Hey there, I'm Joe Wisenthal and I'm Tracy Allaway. We wanted to let you know that if you're a fan of the show, there's more to Odd Lots than just the podcast.
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Hello and welcome to another episode of the Odd Lots podcast.
I'm Joe Wisenthal and I'm Tracy Alloway.
Tracy, we did that episode recently on the big potential development in northern Egypt. Yes, and I'm sort of fascinated as a topic by these like huge, gleaming megacities, many of them being built in the Middle East, tons of money pouring into these sort of just absolutely jaw dropping skyscrapers, luxury buildings, things like that.
Yeah, I think we spoke a little bit about it on that episode, but it's sort of the Dubai blueprint that seems to be being copied and multiplied across the Middle East, and the question that always comes up is, well, how big can these markets actually be? Like how much demand is there for multimillion dollar properties in tax havens? And it seems like the answer is more than you would think.
These cities are kind of weird to me because I never get the impression that And you lived in Abu Dhabi, so you could correct me if I'm wrong, But does it seem like there's like that much going on? Even when I see like photos of people there, like friends stopping, They're like, it always looks a little quiet. Am I wrong?
The way I used to describe living in Abu Dhabi? And I should just add a massive caveat here, which is I left in twenty eighteen, and my understanding is that since then Dubai has been booming. In particular, there's been a lot of immigration from Russia, lots of people moving there as part of the tech industry as well. But the way I used to describe living in Abu Dhabi was it was kind of like living in the suburbs of Texas in the sense that it's very hot.
Everyone drives everywhere. You don't really see people walking around on the streets that much, and you spend a lot of time at the shopping mall or the swimming pool.
It doesn't sound so bad. I'd take it.
It's a nice lifestyle. But yes, there isn't a ton going on, although they have made efforts to change that. They've opened museums and things like that.
Yeah. No, But to the point though, like when you see the price tags on what a penthouse in one of these buildings are going for, or just you know how much money is being developed or to some of these buildings, Like it's absolutely eye popping.
You see these headlines and it's not just like one apartment sold for one hundred million, it's like five apartments sold for one hundred million. And I think that's the surprising thing. The other thing that's been happening. I don't know if you saw that in Dubai they opened that Mercedes Benz tower. Did you see that? No, I'm trying to This is a difficult topic for me because I think my personal taste veers so far away from this direction. I'm not even gonna mention the fact that I obviously
couldn't afford any of these properties. But it's an interesting one. I don't know. It's kind of gleaming. It's got lots of lights. If you look at photos of the interior, it's very modern. It's very clean and light, and it has magnificent views of the Dubai Skyline. I'm not entirely sure I would want to live there, but again it's a moot point because there's no way that I would ever be able to afford it.
It definitely now, I looked it up and it definitely looks a lot different than what I imagined where I've never been. But what I imagine your place out in the middle of nowhere in Connecticut.
Probably the polar opposite.
Okay. I want to learn more about this sort of this world of real estate for the ultra rich around the world, and some of these cities and the business behind these extraordinary gleaming towers. Some of them are a nice cone shape, some of them look a little bit like Jenga towers of some sort. I'm really excited. We do have the perfect guest. We're going to be speaking to Hitten some Tani. Here's the founder of ten thirty one.
It's a new real estate media company, former editorial director at the Real Deal, and knows real estate really well, and people who know real estate say to read hit tend. So thank you so much for coming on odlats.
My pleasure, guys, thanks for having me.
What's going on? What's the deal with all these big towers.
The way to think about this market is, it's not really a local market anymore. I think historically when we think about luxury prices in New York, in Dubai and Aspen, we sort of compare them locally. So I haven't opened an economics textbook in a long time, but there used to be this concept of local maximums that no longer applies. The markets that the very very top I'm not talking about what the well healed would buy, but what the well healed sort of many many echelons higher than that
would buy has blended. It's become a global little I call it the parallel universe of this luxury market.
Okay, so give us some examples of the numbers around this particular segment of luxury real estate, because again, we're not talking about like an apartment in New York that maybe costs two million dollars. We're talking yeah, we're talking about apartments that cost like fifty one hundred million. What have we seen recently in terms of transactions.
So the Ali Baba co founder bought a penhouse in two twenty Central Park South on Billionaire's Row for one hundred and ninety million. That was already an apartment that a hedge funder, Daniel Oak, had paid ninety three million for just a year and change ago. So there is you can't really that's one hundred percent premium on a pad like that. Larry Ellison in Florida had bought a Florida estate for one hundred and seventy odd million and
the previous buyer had paid ninety four million. Talking about these numbers that are just that defy reality and you can't track it. You can't really map it and say, you know, it's growing ten percent a year. We're talking about a price appreciation of fifty to seventy five to more than one hundred percent within a year. Sometimes, why is there so there's been It's a hard thing to track because there isn't really any great data that exists
in this global sphere. But it seems like there's been a new kind of feudalism that's happening, which is global billionaires are now untethered to places like New York, and they're looking to portfolio shops. So they're thinking more about their purchases in terms of Okay, I'm a captain of the universe, right, and I want to have my pad in New York where I take my meetings. I want to have my estate in Florida. I also want my
ski shale and aspen. And guess what I'm willing to pay Not just a little more than the local king of the hill, I'm willing to pay double. So I don't really have competition in that market.
So who's developing these properties? Are there ultra luxury specialists or is it you know, the existing sort of normal luxury real estate developers are just building more specialized apartments. Who's actually doing it?
Yeah, So one thing about developers as sort of a species is they're really really good at rejigging their portfolios to cater to current to man. So in many cases, developers who who are building, you know, twenty million dollar apartments are saying, you know, why not go for the fifteen million dollar apartment? And in some cases there is a one sort of a unique class of spec home developer who was saying Okay, there's x amount of billionaires in the world, there's x amount of the kind of
product that they want, let me go and build. So there's a guy called Todd Glazier out of Palm Beach and he just built. He bought an island. It's called Tarpin Island. It's the only private island in Palm Beach. He paid eighty five million for the property and then he listed it at one hundred and eighty five million, after obviously adding tons of bells and whistles. We're talking about thirteen hundred feet of frontage on the water.
What are the profit margins like on this kind of property, because I have to imagine at some point there there's a ceiling of how much it would cost to build these things, and so if you're just selling it for more and more money, presumably the margin is getting fatter and fatter, and that's part of what would be driving this activity. But again, I don't know. I'm happy if
my ceiling isn't falling down. So there are probably some very expensive options out there for multimillionaires that can boost the price or the cost of building. But I have to imagine the margins are part of what's driving this.
The margins are incredible, right, you could make up to sixty seventy million dollars if you do it right. But you have to take into account the incredible risk. You're carrying a spec home. You're hoping that there's a buyer that's out there for it. You're paying a ton of money to buy the property, and there's you know, carrying costs, financing costs, construction costs, and we have seen some pretty
bad flameouts. Los Angeles is a great example of this, where there was a guy called Nil Niami who was trying to sell a home for five hundred million dollars and he called it the one and foreclosure upon foreclosure, upon foreclosure. I think he's lost pretty much all his empire.
Tracy, did you ever watch that documentary The Queen of Versailles?
Yes, that was great. That was at the time America's or the world's most expensive house. Is that right?
Yeah? I thought of all the various films and documentaries that were sort of related to the financial crisis, I actually thought that that was the best one because it really got into the financing chain behind this guy who is trying to build like a half a billion dollar home in Florida, and how like changing fortunes quickly changed his ability and I went Bagram. Do you know what happened with that one?
I do not do not with that one. But I can say that the more success a developer has in a space like this, lenders start to think of it as an asset class. So if someone like a Todd is, you know, building a home making a forty percent markup, et cetera, then he might find a conventional lender. He may not need that wildcatting lender anymore. He might be able to find a conventional lender or partners to fund these kind of deals because he could show that there's
to create an asset class. It's very difficult, but if you do it, and you're the first one or one a few, you can make a lot of money.
If I think of like I want to buy a nice condo here in New York City. I like my apartment. You know, it has a decent amount of space, has two bathrooms. It seems it's enough for me. And then I'm you know, I have friends who have like much nicer places than some of them, like have a backyard, and you know that seems nice too. But when we're talking about like the fifty million dollar property, what's in there and what is like if you want to sell to that market, what does it have to have?
Well, size is very important, right so there generally a lot of these homes will be if you're talking apartments, we're looking at five thousand and seven thousand square feet of indoor space, a couple thousand square feet of exterior space as well. Private elevators are typically a given, and then depending on the market, it can go completely crazy.
Sare go, what's the craziest Just tell us some craziestrea.
Yeah, some markets of helipads, for example, some homes of helipads. Some of them are not operational helipads, but still a billionaire wants a helipad. Sometimes waterfront living is key and what tends to happen with some of these billionaires. And I think this portfolio shopping point is very important. Larry Allison Malibu, he made his first purchase back in the I think in the late nineties or early two thousands.
Since then he's bought thirty five parcels. So when you're when you're when you're spending money like that on luxury real estate, you have the ability to not only influence the homes, but the entire landscape of the area. So he essentially is responsible for changing the retail makeup of Malibu as well. So don't think just about the homes, think completely about the sort of the the area as well. That's important.
Oh, that's interesting. So you can make an investment if you're a billionaire in a particular area, and then kind of develop that area and presumably make more money on your investment.
Absolutely, and Ken Griffin what he's doing in Miami is probably a good example of this, right. He has been buying up well, he said it was for his mom, but it's probably for him. He's been buying up trophy home after trophy home after trophy home. Now pool together that portfolio. The thing about kings of the hill, and you guys know this better than I do, is that you're a king of the hill until the next king of the hill shows up, right, So Ken Griffin was
the alpha citizen of Miami. Guess who showed up recently? Jeff Bezos. Oh, Jeff Bezos just dropped. I think it was ninety million yesterday. I was telling you Joe on an Indian Creek mansion, which is his third purchase in that area.
From the perspective of the billionaire, these kings of the universe, what is the appeal of Like I could see having a place in Miami, in a place in Dubai, and a place in London, in the place in New York, in a place in Malibu, in a place and why three in Miami.
I think a lot about it as the new feudalism. Right, You're trying to build this enormous land bank in some of the world's most coveted markets. There's also, I mean, we can't really deny this. There is some element of Schnitzel measuring here as well. Right, there has to be a little bit of that.
I'm sorry Schnitzels.
I don't know how censored Bloomberg gets. That's what I went. I think there is an element of one upping the other person here. So if Ken Griffin goes and buys a sixty million dollar home, guess what you're going to see someone like Bezos come in. I think Dubai is a great example of this, if I could get into
one specifically. Yah, By the way I grew up there so plenty of things we could talk about later, Mokashambani, Indian tycoon, comes in and he buys a home for I believe it was eighty million dollars, sets a record. This is Palm Jamera, which is that man made island off the coast trace. I'm sure you've probably been there. So he pays eighty million, smashes the record by a factor of two. Some mystery buyer comes in a few months later and pays eighty three million for a home
also on Palm Jamera. Now someone like Ambani, that doesn't really sit well with them, and so he comes back a few months later and he pays one hundred and sixty three million for another home on Palm Jamera. So that's why I think it's it's not always investment. It might just be like, hey, I am I am the guy.
Here, since you brought up Palm Jamera. I mean this is like the original almost extreme luxury development that and what was the one that was shaped like the world.
Yeah, it was just called the World the world that turned into like the Ponzi of all possible.
Yeah, so this is exactly what I was going to ask. So, I mean Palm Jamia, there were eyewatering prices being paid for those properties, same thing for the world, but then it all kind of collapsed. There was a big bust in those luxury property markets, at least in Jubai, and then it kind of came back. Are these markets still cyclical or have we kind of gone beyond that level?
It's very hard to tell. It's a great question. It's very hard to tell in a market like Miami or in Dubai. Are we just looking at a wildcatting situation or is there something else one statistic that might give us some context here. Pre twenty twenty one, there were four sales of twenty five million in in any given year in Dubai. In twenty twenty three we had fifty six, Right, So who are we, as snobby New Yorkers to think?
Is this a market that has legs or not? I think the Manhattan market was responsible for the bulk of ten million dollars plus sales for the longest time. It's hard to crunch the numbers because again there is no repository of this, but I would imagine that ratio has gone way down. And to your point, I think in these luxury markets there is a very strong sense that without rule of law, without some recourse in Dubai or the UA in general has had pretty spotty sort of
issues around credit and debt and all of that. I think the government there too, its credit has been taking some really strong steps to make sure, Hey, this should function like any other market, the courts and there should be recourse and all of that. So I think with that, there will always be a few scams like the world. But to your point about Palm, even though the market collapsed for a while, I'll give you a personal anecdote.
An uncle of mine had bought a home on Palm for one point five million way back, something like one point five million dollars or one and change. He recently moved out of his own house to rent a villa somewhere else because the Russian is offering him one third of his purchase price in rent wow a year. So that kind of gives you a little bit.
It's a great cap rate right there.
There you go.
But actually, I'm glad you brought up rule of law because this is where I want to go next, which is that like, look, some places are just really nice, like Aspen. I've never been there, but I'm sure if you like to ski, and I'm sure, it's very nice. I like Miami. It's very nice by some measures in
New York obviously the greatest city in the world. But you know, when you think about extreme wealth, particularly in certain countries that don't have great rule of law, or where perhaps if you're out of favor with the leader, you can risk confiscation. So you know, maybe alter rich people in China or alterra rich people in Russia, et cetera. One way that they might want to sort of prote some of their wealth to put money in a foreign bank account. But there are limits to that obviously, and
that's not always trivially easy. How much is this about or how much are some of these flows? Essentially, I don't know rule of law arbitrage, where it's like how much can you get your wealth into a system that more or less has predictable rules.
Real estate has historically been a very lax kyc type market, right, So to your point, I think capital flight is definitely a big thing. We saw the Dubai property market just absolutely take off once the war in Ukraine happened. A lot of Russians, and I would say the way I think of it as Russian adjacent Kazakhstan, etc. A lot of that money flowed into Dubai because the Yuei took a very hands off approach to judging anyone in this war,
So that turned out really well. The earlier example we talked about, which was the Ali Baba co founder, if you remember the other guy, he sort of went away for a while, Jack Ma, Yeah, right, he kind of not disappeared, but he was off. He fell out, he did disappear. Yeah, So I don't I'm not in Joe size head, but I'd imagined that part of the reason that he's willing to pay double what was already in crazy price at two twenty Central Park South, A lot of that is predicated on this tracy.
One thing that makes me wonder is whether the high price itself becomes part of the selling point, because the higher the price, the more capacity the market has to take off some of your liquid wealth.
Oh yeah, absolutely, I think that's part of it. And it's funny. This conversation just jogged my memory. Do you guys remember rf knock fee from a braage?
It's a key mad Yeah.
So, Abroge used to be one of the world's biggest private equity funds. With specialism in emerging markets based in Dubai, and basically they went bust. And r If, I think is still being prosecuted for fraud and is being extradited to the US, or was at some point. But when all of that was going down, I was in Nabu Dhabi and I was writing a lot about this, and it turned out that his house in Dubai. RF's house was on like the same block as a bunch of
like dictators houses they had all moved. I can't remember the specific ones, but think African dictators, and they had all bought properties in this one particular neighborhood for the exact presumably reasons that we were talking about.
Right.
Former Prime Minister of Pakistan, Pervesbashariff also at a house there.
Yeah, So the other thing I wanted to ask is, you know, in the intro I mentioned that Mercedes Benz Tower in Dubai and this seems to be becoming more of a thing as well, these idea of branded luxury real estate properties. And I have to say, when I think branded property, the thing I usually think of is the Margaritaville retirement communities in like Florida. But this is a whole other level, and it seems to be becoming more of a thing. What's going on there?
So there are I think Jesshi, of two hundred active branded condo projects in the world, forty percent of them are in North America, and then they're dispersed in places like Dubai, et cetera. What happens I believe it's connected to the initial point I made about this dispersion of global wealth. And so a billionaire who is from New York understands fifty seventh Street. They wouldn't understand what Palm Jamera is. They might understand what Cavali is, or Mercedes
Bench or Bugati. So there is this coalescing around brands that are already known, and you're piggybacking off a luxury brand to create both legitimacy and exclusivity.
That's super interesting. So the Mercedes brand becomes away, It's like, well, I know, Mercedes makes good stuff. They take care of their brand pretty well. They're probably not going to slap their name on some garbage project. What is the role of the brand though, as in the construction of it, did they have input, do they have designed It's purely a licensing deal, but they probably do a lot of vetting, like talk to us about the business from the brand side.
Fair enough, I will say say, it is not a coincidence that a lot of these branded projects are in markets where there is a history of pretty sloppy construction and defects and lawsuits and all of that. Right, so this is kind of the way to say, hey, we're different from the other guys. But so the brand's role. I was talking to a couple of developers about this in one open the kimono on how these deals actually work, and he said, some brands will get really fastidious about
the facade. They care about what it looks like on camera, in the artworks and marketing materials, and they will weigh in. They'll sit with your architect, they'll make you fly to Milan or Stuttguard or wherever, and they'll really weigh in on this stuff. Others are much more obsessed with the interior.
So brand, bride brand, It really depends on that. But in general, the developer is paying between one and a half to three and a half percent, depending on how the deal is structured, to license the brand's likeness for twenty five year deals that can be extended and that's how it works. So the developer is running point on everything. The brand can choose how nitpicky it wants to be, and that is all kind of laid out in the agreement too.
How did those partnerships actually come into being? Is it the developers approaching the brands or the brands approaching developers. How did they actually meet.
So one of the pioneers of this is a guy that I hope we can bring into the studio someday. His name's Gildsert. He's a Miami developer and he created this thing called a Porsche Design Tower, which is this black obelisk type building Sunny Aisles Beach, which is a very Russian heavy market in South Florida, and I think he approached Porsche and they created a partnership. It worked out really well, and then you just saw a huge
wave of these in the US in other markets. It's unclear whether the brand is trying to plant a flag and then they find the right developer. Not quite sure, but in general I would imagine it's the developer kind of driving this. And you see everything from brands that makes sense. There's an adult chain Gabana tower coming up in Miami.
Correct sense, We got them.
Well, when you look at it, it will absolutely make sense to some that are a little bit more inexplicable. There is uh a tower in Dubai that's coming up that is designed by a guy called Jacob the Jeweler. Is anyone familiar what you know?
Tell us about Jacob the Jeweler.
So, Jacob the Jeweler is sort of the celebrity jeweler that known for those statement pieces, very flashy, et cetera. And he's teamed up with a developer in Dubai called Bin Bin Rutti I think is the name. They're also doing a Mercedes tower and they're they're building something together. So some of these I don't know how they're going to go.
How many did you say? There's two hundred?
They're shy of two Hundreddulgien, Gabana, Mercedes, Benz. I believe there's a Kovali tower. Yeah, And Surfside is going to get a Kovali tower made by one of another huge Yui developer called Demac. There is god, I'm sure there's a Fendi tower as well. Bentley has a tower as well, Aston.
Martin Residencesani Really Yeah, Bentley Tower. I had no idea about any of.
This, And then obviously there's the more conventional Ritz Carlton, all of those.
Oh, the Bentley Tower looks like it's gonna be nice twenty twenty six. When I was a kid, I used to vacation with my family over Christmas and sunny aisles and it was nothing like this. In fact, the old like eighties like postcards is really kind of said what happens though, Like this is like, you know, people talk
about gentrification. This is like gentrification on steroids, right, Like, what is the effect in local communities or people who just lived in these areas when suddenly a neighborhood or an area becomes the arena for a billionaire uh Schnitzel size content.
Well, I think we have a more proximate example, right, what the Hamptons used to be versus what it is today. So there's two ways to look at it. One, life as we know it is completely warped in those markets. If you're in a certain part of Dubai, you are paying double triple what you used to pay even five years ago, undeniable. On the other side, if you were a property owner in some of those places, you probably made a really good amount of money. So I mean,
is it like, are we what is the like? What sort of chain are we against? Are we against capitalism? It's kind of a philosophical question, but yeah, life in a lot of these markets, Miami, affordability is at an all time low. Right, This is a big thing that's come up over and over. Rent prices have gone up forty over the last couple of years. I think there is some softening now, but life for the average Joe, not you, but the average show is a lot harder than it used to be.
I want to go back to the question that we started with in the intro, which is clearly people are making a lot of money off of the ultra luxury segment. And clearly we've seen efforts to replicate the Dubai model, particularly in the Middle East, but you know some other places are trying it now as well. How big can this more market b Is there room for everyone? Can we have multiple gleaming, shiny Kvali branded cities in the Middle East and have enough multimillionaires to fill them all up.
That's an incredible question because I think you have to have a baseline level of desirability in a city to make it work. So somewhere like Zada or Alula, which is that city in Saudi Arabia they're trying to build. It's going to be a long road before they can try to offer a tower like this, right. But to your broader point, there's so much money in the world. The rich are just getting a lot richer night Frank
had a statistic where they basically they define people. I'll try at Wheorth there's thirty million and up that jump by four percent over the year. There's more than six hundred thousand such people in the world. And again, they're not tethered to their local markets anymore. So if you think of it as like a billionaire hedge fund titan who's tired of sort of schlepping through New York, they have a lot more options in terms of building new
cities from scratch. It's really hard. Dubai has a history of being like a mercantile hub. I think Miami, if anything, is the more interesting example where it went from sort of a backwater for you know, vacationing Americans to becoming this global hub. It's always attracted shady money from Venezuela and Latin America. But we're looking at something very different.
Now, let's go back to this idea of like a
real estate market. I mean you talked about, you know, going back several years, the most expensive wrong of properties in New York would somehow be connected still to the New York City property market, right Like that's like the sort of the old paradigm that you know, you have this like spectrum within New York, And now the idea is it's a it's global, and so the very top echelon of New York City properties are the top echelon of Miami properties don't necessarily have to be connected either
cyclically or price wise to the local market. But it's just like this, like this sort of like clear break from how these markets used to work in the past.
I think. So I think that this will prove itself out in the data over time. But let's say you went from Manhattan's first the record sale that I remember was this fertilizer billionaire paid eighty eight million at fifteenth Central Park West. The next record was set by Michael Dell, who paid one hundred point four million, so still kind of within the range. The next one was what Ken Griffin two hundred and thirty eight million, right, and that
changed everything. So the way I think about it is if a Michael Dell is willing to pay one hundred million in New York and the highest priced home in Boston is thirty million, a developer might be like or a sponsor someone who has a great home might be like, you know what, I could probably get Dell to pay forty five for this.
Right.
So it's hard to say when it changed, but I think the pandemic was absolutely a catalyst for this. Where you saw numbers just doubling six months, eight months a year, you would see that now the depth of the market is the eternal question, right. There are going to be some developers who price accordingly, who buy land accordingly, who build and finish out apartments and homes to this level, hoping to find that billionaire who then never shows up.
It's so weird talking about these numbers because they're so detached from the day to day reality of most people. It's almost like talking about monopoly money or something like that. You mentioned the pandemic, just then what are the risks to this trend or this sort of like it almost feels like it's reinforcing, So you know, the wealthy get wealthier, they have more money to spend on these things, and so we see more of this luxury property being developed.
Is the risk something like a pandemic that would curb individual mobility even if you're a billionaire, or is it something like I don't know, global text.
Or anger and some revolution.
I don't know, So I don't think mobility has ever been an issue for billionaires. Right, even at the height of the pandemic, you had a barrier stern link camping out in Miami Beach and you had people flying all over. So I think this class of people is somewhat insulated from mobility issues. Now, absolutely these countries could come up with some sort of pricing or taxation mechanism that would
make this more difficult. Kycs are another problem if there is somehow, some kind of global consortium saying we need to know who this is, how much they've paid, and sort of where that money came from. But the odds of that happening are really slim. Markets like South Florida, markets like the UAE and other countries that want this kind of wealth to sort of insulate themselves from the
humdrum of the average folk. It's very unlikely that they're going to collude and come up with like a I don't know, some sort of international organization of sorts.
Out of curiosity. Is crypto money big enough that it moves the dial in some of these markets?
One hundred percent. I think there was a big wave of crypto money coming into absolutely in South Florida, certainly in the Middle East, and the volatility I think the beyond and I think about this a lot. How much money do you need to able to be able to afford a forty million dollar apartment? And the answer is, what are.
The condo feesh yeah, what are the fees on that?
Well, not not even the fees. I don't actually know the fees, not even the fees. It's more about like how much liquid do you need? Right? And so, when you've made your money, when it's easy come, it's easy go. So people who've made their money in the last year, eighteen months, they made it through crypto, they're much more willing to pay forty million, even if they just have seventy.
Right.
It's that sort of threshold of yeah, you know, I made the money, yolo.
I'm guessing they have a whole support network of people who are actually looking after the apartments as well when they're not there, which would seem to be a lot of the time.
Yeah, I think the infrastructure around this new market is fascinating. So you do see brokers who are now on what I call the circuit so Skiing and Aspen, the F one race in Melbourne, et cetera. And this is where the buyers are right, they're following. They've kind of created this lifestyle traveling around with these people, and so they can often shepherd in not only deals in their market, but then connect them with the brokers and the property
managers and the wealth managers and all that. So there will be this new class of not billionaires, but millionaires whose sole job is to cater to the international property portfolios off the billionaires.
I've never gone to an F one race. I'm not really into F one, but I also feel like I only want to do it if I can be in some like billionaire box. I don't just want to be in the stand, like I only want to get a really great view the brokerage community around this. Are there legacy brokers building out tiers or divisions, or are there new entrants into the space that are disrupting the traditional industry in some way.
It depends on the market. So in Palm Beach, a lot of the because this kind of real estate is such a high touch business, you often have to take twenty calls a day from the billionaire in places like Palm Beach, which is traditionally sort of an enclave, but not a dynamic market in the way it's been. I think there's been what more than ten twenty eight nine figure sales recently. I don't have the stats in front of me, But in markets like that, it's the old
sort of guard that is cleaning up. So there's a guy called Larry Mownes, who I believe has brokeered pretty much all the one hundred million dollar deals in the last few years. Then you have some of the new people, the brokers who've built this infrastructure that combines media and combines glopzo Ryan Starhant I believe it's sold something for
one hundred and twenty million in Palm Beach. So you are getting these upstarts coming into these markets, but oftentimes they are teaming up with the old hand.
What's the next leg of this trend? So you know, we talked about going from luxury to ultra luxury. So maybe before you would have a really nice apartment, but now you have a really nice apartment with a helipad. Or maybe you had a nice non branded apartment and now you have a Mercedes Benz apartment or whatever. What's the thing that people are where. I'm trying not to say Schnitzel, but what's the next competitive like goll Or Target here.
I think there's actually going to be a little bit of a throwback to the roots, and I think rustic luxury is going to be quite a big trend.
Now you're speaking more traces, Yeah, I like this. What does that look like?
Examples sort of I haven't seen a listing that sort of falls into this, but a giant sort of an old school treehouse or oh that's not the right now. No, I don't have a true but I'm talking about a log cabin, let's say in a prime market like Aspen, for example, that may have sold for a couple million back then. But now, guess what. Jeff Bezos wants to
return to his roots, wants to find some nature. He's willing to pay something like twenty million for it, right, so I think the and I haven't seen many of these homes, I don't really run into them, but if you were, I would think that the sort of return to roots, farmland, et cetera is going to be a big.
Part of this is climate change concern, right, So you see people who have grown up in desert areas who be interested in buying huge tracts of land in Maine or something like that.
Yeah, there is a just a fascinating and probably concerning feudalism happening where a lot of these guys are just making incredible land bank purchases. And now some of the biggest developers in New York City are also the biggest landowners in.
America just in terms of acreage.
Yeah, just thousands and thousands of acres across Montana, Wyoming.
And oh so it's companies that had been developers in New York City are now doing this different play of just land accumulation.
Absolutely, and they get tax breaks as well, don't they if they keep it in environmental trust. That's the other kind of interesting rinkle.
Yeah, there are a lot of taxation gymnastics around buying tracks of land in random spots.
Tracy, at some point I want to do an episode. Well, we talked about when we were in Jackson Hole last year. This came up. I know it comes up in I used to live in Vermont when I was younger, and I know that one of the things the rich do is the tons of land and then they get this big tax break with this commitment to never develop it, which doesn't help them cut down on taxes. It also causes everyone else to have shorter, be short on housing. So I really don't.
See it, especially in jacksonvill Yeah.
Yeah, so I don't really see how it benefits everyone except them. But you know, I guess it's good for the supposedly it's good for the greenery. So last question, this idea, it's very disconnected these markets. What happened though in twenty twenty two when we did see you know, pretty big fall in the stock market, we saw the crypto crash, We saw a lot of tech money vanished, Like,
was there a cyclical effect? Did it slow down any of this activity when we did have this sort of contraction in other asset values?
So the deal volume may have fallen in terms of number of transactions, but the price points did not. Right, So a lot of these transactions. I brought up Larry Ellison paying one hundred and seventy million. I believe that happened in twenty two location Bonnie paying one hundred and sixty three million. That happened in twenty two. So I think when you're at that level of the game, you're not as worried about this now as a market in terms of number of transactions. Yes, there may may be
a slowdown. We're definitely seeing a slow down now, but I think right before I came into the studio there was one hundred million dollar deal in Aspen as well.
All Right, this was a fantastic conversation. Attend some Tommy, thank you so much for coming on odlock my pleasure.
Guys, thank you, thank you attend. That was great.
That was really fun, Tracy. I want to go back to Sunny Isles in Florida, which used to be this very like sort of sleepy area like north of Miami, and check out the Bentley Tower. It looks really nice.
Uh, shorty, Joe, you do that. No, I haven't spent much time in Miami, so I don't have a good frame of reference.
It does.
Part of this conversation is kind of depressing in the sense, but it feels like the rich get richer. A lot of this wealth feeds off of itself. As we were discussing, so this idea of you build a portfolio of properties, you can basically become a developer yourself, pour money into a particular area, see the market value go up, and then maybe crystallize that gain and buy even more properties. It doesn't seem like there's a circuit breaker for a lot of time.
Yeah, no, that's exactly right, and it really does seem like in many respects, the high price is part of the appeal because a you have the competitive aspect, so you want to one up the billionaire or you know who bought in that neighborhood. It's like, oh, they just paid one hundred million, I'm going to pay one hundred
and twenty five million. And then you know, if you do have five billion dollars or billions of dollars and you want to get it out of the country and you want to deploy it in real estate, well like it's pretty inefficient to go buy like a thousand different houses in places where if you have a one, you know, one hundred and fifty billion dollars one hundred fift million
dollar apartment that can absorb that. That could solve your problem of needing to diversify your portfolio in a way that a cheaper place just couldn't.
No, absolutely, and I do think like the taxation and the capital controls and that aspect of it is certainly a driver. And that's one reason why we've seen it really take off in places like Dubai and maybe to some extent, Miami. There doesn't seem to be a lot of incentive for tax havens like maybe Saudi Arabia or the UAE to not want to have this period.
Why would you give up on that area?
Yeah, exactly, Like you know, the city is basically built on absorbing that kind of global wealth, and they seem to be doing a good job of it.
So we also like to live in an area leader again in this where I feel like many of the ultra ridge, despite having been successful and things working out for them, feel a certain sense of like victimization, a certain level of being aggrieved. And so if our city that's sort of built around the premise that you can be really rich and you don't have to apologize for it, and it's okay to even flaunt it. That seems like, I guess I get the appeal.
Yeah, you're right, Like there are a lot of multi billionaires who complain about their tax rate or complain about being shunned by society.
There are the people. Don't retweet them.
That's right. Actually, you know, we could solve the global property crisis by I don't know, retweeting billionaires and satisfying their Schnitzel cravings. Let's put it that way, sure, there, yes, Oh my god, Okay, this has been another episode of the Oudlots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway and.
I'm Joe Wisenthal. You can follow me at the Stalwart. Follow our guest Hit ten some Tommy He's at hit samt Y. Follow our producers Carmen Rodriguez at Kerman Ermann Dash, Ol Bennett at Dashbot, and kil Brooks at keil Brooks. Thank you to our producer Moses Onam. And from our Oddlot's content, go to bloom slash odd Lots, where you have transcripts, a blog, and a newsletter and you can chat about this topic and many others. Twenty four to seven in the Oddlots Discord, Discord, dot gg, slash odlts.
Maybe we'll get a hit ten to come in there and do an AMA for people. If he's down for that, he's giving the thumbs up, so we'll have him do that, and then you can ask him more questions about the world of ultra luxury real estate.
Oh, that'd be fun, all right. And if you enjoy odd Lots, if you like it when we look at the ultra luxury property market. If you want Joe to go down to Miami and start reviewing branded buildings, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is connect your Bloomberg account with Apple Podcasts. Thanks for listening in