The Globalization Of Real Estate Is Happening
There is a lot changing in the world. One of the areas that we focused our discussion upon is the shift in work. This is something that most can see happening in real time. Employers are trying to deal with the new paradigm, something radically different from the pre-COVID days.
Over the last few months, I outlined how we are also going to see a major transition in real estate. This is something that is going to get extremely competitive. Politicians and leaders who keep operating like they have a monopoly are going to end up destroying their cities and towns. Ultimately, this is going to be a global situation.
In fact, we are already seeing the early stages.
This is an idea I laid out in The Layout For The Globalization Of Real Estate.
Bitcoin To Relocate To Arkansas
Anyone think of Arkansas as a high-tech center for the United States? There is Silicon Valley, Austin, and NW Arkansas? Not exactly what most people think.
Regardless of our viewpoint, there is a growing tech sector in the state that is looking to draw in more talent. For that reason, the offer is $10K worth of Bitcoin along with a bike to relocate to the state. This is an example of the competitive nature that is going to start arising as workers are sought.
“Northwest Arkansas is one of the fastest-growing regions in the country, and we’re now seeing more explosive growth in our tech sector,” Nelson Peacock, president and CEO of the Northwest Arkansas Council, said in a statement. “This expanded incentive offer — Bitcoin and a Bike — not only embraces the growing trend toward the use of cryptocurrency as a payment option by employers, but also helps increase our pipeline of talent to benefit tech employers, startups, cities, local businesses and the region overall.”
This is an updated version of an earlier initiative. The change is to pay in Bitcoin in an effort to tap into that aspect of the tech sector.
The original initiative, launched in November 2020, has generated over 35,000 applications from people in more than 115 countries and 50 states that wish to move to Northwest Arkansas and grab the cash bonus and the bike. Those who relocate can now opt for the incentive in bitcoin or cash and a street or mountain bike.
Not bad for a state like Arkansas. Evidently more than 35K people from around the world believe it is worthy of consideration.
We see this move on top of Italian cities that are paying people $33,000 to move there. Get ready, this is just the beginning.
Remote Work
The gamer changer is the concept of remote work. While the likes of Jamie Dimon and Tim Cook are trying to get people back into the office, the entire world is opening up to a completely new paradigm. No longer is it just employer and employee involved in the discussion. We are now seeing Mayors, Governors, and eventually, Presidents stepping up.
The fact people can work from anywhere means they can also live wherever is desired. Hence, the competition is going to ratchet up over the next couple decades. Cities and towns have great incentive to attract newer residents.
At the top of the list is the demographic issue many countries are facing. With a declining birthrate, many towns, especially smaller ones, face extinction. The goal is to attract newer residents even if bribery is necessary.
We see the same thing applying to those areas that seeking industry. It is not secret a talented workforce is required. Since many areas do not have it, they are going to turn to importing. No longer is it only products and raw materials that are imported. People, from all walks of life, will be targeted.
Part of the hypothesis regarding real estate is the simple fact that people are no longer going to flock to the expensive areas. The high cost of living is not worth what is being offered. As we can see, different geographic areas are starting to turn it into an incentive-based system. Those areas that try to operate according to the old model will find things change greatly over the next couple decades.
Certainly there are some who just have to live in a NYC, Boston, or London. For most however, this is not the case. The attraction to those areas was the high salaries that more than offset the cost of living. With the expansion of remote work, these areas could hold less allure to many people.
Here is where the transition of real estate is going to take place.
Global Real Estate Prices
Ultimately, we will see a drop in real estate prices. Of course, we have to keep in mind real estate is always a balancing act. Some areas will rise as others decrease. Nevertheless, the most valuable real estate in the world is going to get a haircut since it is the most populated ones.
In short, people are going to start migrating away from urban areas. This will reverse a trend that started 70 years ago.
Lower cost areas will see a jump in prices as more people move into them. In the 2030s, I predict, this will happen on a national level for many countries that target people in the developed countries. With a cost of living orders of magnitude cheaper, the potential to attract 250K residents making $65K-$70K (from a country like the US) exists. This can radically alter the economic outlook of many countries.
Before it goes global, my guess is we see a lot of movement within the nations themselves. This going to increase into the middle of the decade when I asset it will explode. By that time, the concept of work from home will be the norm for many industries. In other words, it will not even be questioned.
Areas that are built up and have huge budgets that need to be met are going to have trouble. These governments are not going to have monopolies on people any longer. For this reason, they are going to have to think more like businesses. This will be great for people who are willing to be mobile. For those who "just have to live somewhere", or are stuck, they are going to suffer.
The globalization of real estate is starting to come to life. It is in the very early stages right now yet it will consistently accelerate over the next decade. By 2035, I predict it will be in full bloom, with many living as "digital nomads". The ability to make money looking at a screen means people can do that from anywhere.
Quality of life and cost to achieve it are going to be important factors. The artificial urban real estate bubble is about to pop.
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