Three global cities are pulling ahead since the peak of the pandemic
New York is greeting the exodus of its wealthy citizens with a shrug. The local elite seems a bit too sure that Manhattan is, and always will be, the gravitational centre of the cultural universe, or that the city is better off — as a professor recently put it to me — without all the “rich douchebags migrating to Miami”.
But complacency this deep could undo even the world’s greatest city, especially now. The pandemic has shown that remote offices can work full time, making it easier for anyone to relocate and magnifying what I call the cracked mirror effect. Cracks in New York — high taxes, surging crime, simmering anti-capitalist hostility — are reflected in the flight to no taxes and a warm welcome in Miami.
A similar effect is visible in Moscow, where a heavy-handed Kremlin and world reaction to the war in Ukraine are chasing rich Russians out. Instead they are opting for more hospitable options, including Dubai. Meanwhile, regulatory pressure from Beijing is driving tycoons to buy second homes in Singapore.
Millionaire populations dropped by 12 per cent last year in New York, 14 per cent in Hong Kong, and 15 per cent in Moscow. Dubai, Singapore and Miami are deliberately exploiting this migration by opening their doors to capitalists. These global cities rank among the most appealing to millionaire migrants — and make up the top three among luxury property markets where prices are expected to rise fastest this year.
On recent visits, I found all of them gaining momentum as people-magnets. Easy lifestyles smoothed by warm climes and efficient governments are drawing migrants from all over; they, in turn, are attracting new restaurants, swanky malls and art festivals.
Singapore is the most established of the three: the millionaire population of 250,000 is much larger than those of Dubai or Miami and therefore naturally grows more slowly. Yet here, too, the energy is palpable. Recently, Singapore opened an agency to welcome family wealth management firms. The inflow was so overwhelming that the city is getting more selective about who qualifies for tax incentives. The local joke is that $500mn is the new $100mn, the sum required to get the welcome mat. Driving around I was struck by displays of wealth new to the usually sober city — one mansion had eight red Ferraris out front.
Dubai now offers “golden visas” that allow the wealthy to buy property and stay. This is drawing in migrants not only from Russia but from across South Asia and the Middle East. A real estate boom is in full swing, driven by eight-figure purchases. Eighty per cent of transactions are made in cash, making the property market more stable than in past bubbles.
Dubai still values Guinness World Records as much as high culture: witness the colossus of the new Atlantis the Royal, a boutique hotel but massively scaled up to nearly 800 rooms and 17 restaurants, many run by world-famous chefs. It’s easier to find a great meal there than on the Upper West Side.
Miami, once a quintessentially “sunny place for shady people”, has also achieved critical mass as a richly interesting city. People move here to avoid taxes, sure, but also to meet their fellow transplants, do deals in the growing financial district, walk the white sands and shop in the new design district — the first purpose-built luxury shopping neighbourhood in America.
Increasingly, unabashedly capitalist cities are finding one another. Business class on the new Miami-Dubai flight is full every day, I was told, forging a direct link between American entrepreneurs and Middle Eastern oil wealth. Many other countries want to emulate Dubai’s success, including Zimbabwe, which hopes to remake Victoria Falls as a similar hub.
Manhattanites who say good riddance to the “rich douchebags” might consider the Curley Effect, named after Boston mayor James Curley. By the time his fourth term ended in 1950, Curley had deliberately driven most of the rich “Anglo-Saxons” out of his city through incendiary rhetoric and bias. The effect was to deepen its early 20th-century stagnation.
New York is not Boston circa 1950, but the exodus is a bad sign. For years, the state has been bleeding migrants to Florida, where the population is now slightly larger but the state government spends half as much — and the economy grows twice as fast. In 2022, for the first time, Florida had more non-farm jobs than New York.
The migration of jobs and capital are leading indicators of development and of decline. Global cities hostile to wealth will end up sabotaging their own economic prospects to the benefit of more welcoming rivals such as Miami, Dubai and Singapore.
Copyright The Financial Times Limited 2023. All rights reserved.