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Kyle Bass is investing in Texas, Florida and Tennessee, he said in a recent interview with the Investor’s Podcast Network.
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These states should benefit from migration to lower-cost countries, a trend that is already underway.
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Bass has been purchasing land in rural areas to take advantage of demand for environmental credits.
Billionaire investor Kyle Bass is snapping up land in Florida, Tennessee and Texas, touting the states’ upside potential as both workers and businesses shift to more affordable markets.
“When you think about the U.S., you look at the coastal region, the West Coast and the Northeast, because they are very high-cost, very high-tax — you might say poorly managed — jurisdictions,” he said in a recent interview with Investor’s Podcast Network. “They’re moving to pro-business, lower costs, lower or no tax jurisdictions.”
Bass’ success in real estate is well established. His winning bet against the 2008 housing market was immortalized in the classic book ‘The Big Short’. And his focus on real estate in cheaper states is a strategy he’s been following for years, and one that offers a similar statement in 2022.
Between then and last year, Florida’s population rose by more than 365,000, while Texas grew by more than 473,000, census data show. Tennessee’s population rose to 77,513.
Meanwhile, the exodus of big companies from states like California and New York has weighed heavily on these markets, removing $1 trillion in assets over the past three years, Bloomberg found.
“You have to move real businesses where it’s affordable, where there’s expansionary activity, where there are natural resources to accommodate that move, so I want to buy real estate before that macro move,” the Hayman Capital founder said.
But Bass’ focus on the land doesn’t stop there. By expanding his assets, he also wants to take advantage of environmental mitigation, a market that sells credits to companies that want to offset the ecological impact of their activities.
To that end, Bass in 2021 founded Conservation Equity Management, a private equity firm that sells federal credits in exchange for services such as wetland restoration on properties.
“As more companies and people move to Texas and other pro-business, low-tax states, there will be devastating environmental impacts, forcing companies to consider their physical environmental impacts, carbon footprint and mitigation options,” he said in 2022.
By September of that year, the company had bought $90 million worth of properties in Texas alone, Bloomberg reported. By then, the price per hectare of rural land had risen 123% in the past decade, the outlet said.
But price appreciation isn’t the only reason Bass is buying so much land. He also cited real estate investments as an important hedge against macroeconomic uncertainties. He previously noted a preference for land over gold as a safe haven.
“When I think about gold versus rural land again, I have the demographic at my back,” he said in 2022. “I also have something I can drive to.”
As for the risks ahead, Bass’ biggest concern is China. He says the economic turmoil in the country, as well as the threat of geopolitical fallout with the US, leaves little room for positivity in the market.
This story was originally published in March 2024.
Read the original article on Business Insider
