00:34:44,160
Speaker 4: willing to pay something like twenty million for it, right,

700
00:34:44,280 --> 00:34:46,880
Speaker 4: so I think the and I haven't seen many of

701
00:34:46,880 --> 00:34:48,759
Speaker 4: these homes, I don't really run into them, but if

702
00:34:48,760 --> 00:34:51,080
Speaker 4: you were, I would think that the sort of return

703
00:34:51,160 --> 00:34:54,440
Speaker 4: to roots, farmland, et cetera is going to be a big.

704
00:34:54,560 --> 00:34:56,640
Speaker 2: Part of this is climate change concern, right, So you

705
00:34:56,680 --> 00:34:59,879
Speaker 2: see people who have grown up in desert areas who

706
00:35:00,160 --> 00:35:03,440
Speaker 2: be interested in buying huge tracts of land in Maine

707
00:35:03,760 --> 00:35:05,319
Speaker 2: or something like that.

708
00:35:05,440 --> 00:35:09,000
Speaker 4: Yeah, there is a just a fascinating and probably concerning

709
00:35:09,360 --> 00:35:11,560
Speaker 4: feudalism happening where a lot of these guys are just

710
00:35:11,680 --> 00:35:16,200
Speaker 4: making incredible land bank purchases. And now some of the

711
00:35:16,200 --> 00:35:19,640
Speaker 4: biggest developers in New York City are also the biggest

712
00:35:19,719 --> 00:35:20,480
Speaker 4: landowners in.

713
00:35:20,440 --> 00:35:23,280
Speaker 1: America just in terms of acreage.

714
00:35:23,440 --> 00:35:27,680
Speaker 4: Yeah, just thousands and thousands of acres across Montana, Wyoming.

715
00:35:27,840 --> 00:35:30,960
Speaker 1: And oh so it's companies that had been developers in

716
00:35:30,960 --> 00:35:33,920
Speaker 1: New York City are now doing this different play of

717
00:35:33,960 --> 00:35:35,080
Speaker 1: just land accumulation.

718
00:35:35,120 --> 00:35:37,480
Speaker 2: Absolutely, and they get tax breaks as well, don't they

719
00:35:37,480 --> 00:35:40,319
Speaker 2: if they keep it in environmental trust. That's the other

720
00:35:40,880 --> 00:35:42,400
Speaker 2: kind of interesting rinkle.

721
00:35:42,600 --> 00:35:45,120
Speaker 4: Yeah, there are a lot of taxation gymnastics around buying

722
00:35:45,120 --> 00:35:46,560
Speaker 4: tracks of land in random spots.

723
00:35:47,239 --> 00:35:49,640
Speaker 1: Tracy, at some point I want to do an episode. Well,

724
00:35:49,680 --> 00:35:52,080
Speaker 1: we talked about when we were in Jackson Hole last year.

725
00:35:52,200 --> 00:35:55,000
Speaker 1: This came up. I know it comes up in I

726
00:35:55,080 --> 00:35:57,120
Speaker 1: used to live in Vermont when I was younger, and

727
00:35:57,200 --> 00:35:59,600
Speaker 1: I know that one of the things the rich do

728
00:35:59,760 --> 00:36:01,799
Speaker 1: is the tons of land and then they get this

729
00:36:01,800 --> 00:36:04,719
Speaker 1: big tax break with this commitment to never develop it,

730
00:36:05,080 --> 00:36:08,520
Speaker 1: which doesn't help them cut down on taxes. It also

731
00:36:08,680 --> 00:36:12,200
Speaker 1: causes everyone else to have shorter, be short on housing.

732
00:36:12,239 --> 00:36:13,040
Speaker 1: So I really don't.

733
00:36:12,840 --> 00:36:14,560
Speaker 2: See it, especially in jacksonvill Yeah.

734
00:36:14,600 --> 00:36:17,080
Speaker 1: Yeah, so I don't really see how it benefits everyone

735
00:36:17,120 --> 00:36:18,880
Speaker 1: except them. But you know, I guess it's good for

736
00:36:18,920 --> 00:36:22,640
Speaker 1: the supposedly it's good for the greenery. So last question,

737
00:36:22,760 --> 00:36:26,000
Speaker 1: this idea, it's very disconnected these markets. What happened though

738
00:36:26,120 --> 00:36:28,840
Speaker 1: in twenty twenty two when we did see you know,

739
00:36:28,920 --> 00:36:31,160
Speaker 1: pretty big fall in the stock market, we saw the

740
00:36:31,160 --> 00:36:34,400
Speaker 1: crypto crash, We saw a lot of tech money vanished, Like,

741
00:36:34,719 --> 00:36:37,120
Speaker 1: was there a cyclical effect? Did it slow down any

742
00:36:37,160 --> 00:36:38,960
Speaker 1: of this activity when we did have this sort of

743
00:36:39,200 --> 00:36:41,880
Speaker 1: contraction in other asset values?

744
00:36:42,239 --> 00:36:45,320
Speaker 4: So the deal volume may have fallen in terms of

745
00:36:45,400 --> 00:36:48,440
Speaker 4: number of transactions, but the price points did not. Right,

746
00:36:48,480 --> 00:36:50,520
Speaker 4: So a lot of these transactions. I brought up Larry

747
00:36:50,520 --> 00:36:52,960
Speaker 4: Ellison paying one hundred and seventy million. I believe that

748
00:36:53,000 --> 00:36:55,520
Speaker 4: happened in twenty two location Bonnie paying one hundred and

749
00:36:55,560 --> 00:36:59,040
Speaker 4: sixty three million. That happened in twenty two. So I

750
00:36:59,080 --> 00:37:01,959
Speaker 4: think when you're at that level of the game, you're

751
00:37:02,000 --> 00:37:04,319
Speaker 4: not as worried about this now as a market in

752
00:37:04,400 --> 00:37:06,920
Speaker 4: terms of number of transactions. Yes, there may may be

753
00:37:07,000 --> 00:37:09,759
Speaker 4: a slowdown. We're definitely seeing a slow down now, but

754
00:37:09,960 --> 00:37:12,160
Speaker 4: I think right before I came into the studio there

755
00:37:12,160 --> 00:37:14,200
Speaker 4: was one hundred million dollar deal in Aspen as well.

756
00:37:14,400 --> 00:37:18,040
Speaker 1: All Right, this was a fantastic conversation. Attend some Tommy,

757
00:37:18,280 --> 00:37:20,360
Speaker 1: thank you so much for coming on odlock my pleasure.

758
00:37:20,400 --> 00:37:22,080
Speaker 2: Guys, thank you, thank you attend. That was great.

759
00:37:22,160 --> 00:37:39,399
Speaker 1: That was really fun, Tracy. I want to go back

760
00:37:39,440 --> 00:37:42,040
Speaker 1: to Sunny Isles in Florida, which used to be this

761
00:37:42,200 --> 00:37:45,000
Speaker 1: very like sort of sleepy area like north of Miami,

762
00:37:45,120 --> 00:37:47,800
Speaker 1: and check out the Bentley Tower. It looks really nice.

763
00:37:48,120 --> 00:37:51,799
Speaker 2: Uh, shorty, Joe, you do that. No, I haven't spent

764
00:37:51,880 --> 00:37:53,919
Speaker 2: much time in Miami, so I don't have a good

765
00:37:53,920 --> 00:37:54,760
Speaker 2: frame of reference.

766
00:37:55,000 --> 00:37:55,319
Speaker 3: It does.

767
00:37:56,040 --> 00:37:59,839
Speaker 2: Part of this conversation is kind of depressing in the sense,

768
00:38:00,000 --> 00:38:02,759
Speaker 2: but it feels like the rich get richer. A lot

769
00:38:02,760 --> 00:38:06,680
Speaker 2: of this wealth feeds off of itself. As we were discussing,

770
00:38:06,719 --> 00:38:10,080
Speaker 2: so this idea of you build a portfolio of properties,

771
00:38:10,120 --> 00:38:13,640
Speaker 2: you can basically become a developer yourself, pour money into

772
00:38:13,640 --> 00:38:16,440
Speaker 2: a particular area, see the market value go up, and

773
00:38:16,480 --> 00:38:21,120
Speaker 2: then maybe crystallize that gain and buy even more properties.

774
00:38:21,160 --> 00:38:23,719
Speaker 2: It doesn't seem like there's a circuit breaker for a

775
00:38:23,760 --> 00:38:24,120
Speaker 2: lot of time.

776
00:38:24,200 --> 00:38:26,800
Speaker 1: Yeah, no, that's exactly right, and it really does seem

777
00:38:26,840 --> 00:38:30,080
Speaker 1: like in many respects, the high price is part of

778
00:38:30,120 --> 00:38:34,279
Speaker 1: the appeal because a you have the competitive aspect, so

779
00:38:34,360 --> 00:38:37,080
Speaker 1: you want to one up the billionaire or you know

780
00:38:37,120 --> 00:38:39,120
Speaker 1: who bought in that neighborhood. It's like, oh, they just

781
00:38:39,160 --> 00:38:40,840
Speaker 1: paid one hundred million, I'm going to pay one hundred

782
00:38:40,840 --> 00:38:43,040
Speaker 1: and twenty five million. And then you know, if you

783
00:38:43,120 --> 00:38:46,560
Speaker 1: do have five billion dollars or billions of dollars and

784
00:38:46,600 --> 00:38:49,200
Speaker 1: you want to get it out of the country and

785
00:38:49,360 --> 00:38:51,640
Speaker 1: you want to deploy it in real estate, well like

786
00:38:51,760 --> 00:38:54,520
Speaker 1: it's pretty inefficient to go buy like a thousand different

787
00:38:54,560 --> 00:38:57,600
Speaker 1: houses in places where if you have a one, you know,

788
00:38:57,640 --> 00:39:00,320
Speaker 1: one hundred and fifty billion dollars one hundred fift million

789
00:39:00,320 --> 00:39:03,759
Speaker 1: dollar apartment that can absorb that. That could solve your

790
00:39:03,800 --> 00:39:07,920
Speaker 1: problem of needing to diversify your portfolio in a way

791
00:39:07,960 --> 00:39:10,800
Speaker 1: that a cheaper place just couldn't.

792
00:39:10,960 --> 00:39:14,160
Speaker 2: No, absolutely, and I do think like the taxation and

793
00:39:14,239 --> 00:39:18,040
Speaker 2: the capital controls and that aspect of it is certainly

794
00:39:18,160 --> 00:39:20,560
Speaker 2: a driver. And that's one reason why we've seen it

795
00:39:20,600 --> 00:39:24,000
Speaker 2: really take off in places like Dubai and maybe to

796
00:39:24,040 --> 00:39:26,920
Speaker 2: some extent, Miami. There doesn't seem to be a lot

797
00:39:26,960 --> 00:39:31,360
Speaker 2: of incentive for tax havens like maybe Saudi Arabia or

798
00:39:31,400 --> 00:39:34,680
Speaker 2: the UAE to not want to have this period.

799
00:39:34,719 --> 00:39:35,879
Speaker 1: Why would you give up on that area?

800
00:39:36,000 --> 00:39:38,840
Speaker 2: Yeah, exactly, Like you know, the city is basically built

801
00:39:39,040 --> 00:39:43,160
Speaker 2: on absorbing that kind of global wealth, and they seem

802
00:39:43,200 --> 00:39:44,399
Speaker 2: to be doing a good job of it.

803
00:39:44,520 --> 00:39:47,080
Speaker 1: So we also like to live in an area leader

804
00:39:47,200 --> 00:39:50,239
Speaker 1: again in this where I feel like many of the

805
00:39:50,360 --> 00:39:53,279
Speaker 1: ultra ridge, despite having been successful and things working out

806
00:39:53,280 --> 00:39:56,840
Speaker 1: for them, feel a certain sense of like victimization, a

807
00:39:56,880 --> 00:40:00,120
Speaker 1: certain level of being aggrieved. And so if our city

808
00:40:00,560 --> 00:40:03,560
Speaker 1: that's sort of built around the premise that you can

809
00:40:03,600 --> 00:40:05,960
Speaker 1: be really rich and you don't have to apologize for it,

810
00:40:06,320 --> 00:40:09,360
Speaker 1: and it's okay to even flaunt it. That seems like,

811
00:40:09,960 --> 00:40:11,120
Speaker 1: I guess I get the appeal.

812
00:40:11,680 --> 00:40:14,720
Speaker 2: Yeah, you're right, Like there are a lot of multi

813
00:40:14,719 --> 00:40:18,640
Speaker 2: billionaires who complain about their tax rate or complain about

814
00:40:18,640 --> 00:40:19,960
Speaker 2: being shunned by society.

815
00:40:20,040 --> 00:40:21,440
Speaker 1: There are the people. Don't retweet them.

816
00:40:22,360 --> 00:40:25,800
Speaker 2: That's right. Actually, you know, we could solve the global

817
00:40:25,920 --> 00:40:30,759
Speaker 2: property crisis by I don't know, retweeting billionaires and satisfying

818
00:40:30,760 --> 00:40:34,640
Speaker 2: their Schnitzel cravings. Let's put it that way, sure, there, yes,

819
00:40:34,760 --> 00:40:37,359
Speaker 2: Oh my god, Okay, this has been another episode of

820
00:40:37,400 --> 00:40:40,640
Speaker 2: the Oudlots podcast. I'm Tracy Alloway. You can follow me

821
00:40:40,800 --> 00:40:42,080
Speaker 2: at Tracy Alloway and.

822
00:40:42,040 --> 00:40:44,880
Speaker 1: I'm Joe Wisenthal. You can follow me at the Stalwart.

823
00:40:45,120 --> 00:40:47,799
Speaker 1: Follow our guest Hit ten some Tommy He's at hit

824
00:40:47,960 --> 00:40:52,560
Speaker 1: samt Y. Follow our producers Carmen Rodriguez at Kerman Ermann Dash,

825
00:40:52,600 --> 00:40:55,840
Speaker 1: Ol Bennett at Dashbot, and kil Brooks at keil Brooks.

826
00:40:55,920 --> 00:40:58,520
Speaker 1: Thank you to our producer Moses Onam. And from our

827
00:40:58,560 --> 00:41:01,759
Speaker 1: Oddlot's content, go to bloom slash odd Lots, where you

828
00:41:01,800 --> 00:41:04,960
Speaker 1: have transcripts, a blog, and a newsletter and you can

829
00:41:05,040 --> 00:41:07,560
Speaker 1: chat about this topic and many others. Twenty four to

830
00:41:07,560 --> 00:41:11,560
Speaker 1: seven in the Oddlots Discord, Discord, dot gg, slash odlts.

831
00:41:11,640 --> 00:41:13,719
Speaker 1: Maybe we'll get a hit ten to come in there

832
00:41:13,840 --> 00:41:16,120
Speaker 1: and do an AMA for people. If he's down for that,

833
00:41:16,160 --> 00:41:18,200
Speaker 1: he's giving the thumbs up, so we'll have him do that,

834
00:41:18,239 --> 00:41:20,040
Speaker 1: and then you can ask him more questions about the

835
00:41:20,040 --> 00:41:22,160
Speaker 1: world of ultra luxury real estate.

836
00:41:22,280 --> 00:41:24,840
Speaker 2: Oh, that'd be fun, all right. And if you enjoy

837
00:41:24,920 --> 00:41:27,040
Speaker 2: odd Lots, if you like it when we look at

838
00:41:27,040 --> 00:41:30,160
Speaker 2: the ultra luxury property market. If you want Joe to

839
00:41:30,200 --> 00:41:33,560
Speaker 2: go down to Miami and start reviewing branded buildings, then

840
00:41:33,600 --> 00:41:37,279
Speaker 2: please leave us a positive review on your favorite podcast platform.

841
00:41:37,520 --> 00:41:40,279
Speaker 2: And remember, if you are a Bloomberg subscriber, you can

842
00:41:40,320 --> 00:41:43,560
Speaker 2: listen to all of our episodes absolutely ad free. All

843
00:41:43,600 --> 00:41:46,040
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844
00:41:46,239 --> 00:42:05,160
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