Transcript
A (0:01)
Welcome back to Real Estate Without Borders. Today we're going to be talking about smart money. Have you ever heard of the term smart money? It's, it's usually used for like, you know, following in investor capital into, into trades in the stock market. But we're going to talk about it in a global context in where millionaires are leaving and where they're going. So we're going to talk about the biggest inflows and outflows of high net worth individuals around the world. And I'm not going to lie, a couple of these surprised me, honestly.
B (0:35)
So attracting capital, that's my, that's my hashtag. My, my most searched thing on, on Grok recently is attracting capital because I know we'll get into it, but there's a few places like Italy that are doing different things to attract capital.
A (0:53)
Well, yeah, Portugal, Portugal now has like doubled down on their attempts to kind of get rid of a lot of the wealth that's moving there because there's been consequences for locals who actually vote in elections and get pissed off. And so other countries are doing things and you know, we've talked a lot about Dubai here. We're going to have some Dubai experts on the show. But Dubai has been a big one that we're, you know, where you're seeing a lot of millionaires moving to. So that's a little teaser that's on the list. But why don't we, I have something.
B (1:22)
Sorry, I, I was, I was looking at this the other day. You probably know maybe a little better than me, but so houses, this is, we're just jumping into it because I gotta get it off my head if I don't. Okay. House purchases by Foreigners accounted for 5.15% of the total first quarter of purchases. The lowest relative weight since the record of quarter since the second quarter of 2021 for purchases in Portugal. So it's interesting because like all we hear is all these foreigners buying up real estate in, in Portugal.
A (1:54)
Yeah.
B (1:55)
But according to this study it's, it's the lowest in four years. It's only 5% of homes went to non Portuguese buyers. So anyways, I thought I'd just, just hammer it right there.
A (2:08)
No, I mean these are important things, right. Because countries have to balance the, their outcome. Their goal is to attract capital. Right. But they're, the consequences of that are that capital buys real estate and when they buy real estate that means that locals get out priced out of. I mean you saw this in Canada where Canada. And Canada's on this list by the way it's number four on the list, I think. But you know, Canada had a, had to ban foreign buyers of real estate because they were being too competitive against locals. And so Canada has banned foreign buyers since like 2021, 2023. Sorry. And other countries aren't doing that. UAE is a good example. So 128,000 millionaires will relocate this year and 6,700 of them are jet setting to Dubai. And the question is why? Right, well we know, we've talked about it a couple of times on the show when we have had Henley on. Tax structure is very favorable. It's a really beautiful place to live. It's very modern. The entire city was built in like the last 30 years. Very metropolitan, it's warm, right. There's a lot of business opportunity there. But, but Dubai hasn't really been dealing with the same problems like Portugal, Spain etc, where people are revolting against, you know, the, the government attracting all this foreign capital. And I think a big reason for that is Dubai is very good at building, right? They're building a ton of new units and they're doing precon. So they're selling units to investors and migrants and the supply is meeting the demand. Right. And Dubai would be one of the, actually the places that really felt, felt this decline during the Global Financial Crisis 2008, similar thing was happening. Not to say that we're going to see a comparable decline or anything anytime soon. Although you know, the economy does look, there's a lot of question marks right now. But a big reason that Dubai kind of felt that whiplash down after skyrocketing during the global financial crisis was because when more and more capital is moving there, they're building more and more to house that capital. Right. To house all those people that are moving there. And real estate is really long run construction and so it's really easy to overshoot or oversupply, right? Because you know a hundred thousand people are moving there and then you build 100,000 units. But then the economy crashes at some point between when you started those units and when you plan to finish. And only 50,000 of those hundred thousand actually can still afford to show up. And that creates this, this problem. But today Dubai hasn't really had. There's no real risk of that taking place as it, as it appears right now because they're moving so much capital there. But also there's no risk of these negative externalities like we're seeing in Spain and Portugal. I mean house prices are going up a little bit there, but not not like massively to the point where again, people are protesting like Spain and Portugal.