Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 201

This is how the meme goes:

At the time of writing this post, Bitcoin is up ~129% YTD. One Bitcoin is now US$101,256.70, which is a big deal in that it's a nice round milestone and it sounds like an impressive number to most people, including me. The result is that more people now want to buy Bitcoin, hence the above image. Now, this may turn out to be a good time to do this, or it may not be, I really have no idea. But as a crypto believer and long-term holder, I'm certainly happy to see this momentum.

At the same time, the current crypto market makes me want to buy less of it. Ethereum, which makes up the majority of my holdings, is also up this year. But I was dollar-cost-averaging more of it over the past few years when it was dropping and sentiment seemed to be against it. That, to me, felt like a better time.

My favorite investing framework is one that I have written about many times before on this blog and one that people far more successful than me like to talk about. It goes something like this: you want to be right about things that most people think are wrong . Said differently, you want to aim for non-consensus bets, and that's because it's pretty hard to find value when everyone else is chasing the same thing. Markets are competitive.

So as a general rule of thumb, if you can find opportunities that you believe wholeheartedly in, but that many people think are dumb, then directionally, you're probably getting warmer. Obviously, you can't believe in something and then be wrong about it. That's not productive. But if you start with something that many/most people are critical of and then work backwards, you might find something interesting.

I am reiterating all of this today because of our current market dynamics: crypto is way up, as you know, but many real estate markets are way down. For example, here in Toronto, few people are buying pre-construction homes , whereas a few years ago, they were lining up and banging down the doors of sales offices. We have moved from consensus to non-consensus.

This is making for a challenging development environment. But at the same time, I think it's a wonderful opportunity for people looking to buy/rent a home and for real estate companies willing to grind it out and be creative. Legacy deals will need to get worked out and competition is only going to lessen as groups leave the market to focus on other things, like buying Bitcoin above $100k.

More specifically, this is what I'm excited about right now as a developer:

• It is significantly easier to buy wonderful real estate. There's far less competition, and so the opportunity is there to structure creative deals. This is especially valuable for smaller companies like ours .

• You have to know what you're doing to be successful. The market isn't going to bail you out. You need to roll up your sleeves and execute on your strategy.

• Creativity and new ideas are now being rewarded. A red hot market only strengthens our bias toward the status quo. Everything is working, so why change? Except now it's not. So what are we going to do?

Market cycles are a healthy phenomenon. And I think we'll start the next cycle in a better place. Housing will be more affordable and projects will be better tailored toward end users, among other changes. But in the interim, there is now this great opportunity to be right about things that most other people think are wrong. And that's because so much feels wrong. But that's okay. Because it's actually the exact precondition you want.

Disclaimer: Nothing in this post should be construed as investment advice. I am long Ethereum and Toronto housing, and I don't plan to change this, but you should do your own homework.

Cover photo by Saad Salim on Unsplash

Henley & Partners is a firm that specializes in residence and citizenship by investment. What this means is that if you have a lot of money and you'd like to take take up residency somewhere else, or if you'd like to start a company somewhere else, they can probably help you with that. And, if you're a country, they can also help you design a program to attract the above rich people.

As a result of being in this line of work, the company has a pretty good understanding of where rich people are going. This year, for example, they are forecasting that approximately 128,000 millionaires from around the world will end up moving somewhere else. This doesn't mean that they'll simply get residency in another country; it means they'll start spending greater than 6 months each year there.

It's interesting to look at these provisional flows.

Here are the countries where millionaires are currently leaving:

And here are the countries where they're going:

The United Arab Emirates isn't very big. It has somewhere around 11 million people ( 2024 estimate ). This makes the US about 30x bigger in terms of its population. And yet, they seem to have designed a pretty good mouse trap for catching millionaires. Having no income taxes helps. But the same could be said for a number of the countries on this list: relatively small and jockeying for high-net-worth individuals.

Cover photo by Fredrik Öhlander on Unsplash

Real estate development is often described as a hyper local business. You need local relationships and you need to understand the nuances of your market so that you can identify opportunities and best manage your risks. This is all true. New buildings don't exist in a vacuum; they are the result of land use policies, politics, economic conditions, culture, and countless other very specific factors. So when capital invests with a local "sponsor", they are expecting that developer to have the knowledge and experience to navigate all of these local risk factors.

At the same time, the world is only getting smaller and more interconnected. The result is that there are many things that aren't actually different across markets. For example, I find it interesting that, today , you can speak to a developer on the other side of the world and for it to feel like they're living the same life: "yeah, so, office vacancies are up (though we're looking at conversions), residential demand is down (individual investors have left the market), but there's still demand for student housing and distribution centers." On some level, we are all living and operating in the same market.

So perhaps a better way to think about real estate development is that it's both local, and global. And you need to be able to operate at all of the different scales in between. You need to worry about what's happening down the street and the R-value of your wall assemblies in the context of your local climate, but you also need to think about the macro environment. And this is likely to become only more true as time goes on and as new technologies continue to bring us closer.