Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hello and welcome to another episode of the All Thoughts podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 3: And I'm Joe Wisenthal.
Speaker 2: Joe, Obviously, there's a lot going on right now in
Speaker 2: the Gulf. One of the things that's been happening is
Speaker 2: that Iran, of course, has been sending drones across the
Speaker 2: sea and over to the UAE and hitting various energy
Speaker 2: infrastructure assets. But it's also been hitting some non energy
Speaker 2: infrastructure assets such as hotels, you know, consulates, residences.
Speaker 3: Right of course, you know we've seen, for example, the
Speaker 3: various strikes. We're going to talk about Dubai specifically in
Speaker 3: this episode. The interesting thing about Dubai, as we know
Speaker 3: is there's been a lot of people who've moved there,
Speaker 3: lots and lots of money, to say the least. But
Speaker 3: part of the appeal there is here's an island of stability,
Speaker 3: not just an island. And this is what the part
Speaker 3: that enters me not technically an island, not technically an island,
Speaker 3: and not just an island of stability. Within the context
Speaker 3: of the Middle East. There is this growing perception all
Speaker 3: around the world, particularly in rich countries where people don't
Speaker 3: like what's going on with taxes, where they don't like
Speaker 3: feel safe about the trajectory of politics in these countries,
Speaker 3: et cetera. This sort of ongoing feeling of deterioration of
Speaker 3: various flavors where they're from. And it's like, you know what,
Speaker 3: I want to live in a country that has low crime,
Speaker 3: a high level of stability, and sort of you know,
Speaker 3: to be crude, escape the failing West. Exit as they say,
Speaker 3: in sort of the idea of exit, loyalty and voice
Speaker 3: and so forth.
Speaker 4: Right.
Speaker 2: So this is really interesting because in addition to styling
Speaker 2: itself as this sort of island proverbial island of stability,
Speaker 2: that's true, but they've also styled themselves as and I'm
Speaker 2: stealing this from the guests that I will introduce in
Speaker 2: just a minute or two, but they've styled themselves as
Speaker 2: the capital of capital. Right. So, here is this region
Speaker 2: that has an enormous amount of money from oil wealth,
Speaker 2: and a lot of that money has been flowing into
Speaker 2: not just real estate in the region itself, but real
Speaker 2: estate externally in the West. We know that there are
Speaker 2: big sovereign wealth funds in the Middle East and they
Speaker 2: invest in all sorts of things. Lately, there's been a
Speaker 2: lot of private debt investment, which is an interesting one
Speaker 2: given the concerns around private lending at the moment. They've
Speaker 2: invested in famously US treasuries. Tech stocks like the UAE
Speaker 2: Saudi Arabia are huge, huge forces when it comes to
Speaker 2: tech valuations at the moment. And so when you kind
Speaker 2: of start connecting all of these things together, you have
Speaker 2: to ask what does the situation in Iran actually mean,
Speaker 2: not just for the idea of Dubai and Abu Dhabi
Speaker 2: as this sort of expat paradise, but also as this
Speaker 2: locus of an enormous amount of money that tends to
Speaker 2: flow around.
Speaker 3: The world absolutely and again like this is a place
Speaker 3: where those with means, those with like lots of money
Speaker 3: are feeling like this is this is arguably the future.
Speaker 3: This is where I want to set up shop. Ray
Speaker 3: Zalio has a family office that's in the UAE and
Speaker 3: so forth. And you know, historically there have been these places,
Speaker 3: these places where capital wants to be either have a
Speaker 3: literal or sort of figurative footprint. Switzerland of course long
Speaker 3: time in that category. Singapore perhaps similar, but you have
Speaker 3: people in the West. You have a lot of people
Speaker 3: in the UK and you're like, you know what, this
Speaker 3: is where I'm going. This is my bet on the future, right,
Speaker 3: I'm betting my future, the future of my money, the
Speaker 3: future of my business somehow to be domiciled figuratively or
Speaker 3: literally in Dubai, the UAE, et cetera.
Speaker 2: There's also something that the UAE in particular has done,
Speaker 2: which is it's achieved this sort of diplomatic or strategic ambiguity. Yeah,
Speaker 2: I guess you could say where it's a place where
Speaker 2: everyone from the US to Russia and to some extent
Speaker 2: Iran can do business right. So there's a big question
Speaker 2: over whether that continues at all. Anyway, we do, in
Speaker 2: fact have the perfect guest. I actually think this is
Speaker 2: a really good way to look at the sort of
Speaker 2: interconnection of global capital and some of the gray market
Speaker 2: stuff that happens in the UAE is through property and
Speaker 2: commercial property in particular.
Speaker 3: Totally, And you know, I just want to say, this
Speaker 3: is not the first time, you know, we've talked about
Speaker 3: the UA. Certainly we've talked about the golf, but it's
Speaker 3: even prior to the last few weeks. In my mind,
Speaker 3: I've thought I want to do more on this topic,
Speaker 3: specifically in England. It's a very big deal. It's a
Speaker 3: very big part of the sort of news and politics.
Speaker 3: How many of their wealthy have left over the years
Speaker 3: to go to the UAE and so forth. I wonder
Speaker 3: to some extent the UAE. And I'm not the first
Speaker 3: person to make this observation, but like the you know,
Speaker 3: if you imagine this place with an extraordinary amount of
Speaker 3: abundant natural resources, et cetera, a world in which there
Speaker 3: is an extreme and it makes a miracle look very
Speaker 3: pale in comparison, an extreme gap between the haves and
Speaker 3: the have nots, et cetera. Sometimes I think about, like,
Speaker 3: you know, is the future of the world? Essentially, do
Speaker 3: buy a five where you have this very tiny slice
Speaker 3: of people who are just insanely wealthy kind of you know,
Speaker 3: to use the popular parlance, a permanent underclass within the
Speaker 3: same thing, a place where there a lot of these
Speaker 3: successful people are like something you talk a lot about,
Speaker 3: which is is the future of the economy, just like
Speaker 3: people who look really good and so forth. No for real, Yeah,
Speaker 3: and you know, we know that it's a home to
Speaker 3: a lot of influencer is taking photos in front of
Speaker 3: iconic hotels on man made beaches, et cetera. I have
Speaker 3: this feeling that there is a version of the world
Speaker 3: that looks like the UAE, for better or worse. So
Speaker 3: I've just been thinking, both literally and sort of metaphorically,
Speaker 3: we need to understand these dynamics of the UAE better.
Speaker 2: It's funny because when I was an Abu Dhabi and
Speaker 2: people asked me what it was like living there, I
Speaker 2: used to say, it's like living in Texas in the
Speaker 2: sense that you spend a lot of time in the
Speaker 2: shopping mall, you spend a lot of time in your car,
Speaker 2: and it's hot all the time, and you don't really
Speaker 2: see that many people out on the street. Now I
Speaker 2: kind of think, well, you know, maybe Abu Dhabi is
Speaker 2: the blueprint for some places in Texas. But anyway, you
Speaker 2: know what.
Speaker 3: I just say, you know what it looks like is
Speaker 3: it looks like Miami. And if you've spent any time,
Speaker 3: like on North Collins Avenue and some of the architecture
Speaker 3: and hotels, etc.
Speaker 5: There.
Speaker 3: When I've looked at some of the recent photos, including
Speaker 3: unfortunately one of the hotels that got hit, I was like,
Speaker 3: this could be like this could be a building that
Speaker 3: went up two years ago in like somewhere in Miami Beach.
Speaker 3: So so much to discuss, all right.
Speaker 2: Rather than us spending more time discussing this, we do,
Speaker 2: in fact have the perfect guests, someone who's been on
Speaker 2: the podcast before talking about real estate for the ultra wealthy,
Speaker 2: and someone who has personal connections to Dubai as well.
Speaker 2: We're going to be speaking with Hitten Stani. He is
Speaker 2: the founder of ten thirty one Media and publisher of
Speaker 2: the Promote. So, Hitten, thanks so much for coming back
Speaker 2: on the podcast.
Speaker 5: Hey, good to be here.
Speaker 2: Would you agree with that framing? How do you think
Speaker 2: about you know, Dubai's reputation in the world in recent years.
Speaker 4: I think for the most part it's correct, I would
Speaker 4: add to it. So, not only is it styled itself
Speaker 4: as a safe haven to do business, I think where
Speaker 4: it has probably gone further than any country in the
Speaker 4: modern era is cherry picking the kind of society that
Speaker 4: an ultra rich person would think about too. So there's
Speaker 4: one thing to be in Singapore and say all right,
Speaker 4: make your money here, But we have a Singaporean society
Speaker 4: that is very specific right in ubbe Dubai etc. It's
Speaker 4: almost like a build your own bear kind of society. Okay,
Speaker 4: you're a wealthy person, come here. The only rule is
Speaker 4: don't mess with our politics. You're never getting involved in
Speaker 4: anything related to any sort of democratic debate. Outside of that.
Speaker 4: You want to live a decadent lifestyle, we have everything.
Speaker 5: Set up for you.
Speaker 4: You want to live a pious lifestyle, it's all set
Speaker 4: up too. We will guarantee you safety, and that's obviously
Speaker 4: the big asterisk why we're talking today. Will guarantee you safety,
Speaker 4: will guarantee you an incredibly pro business environment, and you
Speaker 4: can kind of stitch together this existence. I think there
Speaker 4: is no other place in the world that has this
Speaker 4: mix between the decadent and kind of the family friendly
Speaker 4: life that the UA government has very very concernedly created
Speaker 4: for the well healed globally. And I think Tracy had
Speaker 4: made a point about sort of all these nationalities coming
Speaker 4: together in this diplomatic xanadu. It's been true forever.
Speaker 2: Yeah, it always reminded me a little bit of like Casablanca,
Speaker 2: you know, all these years the day around, Yeah, exactly.
Speaker 3: I don't know what people do there. I don't know
Speaker 3: if people work, I don't know if anyone actually does work.
Speaker 3: The only thing, you know, I see the Instagram photos,
Speaker 3: et cetera. But like, talk to us about the scale
Speaker 3: of the influx, particularly among the global elite, and to
Speaker 3: what degree is it a real phenomenon. You see people
Speaker 3: talk about this on Twitter of like a certain type
Speaker 3: of people who's kind of given up on the West
Speaker 3: and they're willing to take that trade off. I bet
Speaker 3: a lot of them if you'd asked them, they're like, yeah,
Speaker 3: democracy is good, et cetera like that, but they're like,
Speaker 3: you know what, I look at Western democracy and it
Speaker 3: really does not look that good. It only looks in
Speaker 3: one direction. I'm worried about communists taking over and taking
Speaker 3: my money. I'm worried about all this, and Dubai looks
Speaker 3: like this, you know, oasis and how big has that
Speaker 3: trend to ground?
Speaker 4: Sure, So there's two ways to think about it. One
Speaker 4: is what you're talking about, which is sort of the chavvy, right,
Speaker 4: the chav chavvy British influencer.
Speaker 3: Made a bunch of money because they were early to
Speaker 3: Solana and yeah.
Speaker 4: Yeah, I saw someone shoot up outside my house on
Speaker 4: a very nice street in the UK. I'm sick of this,
Speaker 4: I'm going to go over to Dubai twenty four to
Speaker 4: seven son no taxes, blah blah blah. That is obviously
Speaker 4: one component.
Speaker 3: Of four seven son. I'm pretty sure.
Speaker 2: I mean, except when there's like a dust storm, they
Speaker 2: pretty much do.
Speaker 3: Okay, Okay, I'll have to figure out the astronomy of
Speaker 3: that one, but keep going.
Speaker 4: Well, they do cloud seating too, so they can mess with.
Speaker 5: The weather and ways they Okay think amazing.
Speaker 4: There is that cohort of sort of disgruntled let's say,
Speaker 4: upper middle class to wealthy people from places like the
Speaker 4: UK et cetera. That's one class, and I think that
Speaker 4: is culturally much more significant than it is financially significant. Okay,
Speaker 4: the other class, and I think the inflection point that
Speaker 4: is probably the most logical to take is the Russian
Speaker 4: invasion of Ukraine. Right around early twenty twenty two. There
Speaker 4: was this unbelievable influx of people from let's call it
Speaker 4: Russian Republic for just to make it a little easier
Speaker 4: kind of that area of the world. All this money
Speaker 4: flowed in, and now you look at parts of Dubai
Speaker 4: that have been transformed by let's call it Russian wealth.
Speaker 4: Right there are parts of Dubai that look exactly like
Speaker 4: Sunny Isles Beach in Miami, which is Russian wealth, Russian dominated.
Speaker 4: That's the tongue you hear in the streets, and the
Speaker 4: culture of it has been turned on its head very
Speaker 4: dramatically and very rapidly. So unlike other places, Dubai is
Speaker 4: very I'm going to pull up some numbers now. So
Speaker 4: the city Dubai specifically is home to about three point
Speaker 4: eight million people at the moment. I think when I
Speaker 4: was growing up there in the nineties that was number
Speaker 4: was probably close to two million, and it's expected to
Speaker 4: surge by to five point eight million by twenty forty.
Speaker 4: So you're talking about adding two million people to the
Speaker 4: city in what fifteen years or so, Right, that's gonna.
Speaker 2: Be a I'm already imagining what that means for traffic.
Speaker 4: I mean, it's traffic there is now kind of a
Speaker 4: parody of itself, Like there is no way to gauge
Speaker 4: what's going on. The metros are you know, in full capacity,
Speaker 4: but it's always terrible, right, So they do have all
Speaker 4: these infrastructure problems similar to what Miami is going through now.
Speaker 4: But I think the difference in in the Ua in
Speaker 4: general is the government is really on it. They're really
Speaker 4: trying to create large scale solutions to a lot of
Speaker 4: the problems that we have there. Right so be a
Speaker 4: traffic they're building roads every single day. The joke is
Speaker 4: that people like my dad who grew up there are
Speaker 4: actually the worst drivers there because they try to go
Speaker 4: by gut and they can't because there's always a new flyover,
Speaker 4: our new intersection, et cetera. But they're doing that the infrastructure,
Speaker 4: they're doing the cloud seating for the weather, They're trying
Speaker 4: so many different social experiments for cohesion. There's a lot
Speaker 4: going on, and I haven't seen a government as kind
Speaker 4: of on it, which is why where we are today
Speaker 4: is it's such a big question mark.
Speaker 2: What have you seen just in terms of property prices
Speaker 2: in Dubai in recent years. So you mentioned the influx
Speaker 2: of Russians my you know, anecdotally, I still have friends
Speaker 2: in Dubai. They were saying that all the rents basically
Speaker 2: went up for residential because you had this huge population jump.
Speaker 2: But I'm curious also what happened with commercial property prices.
Speaker 4: I think a lot of the sort of the explosion
Speaker 4: of growth in Dubai can be seen can be seen
Speaker 4: in land prices. Land prices are up by a factor
Speaker 4: for four forty to seventy percent, And this all stems
Speaker 4: from the super luxury boom that Dubai has seen. I
Speaker 4: think the last time we talked a year or change ago,
Speaker 4: I was telling you about the superprime luxury market in Dubai,
Speaker 4: which is globally defined by night Frank as sales of
Speaker 4: ten million dollars or more. Dubai is leading the charts
Speaker 4: for a long time. I think in Q three they
Speaker 4: had north of two billion dollars of sales just in
Speaker 4: the super prime category. So by volume they are they
Speaker 4: have the most transactions of any market in the world
Speaker 4: in this category.
Speaker 5: Right.
Speaker 4: So, because developers can get and this is something we
Speaker 4: that is mirrored in Manhattan for the longest time. Because
Speaker 4: developers can get that kind of pricing for condos and homes,
Speaker 4: they then go and buy more and more land. They
Speaker 4: do some land banking, and because land has become so
Speaker 4: expensive now, they're going and getting some exotic financing for it. So, Tracy,
Speaker 4: you probably remember covering Sukuk and all the Islamic bond
Speaker 4: stuff that is blowing up now in the real estate market.
Speaker 4: So I think you guys had a stat. Bloomberg got
Speaker 4: a stat that dollar bond in sukkook issuance has grown
Speaker 4: more than twelvefold to six billion dollars since twenty twenty one.
Speaker 3: Wow. When I'm in Miami and I love Miami, I've
Speaker 3: never been to Dubai, but I love Miami. I'm going
Speaker 3: to be sort of diplomatic in my words here about
Speaker 3: when I'm in Miami, I get this feeling that it
Speaker 3: is a very diverse on paper city.
Speaker 5: Right.
Speaker 3: You have your Russians, you have your other Eastern Europeans,
Speaker 3: you have your Ironans, effect you have your Israelis, you
Speaker 3: have your various multi obviously Latin Americans of various sorts,
Speaker 3: et cetera. There is this nominal diversity in terms of
Speaker 3: the type of person who comes there, and yet everyone
Speaker 3: sort of merges into the same guy, if you know
Speaker 3: what I mean. They sort of dressed the same, they
Speaker 3: drive this cars, they kind of talk the same. There
Speaker 3: is this sort of I would say, ethnically ambiguous Miami guy.
Speaker 3: They end up all kind of looking the same, et cetera.
Speaker 3: They have the same vibe. Is it sort of true
Speaker 3: in Dubai? Do you have this sort of nominally diverse population,
Speaker 3: but then when they're there, they suddenly fuse into Dubai. Guy,
Speaker 3: do you know what I'm saying?
Speaker 5: Hundred percent? Get it? Okay, this is yeah, one hundred percent.
Speaker 4: So a friend of mine recently went to what's known
Speaker 4: as a watch party, okay, where it's a bunch of
Speaker 4: guys who just sport their ice on the wrist, right,
Speaker 4: and and that that is exactly when you go into
Speaker 4: a party like that, you will see people had every
Speaker 4: nationality bound by just the love of that.
Speaker 3: I yes, yes they have this, yes.
Speaker 5: The masquerading love whatever you want.
Speaker 4: Yeah, there is this kind of Dubai type right, because
Speaker 4: in a city where roots are not really a thing
Speaker 4: for a lot of people, the external factors be more
Speaker 4: and more important. The car I remember vividly. I was
Speaker 4: out with friends for shisha and we were heading from
Speaker 4: from I missed the shisha so much. It's probably, yeah,
Speaker 4: probably better for us that we don't smoke it all
Speaker 4: the time now. But I remember going from a sort
Speaker 4: of a pedestrian sheiesha place to a nicer sisha place
Speaker 4: right so old part of town to new part of town,
Speaker 4: et cetera. I remember this friend. We went home to
Speaker 4: switch cars. That's the only reason we went this place.
Speaker 4: We went to the garage, we did not go inside.
Speaker 4: We switched cars, and then we went back out. This
Speaker 4: is a very common thing that has always been a
Speaker 4: part of Dubai. The difference between what you talked about,
Speaker 4: Joe and what happens in Dubai is it's not necessarily
Speaker 4: a melting pot. It really is like it is it is.
Speaker 4: It is a collection of ethnic enclaves, right, and the
Speaker 4: only thing they have in common is that they live
Speaker 4: in Dubai. You can spend your entire life sort of
Speaker 4: ghettoized in your with your type of people. Interesting, and
Speaker 4: I think with so much influx that has only become
Speaker 4: more accentuated now. It would be silly to say, oh, yeah,
Speaker 4: you only see your type. I have friends from all
Speaker 4: over the world. Anyone who lives in Dubai has had
Speaker 4: that privilege too, right, Like you can kind of tap
Speaker 4: into any culture you want. Yeah, but you can also
Speaker 4: stay very fixated in yours.
Speaker 2: Let's say there's also a lot of racial stratification maybe
Speaker 2: that's the right word, where you know, if you go
Speaker 2: into a fancy restaurant, a lot of the people who
Speaker 2: are like sat down will either be Amoradi or white,
Speaker 2: and all the servers and waiters are going to come
Speaker 2: from Nepal or India. Like that happen. It's very noticeable.
Speaker 4: Yeah, I think I think Tracy, a lot of that
Speaker 4: has changed quite a bit, right, I think so much
Speaker 4: money coming in from all parts of the world, including
Speaker 4: South Asia, that that hierarchy that used to be so
Speaker 4: preced there is very much diluted a little bit.
Speaker 5: So you will go to.
Speaker 4: The top restaurant or top club and you will kind
Speaker 4: of a United Nations type of vibe.
Speaker 2: Now, talk to us about what you're hearing just on
Speaker 2: the ground in Dubai at the moment, because the information
Speaker 2: flow is a little bit tricky. The UAE controls the
Speaker 2: information that not only circulates domestically but also circulates externally.
Speaker 2: So while we have seen some videos of drones hitting
Speaker 2: various buildings, it's not entirely clear. We're getting a really
Speaker 2: good sense of the situation there. What are you hearing
Speaker 2: from friends and family on the ground.
Speaker 4: So overwhelmingly the messages that things are okay in life
Speaker 4: is moving on. I think anyone you talk to in
Speaker 4: the region has a certain the information flow problem that
Speaker 4: you kind of alluded to. That is very much a thing.
Speaker 4: Most people are getting their news and information from social
Speaker 4: media nowadays.
Speaker 5: Social media is.
Speaker 4: Very tightly controlled in the UA and in the region
Speaker 4: in general, so a lot of us who are have
Speaker 4: Dubai sort of close to their hearts from the outside
Speaker 4: end up seeing kind of more than we more than
Speaker 4: the people back home do.
Speaker 5: Now.
Speaker 4: There have been certain things, right there was an attack
Speaker 4: on the airport that was major news. The government in
Speaker 4: Dubai duscent or the government in the UE, sends out
Speaker 4: alerts and all that, that's the kind of thing that
Speaker 4: they see. But in general, and I think this is
Speaker 4: going to be a broader part of our conversation, and
Speaker 4: not to make a desert pun here, but the UE
Speaker 4: has to project an image of an oasis of common stability.
Speaker 5: Right.
Speaker 4: I like to say that New York is a great
Speaker 4: city any day of the week, any weather, at all times.
Speaker 4: Los Angeles has to be on its best best weather
Speaker 4: behavior at all times, and there is a similar analogy.
Speaker 5: To be made at the UAE.
Speaker 4: The whole game does not work unless it feels safe.
Speaker 4: That is the number one thing that the government talks
Speaker 4: about that is the number one thing that investors taut
Speaker 4: in their materials. When you're soliciting investment for the UAE
Speaker 4: or convincing someone to move your business to the UE,
Speaker 4: safety is the number one thing. And again we don't
Speaker 4: know how bad this is. I think I'd like to
Speaker 4: make an example from another neighbor of the UAE, the
Speaker 4: Kutthery Energy minister. Did you guys see that comment? I
Speaker 4: mean that is absolutely stunning.
Speaker 2: Oh what do you say?
Speaker 4: So the Iranians struck an LNG facility.
Speaker 2: In Kuthar and about the repair time, No, this is.
Speaker 4: About he said that it took out seventeen percent of
Speaker 4: Cutter's expert capacity. That is a stunning revelation to make.
Speaker 4: I think this guy, his name is Sad the Cabby,
Speaker 4: I think he is a little bit more outspoken than
Speaker 4: I've seen other government ministers. But he said they might
Speaker 4: have to invoke force majure contracts on experts to certain countries.
Speaker 5: Right.
Speaker 4: That is the kind of thing that should give people pause. Right,
Speaker 4: And we're going to talk about this in a second.
Speaker 4: But a lot of these countries, the UE, in particular Katar,
Speaker 4: Saudi Arabia, Kuwait are big, big investors in the global landscape.
Speaker 3: You mentioned a l Right, you go into the nice restaurant,
Speaker 3: and maybe at this point it does have sort of
Speaker 3: the clientele has this United Nations feel, But as Tracy mentioned,
Speaker 3: maybe the waiter is from Nepal or somewhere else in
Speaker 3: South Asia, et cetera. Again, there's this meme in that
Speaker 3: the world is gonna entering what they call, you know,
Speaker 3: the global permanent under class. You have to buy this
Speaker 3: cryptocurrency because this is your lottery ticket out of the
Speaker 3: global permanent underclass. You have to whatever Ai sort of
Speaker 3: are talked about in the same language as crypto in
Speaker 3: that respect. From inside of Dubai, that waiter or the
Speaker 3: child of that waiter, is there this sense that they
Speaker 3: will always be part of that permanent underclass, and that
Speaker 3: there is no relationship in a sort of societal fabric
Speaker 3: between the life of that waiter and the life of
Speaker 3: everyone that they're serving in that restaurant.
Speaker 4: Yeah, I think that that's very true the Horatio Alger
Speaker 4: stories and I tend to be the person who's come
Speaker 4: in and made the life for themselves, right, the scrap
Speaker 4: the entrepreneur who came at thirty years old with nothing
Speaker 4: and now owns a bunch of yachts. That is the
Speaker 4: kind of story you do not typically see social mobility
Speaker 4: within the city. Right, So if you are part of
Speaker 4: what you described as the social underclass, you tend to
Speaker 4: stay in that role until you leave, and you will
Speaker 4: always leave, right, that's the other part of it.
Speaker 3: Yeah, and just you know, on your point about business
Speaker 3: as usual. One of the things that I like to
Speaker 3: do to sort of get some perspective on an area
Speaker 3: is go to Instagram and see what the latest photos
Speaker 3: from that area are. And it's sort of like I've
Speaker 3: always found that to just be a nice way of
Speaker 3: like figuring out, like what is the vibe of this,
Speaker 3: what's going on? It's still to this day if you
Speaker 3: look at if you try to pull up any location
Speaker 3: in Dubai, particularly an outdoor location, there's a good chance
Speaker 3: that the only photos you're going to see are You're
Speaker 3: going to see a lot of butts in that photo, right,
Speaker 3: You're going to see photos of women in bikinis with
Speaker 3: the bourgeak khalifa in the background, or some artificial island
Speaker 3: chain in the background, etc. In terms of the information
Speaker 3: coming out, it is almost no different than I believe
Speaker 3: what gets posted on social media is almost no different
Speaker 3: than it would have been, say, a month ago.
Speaker 4: Yeah, I think your strategy works better in the country
Speaker 4: where there is a broader sort of a more free press, etc.
Speaker 5: Right.
Speaker 4: One of the and you guys have probably seen the
Speaker 4: flood of op eds coming out. I think the Wall
Speaker 4: Street Journal bureau chief back there wrote a very very
Speaker 4: spirited piece in defense of the country because it's a
Speaker 4: very easy place to take shots at, right, And we've
Speaker 4: probably taken a couple here in this episode. It's a
Speaker 4: very easy place to take shots at because a lot
Speaker 4: of people are judging the bargain from the American lens,
Speaker 4: or let's call it the lens of the depraved West.
Speaker 5: That is not the bargain.
Speaker 4: They don't care about, you, Joe, And to be honest,
Speaker 4: what they care about is like a wealthy person who
Speaker 4: does not care so much about the sort of the
Speaker 4: broader Western ideals and only cares about the Western ideal
Speaker 4: of capitalism, and then they will provide all the other
Speaker 4: things we talked about, safety, high quality of life in
Speaker 4: one sense.
Speaker 5: Et cetera.
Speaker 4: So that's very much the case. I think that we
Speaker 4: tend to be as people who've been in the West
Speaker 4: for a long time tend to be more concerned that
Speaker 4: we don't get to see the truth as much as
Speaker 4: they don't seem to care as much. What do people
Speaker 4: really care about? Just having a safe, chill place to live,
Speaker 4: and the UA does that better than pretty much anyone.
Speaker 2: Yeah, but I mean there is a tension here at
Speaker 2: the moment where you could argue that if you're a
Speaker 2: citizen on the ground, like you would like to be
Speaker 2: more informed about missiles flying around. I know they have
Speaker 2: an alert system, but also since you mentioned Instagram, I'm
Speaker 2: now thinking about geotagging. We know that a lot of
Speaker 2: the location services in Dubai and Abu Dhabi aren't working
Speaker 2: at the moment because they're getting jammed because they don't
Speaker 2: want Iranian drones to know where they're going and vice versa.
Speaker 2: So like there is this informational problem and informational control problem.
Speaker 2: But I just want to talk for a second about
Speaker 2: where golf money has actually been flowing externally in the world,
Speaker 2: because this has been a big story but still an
Speaker 2: underappreciated one. I think.
Speaker 4: I think it's just a lotifying story of the investment
Speaker 4: escape of the last ten years.
Speaker 2: Yeah, yeah, Okay, talk to us about.
Speaker 4: It, Okay, So just broadly GCC sovereigns collectively, so it's
Speaker 4: called them the Big four of the Big five managed
Speaker 4: close to six trillion dollars in AUM. That represents more
Speaker 4: than forty percent of the global sovereign wealth fund total, right,
Speaker 4: and increasingly so. I think in the nineties they were
Speaker 4: probably mostly focused on fixed income, right, US bonds being
Speaker 4: a big part of the equation. I think starting in
Speaker 4: the two thousands and definitely in the twenty twenties, they've
Speaker 4: been flowing towards let's call it more exotic cults.
Speaker 5: Right there, crypto.
Speaker 4: They're massively invested in venture capital, and at the highest
Speaker 4: highest level they are obviously incredibly large real estate investors,
Speaker 4: both as lp SO limited partners in deals, but also
Speaker 4: increasingly in what's known as GP staking, which is when
Speaker 4: you buy a piece of a black rock let's say, right,
Speaker 4: and the PIF who oh yeah. So when PNC sold
Speaker 4: a fourteen billion dollar steak in black rock around in
Speaker 4: the pandemic at some point, the buyers were Mobabla Kia
Speaker 4: which is Kuwait, Qia which is Cutar, and PIF, which
Speaker 4: is sud Right, So they are all over the tentacles
Speaker 4: are so incredibly well spread into all aspects of the
Speaker 4: global economy, especially in the United States. And I think
Speaker 4: one question that I have, and I'm sure a lot
Speaker 4: of people have as this conflict drags on, is will
Speaker 4: that bigot stop or at least tighten up, right, because
Speaker 4: I think you wrote about it in your newsletter recently.
Speaker 4: Petro dollars are essentially what creates this this giant pool
Speaker 4: of money, right and right now, Let's say hopefully the
Speaker 4: conflict ends in the next couple weeks. If that is
Speaker 4: the case, the UA can very quickly get out of
Speaker 4: this hole, because it probably has the best functioning government
Speaker 4: in the modern era. If this goes on for months
Speaker 4: and longer, then you have to have those questions. I mean,
Speaker 4: I think it would be really interesting to talk to
Speaker 4: a fund manager right now and see what kind of
Speaker 4: conversations they're having with pif Mahbadla and the likes, because
Speaker 4: those conversations, and we like to say, investors like certainty
Speaker 4: and this ain't it right?
Speaker 3: Okay? There have been the hits to some energy infrastructure,
Speaker 3: like why does it change? How much do you perceive
Speaker 3: that this story of lots of money coming in because
Speaker 3: people carry it in their pockets and then lots of
Speaker 3: money going out because it enters these huge funds that
Speaker 3: are funding everything from me AI to infrastructure to all
Speaker 3: kinds of things. So far in this war, is there
Speaker 3: anything that disrupts the trajectory of that model?
Speaker 4: So far in this war, there hasn't been anything that
Speaker 4: shows like, hey, this is good, the party's going to stop.
Speaker 4: But I think the cut Thery example that I pointed
Speaker 4: to is the first one. I said, Wow, they're talking
Speaker 4: about seventeen percent of export capacity.
Speaker 5: That is very serious.
Speaker 4: At some point, if not already, Qia has to be
Speaker 4: brought into the room and say okay, let's assess the situation.
Speaker 5: Right, I would.
Speaker 4: Imagine this would come up, and then there are these
Speaker 4: long term beds. I think you had one of my
Speaker 4: favorite song at some point, ziadaoud to talk about, Oh yeah.
Speaker 5: He's so good, he's incredible.
Speaker 3: They're going to get him on a gun and just
Speaker 3: for listeners, he's our colleague here at Bloomberg. Guy, he's
Speaker 3: in Bloomberg Economics, right, and so yes, we're going to
Speaker 3: try and have him on ace app.
Speaker 4: He's incredible. I think I first heard of about him
Speaker 4: on Sultano Kosami's cultural much less, which really fun thing
Speaker 4: that he used to do that and he's restarting.
Speaker 5: But anyway, you.
Speaker 4: Guys had talked to yeah about the UA's thirty five
Speaker 4: billion dollar investment into kind of the Egyptian coastal development,
Speaker 4: et cetera. Right, Yes, those kind of bets are where
Speaker 4: I would say, okay, what is That's just sort of
Speaker 4: a commitment made to doing things in the future, right,
Speaker 4: It's it's like a thirty five billion dollar number that's
Speaker 4: probably going to be over a couple of decades or so.
Speaker 4: When you make those kind of claims, or you make
Speaker 4: that kind of commitment and you see all the stuff
Speaker 4: happening with your own in your own home, maybe there's
Speaker 4: some talk of redeployment, holding back, et cetera. I think
Speaker 4: those are the big things. A lot of the other
Speaker 4: money we're talking about, and we'll talk about private credit
Speaker 4: in a minute, has already been committed, deployed, et cetera. Right,
Speaker 4: But the scale of the UE's specifically's investment in this
Speaker 4: let's call it the frontiers of the new economy, I
Speaker 4: don't think is fully appreciated. I mean MGX, which is
Speaker 4: a state owned state controlled Shake thenun controls this giant,
Speaker 4: sprawling web of at least a one and a half
Speaker 4: trillion dollar pool money, the various fund stitched together from
Speaker 4: ubbleb It is in everything, It's absolutely in everything. And
Speaker 4: again this is again in question of how long the
Speaker 4: conflict will go on. I'm not an expert on that,
Speaker 4: but if this drags on for a bit, there has
Speaker 4: to be some reckoning with how that money is flying.
Speaker 2: If we actually see an exodus from Dubai, and.
Speaker 4: In terms of population, In.
Speaker 2: Terms of population and anecdotally I certainly have seen people
Speaker 2: leaving in recent weeks. It's hard to tell if they're
Speaker 2: going to leave forever or if they're just planning on
Speaker 2: departing during the worst of the conflict. But if we
Speaker 2: were to see an exodus from Dubai, and presumably real
Speaker 2: estate prices would be impact from that, that could be
Speaker 2: the line of entry where you start to get more
Speaker 2: pressure on government finances.
Speaker 4: Right, yeah, I think more than any other city probably
Speaker 4: in the world, debuys in the sentiment business right, the
Speaker 4: sentiment business. Right, their primary sources of revenue are real estate, tourism,
Speaker 4: and commerce. Right, those are the three and those are
Speaker 4: all sentiment based industries. In fact, I don't think I've
Speaker 4: seen I haven't heard personally of any departures in the
Speaker 4: way that I remember in the first Golf War in
Speaker 4: the nineties there was a flood of people that left.
Speaker 4: I think that, if anything, the UA is kind of
Speaker 4: being more tested now than back then. But I think
Speaker 4: they've done a really good job of creating long term
Speaker 4: incentives this time around for people to stick around. Things
Speaker 4: like the Golden Visa, which is very similar to the
Speaker 4: EB five visa or the Trump Gold Card. It's kind
Speaker 4: of modeled on the Golden Visa, things like property rights,
Speaker 4: a more robust legal system. They've put all those things together. Now,
Speaker 4: if people do leave, what does that look like? First
Speaker 4: of all, real estate prices. People have been talking about
Speaker 4: a correction in the UA for a long time. If
Speaker 4: people start leaving, that is certainly going to be on
Speaker 4: the table, right And then the kind of the back
Speaker 4: infrastructure of financing a lot of these projects will be tested,
Speaker 4: the bond market, the Islamic financing market, et cetera. That's
Speaker 4: when things will start getting shaky. And again, one of
Speaker 4: the things.
Speaker 5: That is.
Speaker 4: Dubai has got a very, very very robust private market's
Speaker 4: economy now, but at some point or the other there
Speaker 4: is some government involvement in that, right, either by backstopping
Speaker 4: or being an LP and many things, etc. I don't know,
Speaker 4: I think, Tracy, I don't know where AMARS stands now,
Speaker 4: but at some point it was very much an arm
Speaker 4: of the state.
Speaker 2: Now, yeah, yes, I think that's fair.
Speaker 4: Yeah, so I think we'll be if we do see
Speaker 4: an actual exodus or an outflux, then there's a lot
Speaker 4: of questions to be asked about the stability of that market.
Speaker 4: And again, this is an absolutely insane market. So things
Speaker 4: have been selling off plan. There are stories out there
Speaker 4: about eight hundred million dollars worth of product selling in
Speaker 4: a single day. Right, that is a momentum driven like
Speaker 4: I need to get in while this market is still
Speaker 4: semi affordable, and by semi affordable, I think one of
Speaker 4: our the reason we connected in the first place is
Speaker 4: that you have to look at the ultra luxury market
Speaker 4: in the world as a collection of properties as opposed
Speaker 4: to compare them to local comps. Right, and at that level,
Speaker 4: if you look at it from that level, the Dubai,
Speaker 4: Weleve et cetera. Are still a relative bargain, right, So
Speaker 4: this all really is contingent on it maintaining its demand
Speaker 4: from very wealthy people, and safety is obviously that that
Speaker 4: X factor and all of that.
Speaker 3: You could make the argument that the UAE has the
Speaker 3: best functioning government in the world. And I think this
Speaker 3: is very important because, particularly in the West, that is
Speaker 3: not a comment that will be uttered in a million
Speaker 3: years in the United States, in the UK and France,
Speaker 3: in Europe, et cetera. I mean, the idea of a
Speaker 3: functioning government feels almost like what's that? Those words don't
Speaker 3: even go together anymore. Could you explain a little bit,
Speaker 3: you know, how that works. We often think that governments,
Speaker 3: particularly non democracies, are riven with corruption and have no
Speaker 3: accountability and so forth, and there are all kinds of
Speaker 3: reasons on paper to think that that would be impossible.
Speaker 3: How would you describe the sort of organizing principle of
Speaker 3: the government such that it doesn't it doesn't collapse whatever
Speaker 3: it is. What is it about how it's structured where
Speaker 3: actually public sector is taken very seriously and effective.
Speaker 5: Okay, it's a heavy question, but let's try. Right.
Speaker 4: There's two elements to this. One is a functioning society,
Speaker 4: in which things just seem to work, and the UE
Speaker 4: government has done, probably again an incredible job of doing that.
Speaker 4: You want to set up a business, you can do it.
Speaker 4: You want to make money, it's yours. No one takes
Speaker 4: it away from you. This has always been true.
Speaker 5: Et cetera.
Speaker 4: Right, if a crime happens, it is handled very quickly.
Speaker 4: That's one part of it, right, that's the actual tangible
Speaker 4: on the ground. They build roads all the time. You
Speaker 4: can see the progress. There's never a pothole inside. You
Speaker 4: will never see any vagrants, you will never see any
Speaker 4: violent crime, et cetera. So that is the as a
Speaker 4: person living here that makes half a million dollars a
Speaker 4: year and expects a certain quality of life, the government
Speaker 4: is giving me that quality of life. That's one part
Speaker 4: of it. The other part of it is a little
Speaker 4: more state crafty, right, which is the illusion that is
Speaker 4: created that this is the best government in the world,
Speaker 4: the illusion that is created that this is the safest
Speaker 4: place in the world, and then is repeated and amplified
Speaker 4: by everyone who lives there, because that's part of the deal.
Speaker 5: Right, you go there.
Speaker 4: Anyone, and again they do an incredible job of creating
Speaker 4: that society everyone from athletes to actors to footballers, et cetera,
Speaker 4: will throw in a plug for Dubai randomly, seemingly randomly
Speaker 4: in any conversation they have, And I think part of
Speaker 4: this is because there's gratitude, and part of it is
Speaker 4: because it seems like that's part of the deal.
Speaker 2: Let's go back to private credit for a second, because
Speaker 2: this is one of the reasons we really wanted to
Speaker 2: talk to you, because a lot of that money, you know,
Speaker 2: direct lending, has found its way into your world in
Speaker 2: various ways. It's hard to gauge how active or how
Speaker 2: big the GCC presence in that market has been, but
Speaker 2: what's your sense of it.
Speaker 4: I think it's it's been fairly large and only growing.
Speaker 4: And I think a good example to look at as
Speaker 4: something like Mabadla, Right. Mabudla is one of the more prominent.
Speaker 4: I think it's three hundred and fifty billion dollars ish aum,
Speaker 4: but is incredibly aggressive in the credit space. They recently
Speaker 4: did a full takeover Fortress, which is a big player
Speaker 4: in commercial real estate credit. They have been and I
Speaker 4: think we talked about this in your in your newsletter
Speaker 4: as well. Abdew in general has been getting very much
Speaker 4: into the debt game, not only directly by purchasing companies
Speaker 4: like Fortress, but also by being an anchor LP in
Speaker 4: a lot of the private credit funds that we see.
Speaker 5: Right, So.
Speaker 4: Blackrock and I think this all comes back to a
Speaker 4: trend that we like to call aum gobbling. Right, So
Speaker 4: you cannot there's no such thing as a good mid
Speaker 4: sized fund anymore. Everyone's got to be Brookefield, or everyone's
Speaker 4: got to be Blackstone, and so Sixth Street. I think Fortress,
Speaker 4: this co CEO made the statement, which is like, for
Speaker 4: us to stay relevant, we need to keep growing assets.
Speaker 4: It's not enough to run the book that.
Speaker 5: We have and do it well. We just have to
Speaker 5: keep gobbling up other parts of things.
Speaker 4: So if you had a dedicated fund, let's say you
Speaker 4: had a senior housing and affordable housing fund, and you're
Speaker 4: doing very well, you have two billion dollars you're running,
Speaker 4: you're incredibly good at that. Eventually the call comes in
Speaker 4: from a Fortress or a Sixth Street, etc.
Speaker 5: And you're picked up.
Speaker 4: To make these kind of things happen, you need an
Speaker 4: incredible amount of liquidity slash capital, and all roads lead
Speaker 4: to able when it comes to that kind of thing right.
Speaker 4: So Bloomberg had an amazing article about how to meet
Speaker 4: the World's one and a half trillion dollar man. I
Speaker 4: think it was called, and it was about Shike Tachnun
Speaker 4: and his entire web of companies and amazing that.
Speaker 5: Kind of figure.
Speaker 4: And once you're in with someone like the Shee or
Speaker 4: one of his deputies, you have access to kind of
Speaker 4: unlimited amount of capital. Larry Fink is in what I
Speaker 4: would venture to guess every month, Ray Daallyio. There's that
Speaker 4: iconic shot of him and the Condura sitting there at
Speaker 4: the table with all the movers and shakers. They have
Speaker 4: sort of infiltrated every aspect of private credit when it
Speaker 4: comes to real estate. The name keeps coming up, and
Speaker 4: if the name doesn't come up directly, it comes up
Speaker 4: as a backer of a lot of these.
Speaker 5: Companies that we talked about.
Speaker 4: AI Infrastructure PIF, I believe is the anchor investor in
Speaker 4: Blackstone I'm sorry, and PIF is the anchor investor in
Speaker 4: Blackstone's Infrastructure Fund, which is their quote lends into the
Speaker 4: AI boom. MGX is a partner in this really stop
Speaker 4: and start government project the US government called Stargate with
Speaker 4: open Ai etc. It's had a bit of a mixed run.
Speaker 4: But MGX is an anchor investor in that. MGX is
Speaker 4: also an investor with Microsoft and Blackrock in that giant
Speaker 4: AI venture. Right, so there's just the odds that UBW
Speaker 4: or one of the Middle Easterns is involved when it
Speaker 4: comes to these big infrastructure bets.
Speaker 5: Is very high.
Speaker 3: The Golf States didn't ask for this war, at least
Speaker 3: the vast majority talk to us about sort of regional politics.
Speaker 3: And obviously, you know, we know that it may have
Speaker 3: been his first foreign visit. Right taking the presidency, Trump
Speaker 3: quickly went to the golf and you know even at
Speaker 3: the sword dance.
Speaker 5: The iconic sword dance thing.
Speaker 3: Oh yeah, the orb yes, yeah, but still the same
Speaker 3: same deal. You get this impression that like Trump has
Speaker 3: golf tastes, oh right.
Speaker 4: That I mean even even before all this, right, he
Speaker 4: his brand was actually so the way that people in
Speaker 4: New York think of the Trump brand is tacky luxury,
Speaker 4: tacky luxury.
Speaker 5: Right in the golf, it's thought of his luxury luxury.
Speaker 4: Yeah right, It's it's always been there. There's sympatico in
Speaker 4: so many ways. Uh, from kind of having incredible control
Speaker 4: over their societies, which is something that our president has
Speaker 4: has always kind of aspired to, right, and some would
Speaker 4: say he's doing pretty well on that front. But there's
Speaker 4: always been that kind of sympatico between Donald Trump and
Speaker 4: the golf leaders. Uh, there has been friction on the
Speaker 4: front recently, though.
Speaker 3: Well, this is what I'm trying, This is what I'm
Speaker 3: getting at, Like, could that change again, massive damage to
Speaker 3: their domestic economies for a war that they certainly didn't
Speaker 3: ask for. Is there any prospect of in the wake
Speaker 3: of this, whenever that ends, some slightly new trajectory between
Speaker 3: the US and the Gulf.
Speaker 4: Impossible to tell if the war drags on, but for now,
Speaker 4: I don't think so. I think they've been pretty in
Speaker 4: lockstep with pretty in lockstep with the US's policy on this. Right,
Speaker 4: There's there's been reports, and this is above my pay
Speaker 4: grade and above my beat, but there's been reports that
Speaker 4: Saudi was very much pushing for this this.
Speaker 3: Yeah, as the one exception, you sort of get the
Speaker 3: impression that Saudi was also one of.
Speaker 4: Right, and then then the country over correct. The GCC
Speaker 4: countries often don't see to I, especially on Iran. Right,
Speaker 4: there's there's a fair amount of friction between the two powerhouses,
Speaker 4: the UA and Saudi arab on a lot.
Speaker 5: Of geopolitical issues.
Speaker 4: They're they're brothers, but kind of not right as well,
Speaker 4: and there's a lot of rivalry in general for capital
Speaker 4: and the joke I think even when Tracy lived there
Speaker 4: was probably you you lived in Dubai and you would
Speaker 4: go consultant WW sorry, in Saudi for four days a week.
Speaker 4: That's not so much the thing anymore. Sally's been pushing
Speaker 4: people to live there and you know, upon threat of
Speaker 4: losing business, et cetera. But I think back to this
Speaker 4: fracture or potential fracture between the US government and the GCC.
Speaker 4: We haven't seen anything from government level friction yet. We
Speaker 4: have seen, though, a couple of very influential businessmen, Kalfelptur,
Speaker 4: who was a big developer player in the in the UAE,
Speaker 4: had had put out a letter kind of excoriating Trump
Speaker 4: for starting this conflict at the best of at the
Speaker 4: behest of Israel, right, and this was a this was
Speaker 4: a big, big deal for a statesman level businessman in
Speaker 4: the UA to talk about this. The letter was at
Speaker 4: some point redacted, right, and then and then Hoaptor sat
Speaker 4: down with the Washington Post and did this incredibly entertaining
Speaker 4: interview about you know, it's more about kind of the
Speaker 4: cohesion for the long term, et cetera. It doesn't agree
Speaker 4: with the war, but I think in general pissing off
Speaker 4: your American allies at this point is not good, et cetera,
Speaker 4: et cetera. So we have seen some of that. Now again, Joe,
Speaker 4: your question is really about how long this lasts. For now,
Speaker 4: they can kind of keep things going. But if this
Speaker 4: is a month's long conflict or longer, God forbid, then
Speaker 4: then there might be a little bit more of a fracture.
Speaker 5: Right.
Speaker 2: Just on that note, what are you watching in terms of,
Speaker 2: I guess, gauging the overall health of the Dubai property market,
Speaker 2: but also the overall health or circulation of that oil
Speaker 2: money in the wider property space.
Speaker 4: So in the first one about the overall health of
Speaker 4: the Dubai property market, I think one thing you want
Speaker 4: to pay attention to is if any planned or announced projects,
Speaker 4: if they are kind of continuing on the timeline that
Speaker 4: they talked about. Again, a lot of these depend kind
Speaker 4: of like Miami's economy on pre sales, right, they get
Speaker 4: commitments and then they go build the thing and the views.
Speaker 4: I mean, these things get more and more fantastical. Tracy,
Speaker 4: this is very much for you.
Speaker 5: There is one. I'm gonna pull it up. Hang on.
Speaker 4: There's a tower that's coming up which is called Aiwa,
Speaker 4: which is twenty one story resident a twenty one story
Speaker 4: residential tower designed to look like the Hallelujah Mountains from
Speaker 4: the Avatar movies.
Speaker 2: All right, that's going Why do you say that once
Speaker 2: for me?
Speaker 4: Because you love this stuff, You've always won I do.
Speaker 2: I do, like I wouldn't want to live there, but
Speaker 2: I like hearing about it for sure.
Speaker 4: There are doing a lot of interesting innovations with engineering
Speaker 4: and design. They're doing Manhattan like skinny super talls now
Speaker 4: as well. So they have a tower coming up that's
Speaker 4: a seventeen to one ratio, which is the kind of
Speaker 4: skinny pencil tower that you would see on Billionaire's row.
Speaker 4: But on billionaire's row land is such a crazy constraint
Speaker 4: in Dubai. It hasn't really been until Yeah, that's.
Speaker 2: Wild to think that they're doing that now, that like,
Speaker 2: that's that's how far it's gone.
Speaker 4: Well, I think it's I think it's a little bit
Speaker 4: of both. I think it is one a financial constraint
Speaker 4: that they're trying to solve for and the other like, hey,
Speaker 4: if this is you know, this is all the rage
Speaker 4: in New York, then why not do it here with
Speaker 4: with the government or with the sorry with the UE.
Speaker 4: It's hard to tell when it's being done for sort
Speaker 4: of financial prudence and when it's being done because someone
Speaker 4: else somewhere else did it.
Speaker 3: What has been the strategy I mean, okay, the ultra
Speaker 3: rich going moving to moving to the golf, moving to
Speaker 3: the GCC states. How active is the push buy to
Speaker 3: get just the merely rich or the sort of you know,
Speaker 3: as they would say, the mass affluent, et cetera. Has
Speaker 3: there been a push to sort of like make more
Speaker 3: people around the world aware of the fact that they
Speaker 3: can move to Dubai and cut their tax bill and
Speaker 3: live a much more comfortable life and better weather.
Speaker 4: I would say it's almost a strategic imperative of the government.
Speaker 4: It is such a big initiative to get not just
Speaker 4: your Ray Dalios of the world, which is much more
Speaker 4: of a personal relationship banking relationship, but to get those
Speaker 4: families that are down for this lifestyle to come over
Speaker 4: when you enter the Dubai Airport now, which is one
Speaker 4: of the busiest airports in the world, you will see
Speaker 4: these giant, absolutely giant interactive ads about all ethnicities used
Speaker 4: to see typically you would see white people in these ads.
Speaker 4: Right now, I just went a couple months ago or
Speaker 4: a month ago. You're seeing Usbeks, You're seeing Canadians, you know,
Speaker 4: and it says specifically Canadians, this is your Dubai usbex,
Speaker 4: this is your Dubai, et cetera. They are pushing this
Speaker 4: beyond and I wouldn't be surprised if there's like an
Speaker 4: arm of the government dedicated just to what you're talking
Speaker 4: about and just.
Speaker 2: Going back to thinking about, you know, warning signs of
Speaker 2: trouble ahead. What are you looking for in that global
Speaker 2: capital space.
Speaker 4: A lot of these conversations happen behind closed doors, but
Speaker 4: I think one of the things that we're doing is
Speaker 4: talking to fund managers and seeing if there's any kind
Speaker 4: of hesitance expressed by these LPs right whether it's in
Speaker 4: snaking conversations or backing funds. That's that's probably where you're
Speaker 4: going to see the most pressure, which is not now,
Speaker 4: and in fundraising, not now is as good as no right.
Speaker 4: So if you start seeing those conversations where God knows
Speaker 4: Brookfield is going to raise another distressed credit fund, and
Speaker 4: the conversations with Lubble Ubby or with Saudi, etc. Get
Speaker 4: a little bit more, a little bit more wishy washy,
Speaker 4: that is something definitely to look out for, right, because
Speaker 4: without without ongoing constant moment him, this doesn't work and
Speaker 4: the scale of capital needed. I think a great example
Speaker 4: is that of God. If that electronic arts LBO deal
Speaker 4: was going on now, the EA Sports formerly EA Sports
Speaker 4: Electronic Arts. It was a fifty five billion dollar LBO,
Speaker 4: which I believe is the largest in history. It was
Speaker 4: broken randomly by Jared Frickin. Kushner right and PIF wrote
Speaker 4: a twenty nine billion dollar equity check into this transaction
Speaker 4: to take I think majority control of EA. Would that
Speaker 4: deal have happened in this environment, I venture to say
Speaker 4: it would have taken a little bit long down.
Speaker 2: All right, Hitten, We're going to have to leave it there.
Speaker 2: But this has been a fantastic conversation. Thank you so
Speaker 2: much for coming back from myos.
Speaker 4: Really appreciate it, my pleasure.
Speaker 5: Thank you, Tracy, Thanks Joe, Joe.
Speaker 2: Obviously a lot that stood out from that conversation. But
Speaker 2: one of the things I was thinking was that sort
Speaker 2: of flywheel dynamic that Hitten was talking about towards the end,
Speaker 2: and also just the interrelatedness of all of this. So
Speaker 2: I think that one of the difficulties is if you're
Speaker 2: a sovereign wealth fund in Abu Dhabi or Dubai at
Speaker 2: the moment, and you've invested a lot in private credit,
Speaker 2: a lot in tech those areas, even independently of what's
Speaker 2: happening in the golf, there are concerns around that at
Speaker 2: the moment, right, And then if you think that, well,
Speaker 2: maybe the UAE won't be able to sell as much
Speaker 2: oil as it has in the past, or maybe some
Speaker 2: of that tax and tourism revenue is going to start
Speaker 2: going down because there are drone strikes in various cities,
Speaker 2: that's I think where you start to get the potential
Speaker 2: for some real weakness.
Speaker 3: Yeah, I mean you just think, like, how much does
Speaker 3: it really take to change the trajectory, and does it
Speaker 3: you know, could it be as simple as a meaningful
Speaker 3: down shift. I'd say the war ends fairly soon, but
Speaker 3: you know what if you had a year or two
Speaker 3: in the wake of it, where there was a significant
Speaker 3: decrease in the amount of capital flowing into the region
Speaker 3: relative to what's expected. What are the ripple effects of that?
Speaker 3: And again, you know, it's hard to get really good
Speaker 3: information from what you said in the beginning, and I
Speaker 3: think this is really key. I do think it's hard
Speaker 3: to tell from the outside world. Like you see plenty
Speaker 3: of pictures where it all sort of looks the same,
Speaker 3: but you don't really know about the truth of that.
Speaker 3: And I think right now, in this moment, there are
Speaker 3: probably plenty of people it's like, you know what, I
Speaker 3: like the idea of moving from England, and I think
Speaker 3: it's really big. It's it's actually like our government doesn't
Speaker 3: pay attention to anything big going on domestically or whatever.
Speaker 3: I know that this is a very big part of
Speaker 3: UK politics right now, the flight of the well off
Speaker 3: who they're already under a tremendous fiscal strain. And if
Speaker 3: you have money and you don't like the fact that
Speaker 3: half of your money is going to the government and
Speaker 3: all of these sort of pathologies and dysfunctions that we
Speaker 3: see in the UK, it has become an extremely popular
Speaker 3: option to just DeCamp to Dubai.
Speaker 2: But this is the other thing if you're targeting, if
Speaker 2: you're trying to attract an extremely wealthy mobile population into
Speaker 2: your city. The converse of that is that they can
Speaker 2: leave right like if for whatever reason they don't feel safe,
Speaker 2: or they just think, like, you know what, now's the
Speaker 2: time for a really long vacation somewhere else in the world,
Speaker 2: they can go.
Speaker 3: And I really think that again, you know this meme
Speaker 3: the globe, there's going to be a point where there's
Speaker 3: this global permanent underclass, which is a phrase, and I
Speaker 3: do feel as though Dubai is ground zero for this
Speaker 3: phenomenon where you have an extremely rich, well off part
Speaker 3: of the society that has access to every luxury experience
Speaker 3: that you could possibly think of, and then there's this
Speaker 3: layer of people that will never ascend to that despite
Speaker 3: living in the same country. It does not seem like
Speaker 3: a place where you could quote work your way up.
Speaker 2: Yeah, I have to say, you know, Hitten mentioned also
Speaker 2: the sort of like UAE legends, like the Horatio Algis
Speaker 2: of the UAE. I still remember A big one was
Speaker 2: this Indian guy called b. R.
Speaker 3: Shetty.
Speaker 2: Does that name ring about?
Speaker 5: Oh?
Speaker 2: So he built this huge medical company called NMC and
Speaker 2: then it turned out to be a massive fraud. But
Speaker 2: he was like the guy that people would point to
Speaker 2: as you know, you can make it here anyway, we
Speaker 2: can keep going on.
Speaker 3: Position is just the past. Yeah, I love talking to him.
Speaker 2: All right, shall we leave it there.
Speaker 3: Let's leave it there.
Speaker 2: This has been another episode of the Odd Thoughts podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.
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