The Great Wealth Migration: It's Not Always About the Price

Abhii Dabas0:00The question is not about what $1 million will get you. It's how much will your $1 million be worth 10 years down the line? So people create demand. Demand deepens services. Services pull in more people. And the property is just the visible end of the human story.

Own the World0:18Welcome to Own the World Podcast with Abhii Dabas. Powered by INTRIC Global.

Cath Quiambao0:34A city does not get rich because someone builds towers. It gets rich the moment the right people decide their future belongs there. Founders, fund managers, doctors, family offices. When people move, money moves. When money moves, services improve. When services improve, more people move. That is how a city compounds. The danger is that by the time everyone is talking about the destination, the easy money is already gone. Welcome to Own the World. I'm Cath Quiambao and I'm back with Abhii Dabas. Today's episode flips the question almost everyone asks. Most people start with where prices are rising. Abhii starts with people because when capable people decide their future belongs somewhere, the money quietly follows. Hi, Abhii. How are you?

Abhii Dabas1:19Hi, Cath. Very well. Thank you for having me.

Cath Quiambao1:21Before I jump into my questions, um, there's one city that I can think of that you can confirm or probably share another country that where this has happened. So I remember back in maybe even before the pandemic, I was listening to a podcaster, Noah Kagan, and he moved from LA to Austin. And he was saying, Oh, this is the next Silicon Valley. All the tech companies are now moving here. I was like, okay, that's cool. I mean, Austin is like in the middle of nowhere. It's not really a popular place or destination. But then one of my cousins in Las Vegas just told us that they're moving to Austin as well. They have two small kids and they're very happy there.

2:00Is this something that you think is a good example, or do you have anything that you can think of where this thesis is really true?

Abhii Dabas2:07I think it's a great example. And I think we are talking about a very interesting uh case study where if you now think of Austin, you've probably missed the bus. You know, it's never too late. But the fact is, as you said, the easy money is gone. So you have to think about a place where nobody else is thinking. It's the same for any, you know, it's the same for any asset class. So for instance, I remember when I was investing a lot in cryptocurrencies, as was everyone else. I was sitting on some really healthy gains. And then I would go to every party, and everyone's 11-year-old son or daughter was had started to make NFTs and making money.

2:46And I just I in fact I remember having this discussion with a friend saying, I think it's time to get out. But I didn't act on my conviction. This is important to get into a market where people are not talking about it as much. So people create demand, demand deepens services, services pull in more people. And the property is just the visible end of the human story. So you have to get into a market where you feel because of policy changes, because of demographic trends, because of industry coming in, infrastructure being developed, that this would be an interesting story, not based on what it is today. Because many times when I look at emerging markets and I have discussed these markets with a number of investors, they laugh at the idea.

3:34And I just think about where Singapore was, say, 40, 50 years ago, and where it is today. So as long as there's a right policy, there's uh good governance, and you see where countries and cities can go. So very difficult to replicate Singapore. But even if somebody has, you know, half that success or a quarter of that success, I think that's a very compelling investment destination.

Cath Quiambao3:58Great. Okay. So the most important property question of the decade, and in your view as well, isn't about prices at all. How can it be not about prices, right? Tell me what it actually is and why everyone's looking in the wrong place.

Abhii Dabas4:11Well, because prices are relative. We have to ask ourselves, what are we comparing the prices to? So you have a country where per capita income is a few hundred dollars, and then you have a country where per capita income is $75,000 or $90,000. So how do we compare these prices? So you just have to look at where the demand will strengthen. You have to ask yourselves, so for instance, if you think about where the world population is today, when you speak to a lot of people in the developed world, and developed world means both the West and the East, there's a very different sentiment. People are talking about aging populations, people are talking about transfer of wealth.

4:52And if you speak with emerging market professionals, the narrative is very different. The mood is very different, where there is a there's a lot of opportunity for growth. So some of the countries in Africa, for instance, have average age of 15, 16, 17. The Philippines, if I'm not wrong, has an average age of 25. So you have to ask yourselves, what are you investing in? Prices don't mean anything. So if the cost of construction or the rental or the property tax or the management fee is high, then it doesn't matter whether a property is generating 2 million in rental returns or 200,000. So you have to look at where a market is, what the future holds, and how stable it's likely to be.

Cath Quiambao5:35So are you saying like if I'm looking at a million dollar property in Singapore and a million dollar property in Bali, regardless of the size of the property, you're not looking at the price, but what that property can give you. Is that what you're saying?

Abhii Dabas5:50Yeah, exactly. So firstly, it'll be difficult to get anything for a million dollars in Singapore these days. So that is true. And and so you again, Bali is a great example of where it was. And I was speaking to a few developers in Bali over the last couple of weeks, and I would say that their mood was not very upbeat because the currency has taken a huge hit. If you look at the trajectory of the Indonesian rupiah, it's uh gone down significantly. And so that's something to consider. There's been a lot of unplanned uh development and construction. Uh people have not really enjoyed investing in Bali. I think infrastructure is not kept up. Anyone who spends any time in Bali would tell you every time I go to Bali, and who doesn't love Bali?

6:33And there was a time I used to go maybe eight or nine times a year. Now it's probably gone down to twice because just the infrastructure has not kept up with the inflow. And so you have to ask yourself, is it an investment destination? There's still a lot of good energy in Bali. Of course, it has so much to offer culturally, and it's still a popular digital nomad destination. But if you speak to a lot of nomads who've been there for a while, they've started moving to other places as well. And so the question is not about what $1 million will get you, is how much will your $1 million be worth 10 years down the line in terms of currency, in terms of net returns, in terms of how easy it is to manage, and how many opportunities and options does the place give you.

7:19So for instance, let's say, hypothetically speaking, if the same $1 million is invested in Singapore, that there are no capital gains taxes, the rental income tax would be quite low. There are no exit taxes in Singapore, property taxes are relatively low, and the currency is strong. So if you look at most Asian currencies or even a lot of developed world currencies, Singapore dollar has strengthened anywhere between 10 to 60% over the last 10 years. And so your money has grown not only because of how much money you made in the property market, but also the strength of the currency. So there are quite a few things to consider, but pricing can be deceptive. That's why you have to ask yourself you don't compare a 300,000 property in South Africa to a $300,000 property in Australia.

8:09And the same thing applies if you're comparing a $30 million property in India with high returns, but a relatively weakening currency with say a $30 million property in Singapore. So the returns could be different. The price could exactly be the same, but in terms of real returns, you have to consider a lot of other people.

Cath Quiambao8:28And you mentioned before starting this episode about the wealth migration flywheel. Can you tell me how that works? And does it help you kind of decide where to invest?

Abhii Dabas8:37Yeah, it's it's an interesting way of looking at things. So you look at where talent is, right? So talent arrives, capital flows, services deepen, schools improve, then lifestyle lifts, supply would tighten, uh, prices rise, politics reacts, and then it matures or breaks. So if you want, I'll repeat it. So talent arrives, capital follows, services deepen, schools improve, lifestyle lifts, supply tightens, prices rise, politics reacts, then it matures or breaks. So it's a very interesting journey for every market. If you look at it, it doesn't happen over weeks or months. So you don't really see that. But if you observe a market over a period of time, then you will see the same trend. So obviously, you have to ask yourself where we are in the cycle, where we are in this whole process.

9:31So understand the phase, not the headline. So for instance, Riyadh is early, maybe, Dubai and Lisbon are maturing, Singapore and London are established, and some markets, which were the flavor of the season a few seasons ago, have completely collapsed. So the danger zone is where affordability anger is already rising, right? So I talk about this a lot these days, and I just feel with the growing inequality, the pitchforks are out in some form or the other, right? I mean, not literally, but governments are reacting. Now we can debate the pros and cons of higher taxes and what's the right way of doing things. But the fact is there is some resentment in a lot of markets when it comes to wealth creation and then taxes are increasing.

10:17And so you have to also understand the jurisdiction. You also have to ask yourself how a certain government is likely to react. And so if you're early in this cycle, this whole flywheel, this process that we spoke about, then it's fine. You have a few years to to generate your returns and hopefully exit, if you want to exit. And if the market matures like a lot of uh good markets do, then you don't have to worry about it because then it first you create your wealth and then you preserve your wealth because markets have matured in a meaningful way. But if these markets are not uh backed by good policy, good governance, then we get into that danger zone where affordability becomes a problem.

10:58Local communities start resenting overseas investments because there are affordability issues, and then most reactions to these things are not very wise, but they are knee-jerk reactions which are not good for either the local communities or overseas investors. So you have to again read the phase and not the headline. That's very important.

Cath Quiambao11:19And your investment experience, maybe you can name the country if you're comfortable with where you actually invested a bit early, and this whole flywheel happened.

Abhii Dabas11:30Yeah, I mean, if you think about it, again, I'll talk about a few markets where you can very clearly see this trend. So Canada is a market where s there was a lot of immigration, big student population. There were questionable policies in terms of the housing supply did not keep up with the immigration numbers, and now the government has gone to the other extreme where now foreigners have all kinds of restrictions.

Cath Quiambao11:54Yep.

Abhii Dabas11:55Absolutely. And there was a time when I remember Vancouver market uh was primarily driven, or Toronto also for that matter, primarily driven by uh foreign investors. And so that was one extreme, that was that part of that uh cycle, and now foreigners cannot own a lot of assets and there are a lot of restrictions. And and who is uh suffering? Everyone, because if a lot of local Canadian investors invested in property market thinking it'll continue to go up and go up, and I was speaking to three investors last month, and and they had all lost a lot of money and they were trying to sell their assets and they could not. So so Canada is one you see similar trends in Australia, the UK, I would say there is a limited supply, and so that's why there's always this conversation about affordability, but I don't think it's reached the extremes of Canada.

12:50If you look at Thailand, for instance, uh every few years there's a bit of a debate about what foreigners can buy or cannot buy. So, for instance, obviously in in Thailand you cannot own land as a foreigner, so you have to either have a Thai partner in a company, and so there were all kinds of unsavory structures that came up over the years, and now the government's cracking down on those. Once the government starts to crack down on some of these things, then it affects the property market because then foreign capital becomes more hesitant, and then Thailand also has the rule of uh 51 plus condo units or ownership of the condo assets being belonging to uh local Thai nationals.

13:34And so you have plenty of condos where they are sold at very high prices to foreigners, 49%, and then you'll see half the lights in those condos are off because there is no local demand for those. So there are so many examples of where a policy that made sense at a certain point no longer makes sense or it should have evolved and it hasn't.

Cath Quiambao13:55So migration lifts a market until it doesn't. What are you actually watching out for?

Abhii Dabas14:00It's it's a complex question. Migration can be very positive for a lot of economies, the US being a great example. Uh, Australia had a very good migration scheme for the longest time, and that has worked very effectively as well. But sometimes, you know, it's the quality of migrants, whether you know they are integrated into society, there are so many factors. Or sometimes governments, in order to boost revenue in the short term, will allow assets to be purchased by foreigners, and and some markets are primarily driven by foreign money, and so that can trigger affordability crises, and then rental crackdowns follow, then foreign buyer taxes, and then a severe backlash. And then, as I always say, nobody is happy in that outcome because entire industries come up to service these foreigners.

14:49And suddenly, when we speak with a lot of real estate companies around the world, and especially in a lot of foreign capital-driven markets, you should see a lot of them are really uh pessimistic about where their market is because back in the day, maybe they were attracting a lot of capital from certain countries, then rules were tightened because of the backlash, and now suddenly there is absolutely no capital or next to no capital coming in, and then that leads to a real decline in property prices. Uh, you know, there's no activity in the property market, and that's bad for local investors as well, right? Because local investors uh then j you know join in and they invest because they hear stories of people doubling their money every three years or five years, or in some markets I've even seen like markets like Georgia.

15:38I I remember seeing this very interesting and quite a beautiful uh project where they were building villas on top of a mountain and and with a beautiful view of Tbilisi. And the developer that I was speaking to mentioned that the prices when they launched double in 18 months. And so that gets that makes headlines, then people get excited, then local population and foreigners then start getting involved in the market, and then something changes. So I mean, I haven't seen any major government policy change in Georgia to discourage investors so far. But the fact is, if somebody goes into that market now thinking that they'll double their money in two or three or four years, then you know that's unlikely to happen.

16:22So ask yourself how much of a market demand is coming from foreigners and external capital, and what is the infrastructure able to keep up? If the infrastructure is able to keep up, then wonderful. Some markets growth. Dubai is a great example of that. Very aggressive immigration targets, population growth targets, but the government manages to keep the infrastructure growing at that pace. Singapore has been the biggest success story globally. The population has increased significantly, but there are no traffic jams. Government policies are fabulous in terms of car ownership, in terms of public transport, keeping up with it, and all kinds of things. So there is no real backlash, and and the government can pick and choose what uh quality of capital they want to attract.

Cath Quiambao17:09You've shared a lot of advice. And one more question that I have before you wrap up. Example, your nephew is listening to our podcast, and he asks you, like, what is one thing that I can do so I can take advantage of this and be part of this great global wealth migration.

Abhii Dabas17:28Who is this nephew? Okay. No, so I mean, for any young investor, I would say, firstly, think about where the growth is happening. So I used to uh teach at certain universities, and I have interacted with a few thousand students over the years, and I really do enjoy uh doing that. And and as I say, I'm a closet educator. I always tell young people, go where the opportunities are, because you should not be stuck in a country because that's where you were born, and maybe the market has matured. So while your parents were building their careers, the market was thriving. Now it's a very mature market, it's not growing as much, there are not that many opportunities, and half the battle is won if you're in the right playground, playing the right game.

18:13So a lot of times we are good players and we are playing the wrong game in the wrong playground. Either we are in the kiddie playground or we are playing the wrong game, and then we are wondering what's going wrong, and then we question our ability as players. So it's important to go to markets which are still witnessing a lot of growth. And some of the most successful investors uh historically have done that. And you also have to ask yourselves, what are you willing to sacrifice? Because when a market is early in the cycle, early in its growth cycle, then you will not have all the conveniences. And even as an investor, so if you want to invest in a market that's likely to give you 20%, 25%, then if you expect everything to be wonderful in terms of infrastructure, bureaucracy, equality of life, all of those things, then you're in for an unpleasant surprise.

19:07But as long as you know it's headed in the right direction, then that's the place to be in as a professional or even as an investor.

Cath Quiambao19:14That's a good one. And I want to add to that that apart from talking to people like your wise uncle, but other people who have done this in the past and was successful, I would say stay up to date. Um we have a lot of intelligence reports that we create for investors thinking of diversifying, migrating, depending on your key objectives. You can visit intrical.com and we publish a lot of market trends, community neighborhood guides that you can check out. I think that's a good way to wrap the episode. So the old globalization moved goods. We now know that the new ones move people. See the people first and you see the price before it arrives.

19:55If there's one a market on your mind that we have might have missed, let us know. We're curious to know. Um send a message to a bee via LinkedIn, and we will definitely cover that in the next episode. Thank you, Abhii, for your time and thank you for listening. Don't forget to hit that follow button and subscribe. See you on the next one.

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