Latest / IMI Podcasts / #33: Putting The Spark Back in Sark - Swen Lorenz's Big Plans for Europe's Tiniest Tax Haven

Transcript

#33: Putting The Spark Back in Sark - Swen Lorenz's Big Plans for Europe's Tiniest Tax Haven · IMI Podcasts

0:02
SPEAKER_01: Ladies and gentlemen, it's 7 p.m.
0:05
SPEAKER_01: in Dubai, 3 p.m.
0:06
SPEAKER_01: in Lisbon, 11am in St.
0:08
SPEAKER_01: Kitts.
0:08
SPEAKER_01: Welcome to a new episode of the Mobility Standard, the podcast where we dissect current events, trends, and crucial questions related to investment migration.
0:19
SPEAKER_01: I'm your host, Christian Nesem, editor of IMI, and in this episode, I have the pleasure of hosting Sven Lorenz, a man that has big plans for Sark, one of Europe's least known but also most fascinating tax havens.
0:34
SPEAKER_01: Sark is a tiny self-governing island in the English Channel that has no income or capital gains taxes.
0:42
SPEAKER_01: It's home to just 600 people, and for years this car and crime-free island's population was in decline and struggled to sustain even the most basic of services.
0:53
SPEAKER_01: That was until German entrepreneur Sven Loventz showed up in 2017 and began singing the island's praises across the European continent.
1:02
SPEAKER_01: By 2021, when we first covered the story in IMI, Loventz's efforts had already driven a 20% increase in the island's population.
1:10
SPEAKER_01: Now, after years of planning, Loventz is making what could be the biggest move of his career.
1:17
SPEAKER_01: He plans to raise some 70 million British pounds over the next several years to renovate and redevelop as much as 40% of the island's total land area, which would more than double its population.
1:31
SPEAKER_01: We ask Loventz a range of questions, including what is it like to live on Sark and what kind of people does he hope to attract?
1:38
SPEAKER_01: How can he get residency there?
1:40
SPEAKER_01: Why are so many of the island's properties in a state of disrepair?
1:44
SPEAKER_01: What does his company plan to do once it's acquired 40% of the island?
1:48
SPEAKER_01: What kind of returns does he foresee for investors?
1:51
SPEAKER_01: How many people does Sark have room for?
1:54
SPEAKER_01: What do the locals think of his redevelopment plans?
1:58
SPEAKER_01: All of that and a great deal more in today's episode of the Mobility Standard.
2:02
SPEAKER_01: But before we start, I'd like to tell you that if you haven't already signed up for a pro membership, you really should consider it simply because it'll help you make more money as an investment migration professional.
2:14
SPEAKER_01: With an IMI Pro membership, you'll get your very own profile in IMI where clients can contact you directly.
2:20
SPEAKER_01: You'll have full access to our data center, our private briefings, all our reports, and many, many other tools and resources that will help you make more money and become a better investment migration professional.
2:32
SPEAKER_01: So, with the preambles out of the way, let's get this show on the road.
2:40
SPEAKER_01: Sven Lawrence, Sven Lawrence, I should say, because you're German originally.
2:44
SPEAKER_01: Very happy to have you here.
2:47
SPEAKER_01: We we've spoken in the past, uh, you've been to IMI Connect in Malta, where you you brought this seigneur of Sark, which we'll also speak about, I'm sure.
2:56
SPEAKER_01: And we've written about Sark uh in IMI previously, when you in connection with you writing the guide on relocating to Sark.
3:06
SPEAKER_01: But I suspect a lot of most of our listeners probably don't remember that because it's a few years ago.
3:13
SPEAKER_01: So let's start by you telling me again briefly about your background and how you came to develop this passion for Sark.
3:23
SPEAKER_00: Hi, Christian, great to be here.
3:25
SPEAKER_00: So to just take a few steps back and go to the very beginning of this story.
3:29
SPEAKER_00: So in 2020, I already lived on this beautiful small island that is just off the coast of France.
3:37
SPEAKER_00: It's between France and England, but it's a crown dependency, it's independent.
3:41
SPEAKER_00: And Sark at the time had an issue with demographics.
3:44
SPEAKER_00: The population was in decline.
3:46
SPEAKER_00: It was the population was too old as well, and then it always goes into this sort of spiral where young people leave because there are no job opportunities.
3:54
SPEAKER_00: And at the time the population dropped to probably something like 360, and the local supermarket was was genuinely at risk of closing down.
4:04
SPEAKER_00: So I said, okay, I'm going to do something about this, and I published a book which was called How and Why to Move to SARC.
4:11
SPEAKER_00: And this went viral as a news story.
4:14
SPEAKER_00: So we were suddenly in 30 magazines and newspapers around the world, and it helped that there was the Brexit deadline.
4:22
SPEAKER_00: For another four months, EU citizens could move to SARC at the time, plant a flag, so to speak, and then remain here for five years.
4:31
SPEAKER_00: And that's when we first got talking.
4:34
SPEAKER_00: You did a brilliant analysis and article about it at the time.
4:36
SPEAKER_00: That was one of the best pieces of analysis about how this evolved at the time in SARC.
4:41
SPEAKER_00: And um, I'm delighted we can speak about new developments today.
4:44
SPEAKER_01: Yes, great.
4:45
SPEAKER_01: Because you you've been in the news again.
4:47
SPEAKER_01: Uh, you were on the front page of the Financial Times and you were in what was it, the Telegraph or Sunday Times, right?
4:55
SPEAKER_01: Because now you have a very exciting project.
4:59
SPEAKER_01: But we'll get to that.
5:00
SPEAKER_01: But I want to first uh put Shark on the map for the audience.
5:04
SPEAKER_01: I think a lot of the audience will be familiar with it, but some might not.
5:08
SPEAKER_01: So let me start by saying that what little I do know about the place is absolutely fascinating to me.
5:14
SPEAKER_01: It's a tiny island in uh as you've as you've uh identified between France and England, and uh it's it's right next to Guernsey.
5:24
SPEAKER_01: In fact, it's part of the bailiwick of Guernsey, but it it belongs to while it belongs to the bailiwick of Guernsey, it's still autonomous in crucial respects, particularly when it comes to taxation, of which it has very little.
5:37
SPEAKER_01: So I wanted to kind of ask you about the you know, what are the salient characteristics that it's important to know about Sark?
5:46
SPEAKER_00: So for your audience, I think the most fascinating aspect is really that it's self-governing, it's autonomous.
5:52
SPEAKER_00: SARC passes its own laws, it has its own treasury, it collects taxes, it has a prison, it has a judge.
5:58
SPEAKER_00: It is literally like a country, although technically speaking, it's not fully a country, it's a so-called crown dependency.
6:05
SPEAKER_00: The other crown dependencies that people would know of are Guernsey, Jersey, and the Isle of Man.
6:10
SPEAKER_00: And the interesting thing is, and this often gets confused and needs to be repeated over and over again to really drive home this point.
6:17
SPEAKER_00: Sark is fully independent from Guernsey and has the same legal standing as the Isle of Man, Guernsey, and Jersey each have.
6:27
SPEAKER_00: Where it occasionally gets a bit confusing for people who've you know just looked at it from the outside, it's it's part of the bailiwick of Guernsey, which is a geographical term and an administrative term but has no meaning of Guernsey has has no say in Sark.
6:42
SPEAKER_00: Sark has outsourced a few matters of public administration to Guernsey simply because if you have an island with 600 people, you can't really have a financial regulator, for example.
6:53
SPEAKER_00: So Sark said voluntarily we submit to the financial regulation of Guernsey because we could never manage that ourselves.
7:00
SPEAKER_00: But for all other, almost all other purposes, SARC just does its own thing and it does that since 1565.
7:07
SPEAKER_00: The story is basically that in 1565 Sark was not inhabited, and uh there was a risk that you know pirates or someone else could could use the island.
7:17
SPEAKER_00: So the English crown said to a nobleman from Jersey, if you take 40 men to Sark and you occupy the island and you agree to defend it for the crown, then we grant you the right for eternity that you may self-govern.
7:32
SPEAKER_00: And this is how it all came into life.
7:34
SPEAKER_00: And at the time, these 40 men, each one got a piece of land, and each one was obliged to keep a loaded musket or two muskets in the house, and they also formed a de facto parliament, which at the time was a parliament of landowners, but since 2008 it was reformed and it's now a parliament that gets elected, so we have elections here like everywhere else.
7:56
SPEAKER_01: Right.
7:56
SPEAKER_01: But then um the seigneur of Sark, that is a hereditary position, as far as I understand.
8:03
SPEAKER_00: Correct.
8:03
SPEAKER_00: That's a feudal lord, and it's currently the 23rd senior of Sark, and this is it comes with a piece of real estate.
8:11
SPEAKER_00: He has a, I'm not sure if you could call it castle, but it's certainly a very nice estate.
8:16
SPEAKER_00: And yeah, the current senior is Christopher Beaumont, who attended IMI Daily in Malta to learn about the industry of investment migration and related subjects.
8:26
SPEAKER_01: Yes, and and he's part of Sark Property Company with you.
8:30
SPEAKER_01: He's on the board, right?
8:32
SPEAKER_00: Correct.
8:32
SPEAKER_00: So he and I we really met many years ago at an event of the Sark Chamber of Commerce, where Christopher at the time had not been on the island for a long time yet.
8:42
SPEAKER_00: He had just inherited the position.
8:44
SPEAKER_00: And he spoke at the Chamber of Commerce in Sark about we probably need more people here because if you have, say, 500 or 600 people, most things are just not possible because of a lack of critical mass.
8:58
SPEAKER_00: Like we have no bakery, and at almost any given time there are empty seats in parliament because not enough people want to stand.
9:05
SPEAKER_00: In winter, restaurants are not open because restaurants are driven by tourism in the summer, and in winter, there's just not enough people to justify keeping restaurants open.
9:14
SPEAKER_00: So I'm a resident here, I've lived here since 2017, and I said, you know, there's I think something that needs to be done here because we all want to have a better life.
9:24
SPEAKER_00: We also want a great future for SARC.
9:26
SPEAKER_00: Everyone wants to protect what makes it special.
9:28
SPEAKER_00: If you live here, there are certain things that you really, really, really don't want to change.
9:32
SPEAKER_00: One of which is, for example, that we don't have cars.
9:34
SPEAKER_00: I don't think anyone here really would want motor cars to be introduced to the island.
9:38
SPEAKER_00: But you need a certain minimum number of people, and that requires real estate.
9:42
SPEAKER_00: And that's that's in a way the subject we're currently looking at.
9:46
SPEAKER_01: Yeah.
9:46
SPEAKER_01: So so how do you get to Sark?
9:48
SPEAKER_01: Yeah, I imagine you would fly into Guernsey and take a ferry from there.
9:52
SPEAKER_00: Correct.
9:53
SPEAKER_00: So very importantly, Sark has no airport, and you can take five flights a day from London Gatwick and you fly to Guernsey.
10:01
SPEAKER_00: There are also flights from other cities in the UK to Guernsey, and then at Guernsey Airport you take a taxi.
10:07
SPEAKER_00: It's 10-15 minutes, you go to the harbour, and then you hop on the ferry.
10:10
SPEAKER_00: The ferry goes back and forth between Sark and Guernsey, maybe I think five times a day in summer.
10:15
SPEAKER_00: In winter, a lot less.
10:17
SPEAKER_00: In winter, there are days without ferry as well.
10:19
SPEAKER_00: And it's about 34, uh 35 to 40 minutes to come over here.
10:24
SPEAKER_00: Weather permitting, it does get cancelled occasionally.
10:26
SPEAKER_00: It's the English Channel, it's not the Mediterranean, it's not a bathtub.
10:29
SPEAKER_01: Right, right.
10:31
SPEAKER_01: I imagine a lot of the local residents must have private boats by which they they get to Guernsey, right?
10:38
SPEAKER_00: They do, but probably fewer than you think because the sea here is quite rough and the weather can be challenging.
10:44
SPEAKER_00: So either you have a really big boat and you know then becomes a bit of an obligation and a bit of a drag on your life, or you just simply use the ferry.
10:52
SPEAKER_00: And I I would say 95% of everyone uses the ferry.
10:56
SPEAKER_01: Okay, so let me ask you a little bit about who you know who Sark is suitable for.
11:02
SPEAKER_01: Like to what type of person is residency in Sark primarily of interest?
11:07
SPEAKER_01: And how do you even get residency in Sark?
11:10
SPEAKER_00: So by way of being a very small island, it appeals to a small audience.
11:15
SPEAKER_00: This is a niche product, and obviously has to be because it's a small island and there are only so many people who could ever live here.
11:22
SPEAKER_00: It's also at the same time a product that just perfectly suits some people.
11:26
SPEAKER_00: I'm one of them.
11:27
SPEAKER_00: So I am very fond of the English-speaking world.
11:30
SPEAKER_00: I like small islands.
11:32
SPEAKER_00: I work in the finance industry, so I want to work somewhere where you are either in or close to a financial centre.
11:39
SPEAKER_00: And I used to live in London for many years.
11:42
SPEAKER_00: So for me, being close to London is a major plus.
11:46
SPEAKER_00: And there are, I mean, I think many reasons why you'd want to live here potentially.
11:53
SPEAKER_00: For families, one of the strong arguments is it's a car-free island, there's no crime, there's a very good school on the island, there's a small, tight community.
12:01
SPEAKER_00: So this is a great place to bring up a family.
12:03
SPEAKER_00: There is a tax angle to it, you pay a relatively low tax here.
12:07
SPEAKER_00: You also get very little for your money, but it is a very benign environment from that perspective as well.
12:12
SPEAKER_00: It's a beautiful island.
12:14
SPEAKER_01: What is the what is the tax?
12:15
SPEAKER_01: So, as far as I understand, there's no income tax, there's no capital gains tax, there's nothing like that, but there is property tax of some kind, right?
12:22
SPEAKER_00: Correct.
12:23
SPEAKER_00: So a slightly simplified version of things is that you don't have to declare your income and you don't have to declare your assets.
12:31
SPEAKER_00: Instead, you pay a quasi-flat tax, which is based on the size of your property.
12:37
SPEAKER_00: And I mean, to give you an idea, I live in a fairly large house with a garden and I pay£5,000 a year.
12:44
SPEAKER_00: I I don't think there's anyone here who pays significantly over 10,000.
12:47
SPEAKER_00: That would only be a handful of people.
12:49
SPEAKER_00: And if you have a small apartment, you probably pay 1,500 pounds a year in taxes.
12:53
SPEAKER_00: Right.
12:53
SPEAKER_01: And that's just based on like the number of windows in your in your house and something similar than that, yeah.
13:00
SPEAKER_00: There's a register for for each property, and it's a one-page tax return.
13:04
SPEAKER_00: You pay that in January and you're done.
13:06
SPEAKER_00: And other than that, there's not even a VAT here, no sales tax.
13:08
SPEAKER_00: You just don't have any of these things.
13:10
SPEAKER_00: You do need to pay£15 a year for your bicycle or for your horse, there's a tax for that, and there's an alcohol tax as well.
13:16
SPEAKER_00: Other than that, it's it's incredible.
13:20
SPEAKER_01: That's incredible.
13:21
SPEAKER_01: And and how can so since it's a crown dependency, I assume that just like in Jersey or Guernsey, UK citizens and probably Irish by virtue of the common travel area, are allowed to settle there, right?
13:36
SPEAKER_00: Correct.
13:36
SPEAKER_00: And in a way, this is fascinating.
13:38
SPEAKER_00: So you've got an island with 600 people right now, and anyone who has a British or Irish passport, which is 70 or 70 million people or way more than that, even, has in theory a right to live here, provided they can find somewhere to live because it's part of the common travel area.
13:54
SPEAKER_00: Until Brexit, it used to be possible for EU citizens to move here as well.
13:59
SPEAKER_00: No questions asked, you just have to find a place to live.
14:01
SPEAKER_00: That has changed.
14:02
SPEAKER_00: So I still get a lot of inquiries from people from France, Germany, Sweden, and God knows where.
14:08
SPEAKER_00: And I just always have to say the same thing.
14:10
SPEAKER_00: Sorry, you're just simply too late.
14:12
SPEAKER_00: It's now the easiest for Irish and British people, and then you may be able to get a visa of a different kind.
14:18
SPEAKER_00: There are visa categories, but they are not that competitive, I have to say.
14:23
SPEAKER_00: You may have reported about the entrepreneur visa on your blog already?
14:27
SPEAKER_00: Well, for Guernsey, yes.
14:29
SPEAKER_01: So so is it if if I get residency in Guernsey, can I so as let's say I'm an EU I'm I'm a non-CTA citizen and I I apply for residency in Guernsey.
14:41
SPEAKER_01: Does that then cover Sark and Alderney and no?
14:46
SPEAKER_00: No, it covers Alderney because Alderney belongs to Guernsey, but Sark is a separate jurisdiction, and this is really quite difficult to get your head around until you've been here.
14:55
SPEAKER_00: Once people have been here, they get it.
14:57
SPEAKER_00: And I've literally just before this podcast, I've walked around someone with whom I've had multiple conversations about Sark, and he came here for the first time now and he said, now I completely get it.
15:07
SPEAKER_00: So for immigration purposes, it's separate.
15:11
SPEAKER_00: There is a an outsourcing agreement of sorts with Guernsey because Sark doesn't have the government officials to deal with immigration.
15:20
SPEAKER_00: They've basically said Guernsey deals with immigration on our behalf, but Sark still has separate rules.
15:25
SPEAKER_00: So Guernsey provides a service to Sark in terms of admin, and then it gets a bit complicated and possibly a bit confusing in the sense that so the entrepreneur visa that Guernsey created was specifically created to also include Sark.
15:43
SPEAKER_00: Sark adopted that, but at the same time, work permits for someone who comes to Guernsey to work do not extend to Sark and the other way around.
15:53
SPEAKER_00: You can get a work permit to work in Sark, but you're not allowed then to live in Guernsey.
15:57
SPEAKER_01: Either way, you'd be you'd be dealing with officials in Guernsey, right?
16:01
SPEAKER_01: When making the application.
16:03
SPEAKER_01: Because that's it, because Sark has subcontracted that service out to officials in Guernsey.
16:09
SPEAKER_00: Correct.
16:10
SPEAKER_00: This is where again I say, you know, it can get very confusing because that makes it look like Guernsey is in charge of Sark and it's not.
16:16
SPEAKER_00: Right.
16:17
SPEAKER_01: No, no, it's it's a it's a question of scale.
16:19
SPEAKER_01: I mean, I I've never been to Sark, but I have been to Guernsey, and I thought Guernsey was small, but Guernsey is 50 something thousand people.
16:26
SPEAKER_01: And and Sark 600 people.
16:29
SPEAKER_01: Okay.
16:30
SPEAKER_01: So so I understand the the one of the problems in Sark is that you don't have the scale necessary to maintain certain basic services, whether public or or private sector.
16:43
SPEAKER_01: But you're looking to do something about that.
16:46
SPEAKER_01: That's why I want you to tell me about your current big project, the Sark property company, and what your your grand vision is.
16:54
SPEAKER_01: But I but I think we should start with identifying what was the problem initially.
17:00
SPEAKER_01: What is the problem right now in Sark that that you want to address?
17:03
SPEAKER_01: I know it has to do with depopulation, there's a dearth of suitable properties, a lot of properties are in a state of disrepair, there's confusion regarding who owns certain properties, etc.
17:16
SPEAKER_01: So I want to I wanted to know if you can sort of provide some context, give us the background to what met you when you came to Sark in 2017.
17:25
SPEAKER_00: Yes, so the biggest problem on Sark that's been in the media for many years all over the world is that there was a family, and to some extent still is a family that owns 20% of Sark, including many of the residential and commercial properties and many five of the seven hotels.
17:42
SPEAKER_00: And they had seven hotels.
17:44
SPEAKER_01: Sorry, there's seven hotels.
17:45
SPEAKER_01: Yes, there's not they can't sustain a bakery, but they can sustain seven hotels.
17:49
SPEAKER_00: Yes, so there is a significant size tourism industry in Sark, which only functions from May to September, and that's when all money is made.
17:57
SPEAKER_00: And yes, there are seven hotels.
17:58
SPEAKER_00: In summer, we go up to last year we had ten restaurants open, but then in winter it all shuts down and it goes very quiet.
18:05
SPEAKER_00: Right.
18:05
SPEAKER_00: Okay.
18:07
SPEAKER_00: And one family, the Barclay family, who've got nothing to do with the bank.
18:12
SPEAKER_00: They're just um they were two twins who became very successful in real estate in the UK, became multi-billionaires.
18:18
SPEAKER_00: They bought a large chunk of the island, but then had a falling out with parts of the population.
18:24
SPEAKER_00: And the details are, you know, depending on who you ask, there are various versions flying around.
18:30
SPEAKER_00: In any case, it led to the family eventually in 2015 closing a lot of their real estate, closing down the hotels, firing everyone, letting things go into disrepair.
18:41
SPEAKER_00: The details of this are very complicated and a bit difficult to explain.
18:45
SPEAKER_00: They don't always make sense.
18:46
SPEAKER_00: But the bottom line is there is a lot of real estate here on SARC that's in disrepair or not used at all or not used efficiently.
18:54
SPEAKER_00: Two of these five hotels are now open again.
18:58
SPEAKER_00: One probably could be reopened with multimillion refurbishment, the fourth one probably needs to be knocked down and replaced, and the fifth one has actually burnt down.
19:07
SPEAKER_00: So there's nothing left except for a permit to rebuild it.
19:12
SPEAKER_00: And if you combine that with a lot of the residential real estate is in a bad condition, and the high street is in a very bad condition, then you've got an interesting investment case where you could say, you know, let's speak to the family and buy the entire portfolio, and then we bring the capital to the table and also the political capital to actually make something happen.
19:31
SPEAKER_00: And that's the goal we set ourselves three years ago when we set up the SARC property company as a special purpose vehicle.
19:37
SPEAKER_00: The only goal of the exercise was to find a way to commercially and in a financially viable way purchase this portfolio, do it up, and that way inject new life into SARC.
19:49
SPEAKER_00: And that's that's what brought us onto the front page of the Financial Times recently.
19:53
SPEAKER_01: Right.
19:53
SPEAKER_01: Okay, so the the means by which you are trying to bring about your vision, and your vision, if I can if I understand it, is that you want a revival of Sark, you want to attract new residents to SARC, and you want to reach a critical mass of residents so that so that you can you can sustain basic services.
20:12
SPEAKER_01: And the the vehicle for this is, as you said, a special purpose vehicle, Sark property company.
20:17
SPEAKER_01: It's an LLC, and you're looking to raise in this first round between 25 and 35 million pounds, I understand.
20:26
SPEAKER_01: How will you be spending that?
20:29
SPEAKER_00: So this is a project that needs to be looked at in two or maybe three phases.
20:34
SPEAKER_00: In the first phase, and I'm very much the I've had multiple positions of actually managing things, and I am very acutely aware that creating a vision is one thing, executing on it is uh is a very different thing.
20:47
SPEAKER_00: And I like to break things down into manageable steps.
20:51
SPEAKER_00: And the first step we want to take is to purchase the portfolio of that family and then deploy about 15 million pounds into refurbishing that.
21:01
SPEAKER_00: So we're currently raising 35 million.
21:03
SPEAKER_00: We have offers for a bit of financing to be provided.
21:06
SPEAKER_00: We don't want to you know leverage a lot, but um there's an element of financing that will be provided to us by someone, and then you can up up to up to 30% loan to value.
21:17
SPEAKER_00: Uh, I think I read 30%, really, not more than that.
21:20
SPEAKER_00: But I'm I'm saying this because then you can sort of work back to what is that portfolio currently worth.
21:26
SPEAKER_00: And we're not we're not saying a figure of what exactly we're going to bid, but you know, it's it's not worth in the hundreds of millions.
21:32
SPEAKER_00: We're looking at a relatively modest figure.
21:34
SPEAKER_00: I always say, you know, this is the price is probably comparable to a large building in in London.
21:41
SPEAKER_00: Right, right.
21:42
SPEAKER_00: It's both a large amount of money if you don't have it equally, it's not that much in the grander scheme of things of the real estate industry.
21:48
SPEAKER_00: And we want to purchase this portfolio and put it back into working order and do that in such a way that we have a good result coming out of that for our investors.
21:58
SPEAKER_00: It's a it's a distressed investment.
22:00
SPEAKER_00: Investment right now, a distressed asset.
22:01
SPEAKER_00: It needs work, it needs a lot of management input.
22:04
SPEAKER_00: But then you can look at the future of SARC, and this is where it becomes exciting.
22:08
SPEAKER_00: And I mean, I just simply want this to be one of the best places in the world to live, and not just for rich people.
22:15
SPEAKER_00: If you live here, you are exposed to everyone else who is on the island.
22:19
SPEAKER_00: You I don't, you know, it's not like I know everyone, but you you have to live with everyone who's here.
22:25
SPEAKER_00: And there's certainly an element of affordable houses is needed.
22:28
SPEAKER_00: That's currently.
22:29
SPEAKER_01: Sorry, how how does that how does that work?
22:31
SPEAKER_01: Like in a tiny place like that?
22:32
SPEAKER_01: Like when you're I don't know, if you're walking your dog or walking your daughter to school or something like this, you run into people in the street, do you have to stop and chat with them?
22:42
SPEAKER_01: And if you don't, uh is that you know gonna be seen as you being elitist or something for not stopping to talk?
22:50
SPEAKER_01: I mean, it's such a small place, right?
22:52
SPEAKER_00: Absolutely.
22:52
SPEAKER_00: I would describe it as everyone says hello to each other, including the people who don't like each other.
22:57
SPEAKER_00: Right.
22:58
SPEAKER_00: And that's almost an unwritten rule here.
23:00
SPEAKER_00: Even if you don't like someone, you have to say hello.
23:02
SPEAKER_00: And what you just mentioned, I would describe as the great thing is that you can just literally get things arranged and planned by being out there and bumping into people and having your conversations with them.
23:16
SPEAKER_00: So, I mean, we have 18 members of parliament.
23:18
SPEAKER_00: If you want to speak to politicians, you do you do meet them in the supermarket on a Saturday morning.
23:23
SPEAKER_00: And you know, you don't want to be rude and interrupt their shopping, but you bump into people everywhere, and you can always have a quick chat and say, hey, you know, like this and that, and shall we have a coffee and shall we meet tomorrow?
23:34
SPEAKER_00: It's a very it's a great place to live in that regard.
23:38
SPEAKER_01: And I've always I've always thought that smaller jurisdictions, the one of the the big advantages is that the the distance between the rulers and the ruled is much smaller, right?
23:50
SPEAKER_01: And so you at SARC you have an extreme example of this.
23:53
SPEAKER_01: Like you bump into the the people who run the country, you bump into them in the supermarket frequently.
23:58
SPEAKER_01: So that means that they can't act with impunity, right?
24:02
SPEAKER_01: They can't.
24:03
SPEAKER_01: It's not like it's you know, if you're prime uh president of a big country or you're protected by you know Secret Service agents or motorcades, you never really have to come face to face with the people that you rule.
24:16
SPEAKER_01: But in a in a smaller country, that's definitely the case.
24:19
SPEAKER_01: And so that's a kind of insurance against tyranny, so to speak.
24:24
SPEAKER_00: I completely agree.
24:25
SPEAKER_00: There's actually a great research report from Credit Suisse about smaller countries being more successful for exactly those reasons.
24:32
SPEAKER_00: The the rulers are so close to the ruled.
24:35
SPEAKER_00: And here in SARC, in terms of what we're proposing, so it's both a challenge and an opportunity.
24:41
SPEAKER_00: It's a challenge in the sense that whatever you do immediately affects all the people around you and they can speak to you about it.
24:47
SPEAKER_00: And I would say it primarily as an opportunity because it's easier to speak with people and engage them.
24:54
SPEAKER_00: And we once, when we made these plans public, we hosted together with an organization specialized in public engagement, we hosted a public event for which close to 200 people turned up to hear about it and debate things.
25:09
SPEAKER_00: And that was one of the largest public gatherings in recent history in SARC.
25:13
SPEAKER_00: So it's easy to get people to come together.
25:16
SPEAKER_00: Not everyone agrees, and some people will strongly disagree with you know whatever I propose, but that's normal in any given place, and you have to work with that.
25:23
SPEAKER_00: And at least you can get them all into a room.
25:26
SPEAKER_01: So so this uh part of the lack of um suitable real estate for for residential for residences in uh Sark is that there's a lot of properties in a state of disrepair.
25:38
SPEAKER_01: As we mentioned, that is is that primarily related to the Barclay properties, or is it generally in Sark?
25:46
SPEAKER_00: It's a wider problem.
25:48
SPEAKER_00: A lot of them do sit in that one portfolio, but it's a wider problem that has a complex background.
25:55
SPEAKER_00: So it relates to the building regulation here as well, and it relates to succession cases where people inherited properties, but then the children fought over it or didn't know what to do with it.
26:06
SPEAKER_00: It's also related to the fact that up until now mortgages don't exist in SARC.
26:11
SPEAKER_00: So mortgages were made illegal in 1607 and only allowed again in 2020.
26:17
SPEAKER_00: So up to 2020, you always had to pay 100% in cash for each property.
26:21
SPEAKER_00: By law.
26:22
SPEAKER_00: Yes, that slowed down the property market.
26:25
SPEAKER_00: They were made legal in 2020, but up to now, no bank lens against SARC property.
26:31
SPEAKER_00: And we we have a strong banking relationship where we will make mortgages happen for SARC properties, but up until now, the whole market is a bit stuck in many ways, and I could, you know, talk about this for hours.
26:44
SPEAKER_00: But yeah, you walk across SARC and you find unoccupied buildings in more locations than you'd you'd think.
26:51
SPEAKER_01: Yeah, and but I imagine, I think I read in your prospectus that uh you're getting a mortgage facility in a bank in Guernsey, is that correct?
26:59
SPEAKER_00: Correct, yep.
27:00
SPEAKER_01: Yeah.
27:01
SPEAKER_01: And so what would that potentially do to property prices?
27:04
SPEAKER_01: I mean, if you if you have a market where you've never had mortgages and then suddenly you have mortgages, all else being equal, prices should go up, right?
27:12
SPEAKER_00: Correct, yeah.
27:12
SPEAKER_00: There's nothing to add here.
27:15
unknown: Okay.
27:15
SPEAKER_01: I'm a bit curious because in in our industry in investment migration, I mean we've seen everywhere, essentially from from Lisbon to Auckland and New Zealand to Vancouver in Canada, that a sudden influx of well-to-do foreign residents isn't always welcomed by the locals.
27:37
SPEAKER_01: Part of that has to do with uh a perceived increase in in costs, uh price of real estate, etc.
27:43
SPEAKER_01: Now if your vision comes to fruition, it would it would by design transform the island of Sark beyond recognition.
27:51
SPEAKER_01: Not beyond recognition, maybe that's that's just wrong, but it would definitely imply very big changes for Sark.
27:58
SPEAKER_01: So in a case like that, you know, you said that you've had you've engaged the public in Sark with a number of meetings.
28:06
SPEAKER_01: To what extent do you feel that you have local buy-in?
28:11
SPEAKER_01: I know from from your article in undervalued shares.com that the local the speaker of the local parliament of the chief please is a bit skeptical to you.
28:21
SPEAKER_01: And you you also said that SARC politics are very divisive.
28:24
SPEAKER_01: So I just want to know if you can explain a bit to what extent you feel like the current residents of SARC are interested in this project and and what kind of resistance you're getting.
28:37
SPEAKER_00: So the I believe there's a majority of people here who say that something has to happen in SARC because when you walk around the place, you see it's literally falling apart.
28:46
SPEAKER_00: There's a cost of living crisis, there's a housing crisis, the public services are in decline.
28:51
SPEAKER_00: The place is clearly not going in the right direction.
28:54
SPEAKER_00: Everyone can see that, and residents are struggling.
28:58
SPEAKER_00: The government here is very hands-off.
29:00
SPEAKER_00: So, what you described with regards to outsiders coming in and driving up prices, that's already happening anyway, and the government has absolutely no policy how to deal with that.
29:10
SPEAKER_00: Imagine a small island that offers the opportunities and the advantages that are described earlier, like for example, with taxes, and 70 million people have a right to live here.
29:18
SPEAKER_00: So, you know, go figure what's going to happen over time with you know with how the tax situation and the political situation in the UK is going following the win of the Labour government.
29:28
SPEAKER_01: And we and we should point out that just your efforts from 2017 until now has already expanded the population of Sark by 40-50%, right?
29:37
SPEAKER_00: It has had quite an effect.
29:38
SPEAKER_00: There was also a churn effect with some people leaving again, but since then the world has changed.
29:43
SPEAKER_00: We've got work from home now as a new trend.
29:46
SPEAKER_00: So it's not like I or anyone else needs to promote SARC, it's just people turning up here under their own steam because they know of it, they use the internet and they check it out.
29:55
SPEAKER_00: And right now there's a waiting list for rentals here.
29:59
SPEAKER_00: And we are the ones who are proposing that something is done about that.
30:03
SPEAKER_00: So when we speak about real estate development, our plan and our ambitions is very much to make a place that is affordable to people of all income groups, because that's the only way how to make this place function and be a nice place to live.
30:16
SPEAKER_00: You can't run a place or an island on the back of just rich people.
30:20
SPEAKER_00: You need you know people from different walks of life, you need professionals, you need someone to run the school.
30:27
SPEAKER_01: And all age groups, too, right?
30:29
SPEAKER_01: Because uh I understand that in Sark the average age is uh what more than 50 or something.
30:33
SPEAKER_00: Yeah, it's 54, I believe, right now.
30:36
SPEAKER_00: And there's a huge problem with, for example, families.
30:39
SPEAKER_00: You know, families can't get here because there are no mortgages available and no properties that would be suitable or attractive for families as well.
30:49
SPEAKER_00: And this is something we want to change.
30:51
SPEAKER_00: So we're really approaching this from the perspective of we need a holistic plan here.
30:55
SPEAKER_00: We need the public and the island to continue to discuss what is needed in SARC, and out of that eventually needs to fall some kind of long-term development plan where you also plan things like energy, water.
31:07
SPEAKER_00: All of these things are matters that the government should be doing.
31:10
SPEAKER_00: Some of that is happening.
31:11
SPEAKER_00: Um, I'm not here to criticize the government, but I guess not enough of it is happening.
31:16
SPEAKER_00: And the other thing is that you need capital to make these things happen.
31:20
SPEAKER_00: And SARC's government has an annual budget right now of two million pounds.
31:25
SPEAKER_00: So you can imagine how you know that doesn't stretch very far.
31:30
SPEAKER_00: And the island is so deep down the hole in terms of infrastructure and needs that I think a private large investor that comes here with, you know, with commercial objectives, but also being very much part of the community and discussing what needs to be done here with everyone who wants to discuss it with us, I think this is really the only way forward.
31:48
SPEAKER_00: The alternative is not a good one.
31:50
SPEAKER_00: Not doing anything is a really, really terrible alternative.
31:55
SPEAKER_01: So, to the extent that you are meeting any resistance from the locals, what are the concerns that they have?
32:02
SPEAKER_00: So the number one concern is, of course, always it's is it going to be an island just for rich people?
32:08
SPEAKER_00: And you know, we can't afford to live here, to which I say, you know, it's the op this is happening right now, and we're here to help to make to prevent that exactly.
32:17
SPEAKER_00: And then there is this somewhat vague but very important point that you know SARC should just stay as it is, and this is something I feel very strongly about.
32:28
SPEAKER_00: SARC is a unique place, it's special, and the seigneurs, part of my team, we're colleagues, that he's a director as well.
32:34
SPEAKER_00: We want to do everything to make sure that what makes SARC special is protected for the future.
32:40
SPEAKER_00: But that doesn't mean that you can't change anything.
32:44
SPEAKER_00: SARC, the world around SARC is changing, and to some extent, SARC needs to change a little bit as well.
32:51
SPEAKER_00: But we need to work out what is it that makes SARC so special and how do you protect that?
32:55
SPEAKER_00: For example, the obvious factor is you know, it's car free, it's currently crime free, there are no paved roads, there are no street lights.
33:02
SPEAKER_00: Would we have ever suggested to change any of these things?
33:05
SPEAKER_00: Absolutely not.
33:06
SPEAKER_00: But um you also have to admit to certain realities, even if there's sometimes incon sometimes inconvenient realities.
33:14
SPEAKER_00: You cannot run this place with 550 people.
33:17
SPEAKER_00: There is such a strain here on public services already and on the government budget.
33:21
SPEAKER_00: And the school is only providing schooling until the age of 13, then kids have to go away.
33:26
SPEAKER_00: This means that families can't settle here, you're in a demographic spiral, that's not good.
33:31
SPEAKER_00: So something has to be done, and these problems are not simple, and they can only be resolved if everyone pulls on the same rope.
33:37
SPEAKER_00: But saying we just keep we don't change anything, that's that's not an option because that's been happening here for a very long time and the place has only gone downhill as a result.
33:47
SPEAKER_01: Yeah, I mean, no place there's no place in the world that doesn't change, right?
33:52
SPEAKER_01: You you you can try to of course retain the essence of a place, but to say that it shouldn't change at all, I mean, it'll change whether you want to or not, either through development or entropy.
34:03
SPEAKER_01: And but yes.
34:05
SPEAKER_01: Sorry, go ahead.
34:06
SPEAKER_00: And if I can just add one more, one more thought here.
34:09
SPEAKER_00: So there's also always, and the media is to some extent, I think, guilty of that.
34:13
SPEAKER_00: There's always this discussion about what do the so-called locals think.
34:17
SPEAKER_00: The truth is that 70% of the population of the island is not actually from Sark.
34:24
SPEAKER_00: So there's been such an influx of people over time already that you know, everyone always claims that you know I'm a Sarkey, but everyone who's been here one day less than me is not a Sarkey.
34:35
SPEAKER_00: And I have friends here, and I'm not kidding, you know, friends who've been here for 50 years, and they say, you know, you're not a local.
34:42
SPEAKER_00: They're being told they're not a local because they've only been here 50 years and someone else has been there 55 years.
34:47
SPEAKER_00: At the end of the day, we're just all residents, and we need to get along and make this place function.
34:52
SPEAKER_00: And really, that's the conversation that grown-ups need to have.
34:55
SPEAKER_01: Yes.
34:57
SPEAKER_01: We spoke about the critical mass necessary to sustain a modicum of commercial and public services.
35:04
SPEAKER_01: How many people could comfortably live on Sark if it's adequately developed?
35:12
SPEAKER_00: So the starting point is that currently the population density of Sark is 10% of the population density of Guernsey.
35:21
SPEAKER_00: So it's very thinly populated.
35:24
SPEAKER_00: And then if you speak to urban developers, they will tell you that you can't run a community anywhere really with less than 1,100 to 1,300 households.
35:34
SPEAKER_00: A household is 2.4 people.
35:36
SPEAKER_00: So that would take you to somewhere between 2,000 and 2,500 people.
35:40
SPEAKER_00: This is not a number we're proposing.
35:42
SPEAKER_00: We're saying we need to have a conversation about this together with urban planners and with people who can create a long-term plan for SARC that makes the place, and I hate this fashionable word, but it makes it sustainable and resilient.
35:54
SPEAKER_00: Resilient is a word that we really like.
35:57
SPEAKER_00: So currently we're probably at 600.
36:00
SPEAKER_00: The number certainly needs to be higher than that.
36:03
SPEAKER_00: Where exactly it needs to be and how fast you want to get there is a totally separate discussion.
36:08
SPEAKER_00: And then, of course, there are multiple, you know, other aspects, such as hardly anyone wants to be on the island for 365 days a year.
36:18
SPEAKER_00: You can be tax resident here with 90 days a year.
36:21
SPEAKER_00: So one dwelling could be used by two parties easily and they can still split the summer between themselves.
36:27
SPEAKER_01: Yes, this is in your development plan as well, right?
36:29
SPEAKER_01: Uh, these types of shared uh what what do you call them?
36:32
SPEAKER_01: Like time, like kind of like a timeshare?
36:35
SPEAKER_00: Fractional use.
36:35
SPEAKER_00: I mean, at the end of the day, we feel strongly that someone who has a dwelling here also should spend significant amounts of time here because that means they spend money in restaurants, on the shops, they're part of the community, they contribute with volunteering.
36:49
SPEAKER_00: And to be a to be a tax resident of SARC, how many days do you need to spend?
36:53
SPEAKER_00: So, interestingly enough, right now, legally speaking, zero days, there is no requirement to be here at all.
37:00
SPEAKER_00: We've been and I've been lobbying for years that it should be 90 days, just to be, you know, a good standard, because entirely empty houses don't help anyone.
37:09
SPEAKER_00: For the local economy to function, you need people to be here.
37:12
SPEAKER_00: And if it's 90 days, then you can say, you know, two parties can spit a house between each other and they've got 180 days each.
37:18
SPEAKER_00: The property is available to them, and it's better they spend money here locally because someone is usually here.
37:23
SPEAKER_00: But that that changes the population count.
37:25
SPEAKER_00: You know, if a building is used by two parties, then you know you're looking at a different way of counting.
37:31
SPEAKER_01: But okay, what type of properties are you planning to develop?
37:34
SPEAKER_01: So you let's go back a little bit because you say you you think of this as really three phases.
37:39
SPEAKER_01: This you have this initial phase where you're looking to raise 35 million pounds, and that is to acquire properties and do some minor refurbishments or renovations.
37:49
SPEAKER_01: But then you have a second phase where you would raise roughly the same amount and buy more land and you would allocate more money toward renovations.
37:58
SPEAKER_01: Just walk me through the phases.
38:00
SPEAKER_00: Yeah.
38:01
SPEAKER_00: So the portfolio that we're looking at right now is 80 residential houses and 20 commercial properties.
38:06
SPEAKER_00: And these 80 residential houses, there's really a vast array of different properties.
38:12
SPEAKER_00: It ranges from small bungalows and cottages to mansions.
38:18
SPEAKER_00: And also includes an apartment building and also the foundation of an apartment building that someone began to build but deserted the construction site in 2008.
38:28
SPEAKER_01: And it's just basically apartment buildings there right now?
38:32
SPEAKER_00: There's one on the island that you could call an apartment building.
38:35
SPEAKER_00: It's not very big, and no one, we certainly not us, we're not proposing to build large apartment buildings, but it exists, yes.
38:42
SPEAKER_00: And for example, in this portfolio, there is one, and it's in an amazing site.
38:47
SPEAKER_00: There is the foundation for an apartment building that was permitted, and you could certainly put quite a few units into that building if you finished it.
38:56
SPEAKER_00: And we are looking at primarily finishing and refurbishing houses that are currently either, you know, just a construction site or they're derelict or they're just not used for whatever reason.
39:06
SPEAKER_00: And yeah, I mean, there's mansions in there and there's cottages in there, apartments, and in anything in between.
39:12
SPEAKER_00: It's a wild mixture.
39:13
SPEAKER_00: And really, that's what we want to get back into full production.
39:16
SPEAKER_01: Right.
39:17
SPEAKER_01: But it but it'll be mostly single-family dwellings then.
39:20
SPEAKER_00: Yes, that's the standard here.
39:22
SPEAKER_00: Single family dwellings, usually with a garden, that's the what you usually get on Sark.
39:26
SPEAKER_01: Right.
39:26
SPEAKER_01: And could you could you fit 5,000 people on Sark if you uh like in the absence of more dense types of dwellings like apartment buildings?
39:35
SPEAKER_00: So what you would do here in the first instance, I mean, so if if you said, you know, can you take this place to 2,000?
39:43
SPEAKER_00: The first matter you would look at is can you increase the density of the existing village?
39:48
SPEAKER_00: Because there is a village and it has a very low density, and there are probably some parts where you could increase the density without anyone even noticing.
39:57
SPEAKER_00: There's also a lot of underutilized property here.
40:01
SPEAKER_00: And longer term, there's certainly a discussion to be had, you know, if you want to significantly increase the population, where do you put them?
40:08
SPEAKER_00: But from my perspective, that is currently still so far away and needs so much more community engagement that it's of limited use to spend much time on that because there's so many quick wins here, and that would create a certain dynamic where SARC would have some positive momentum again.
40:22
SPEAKER_00: I think this after the crisis that SARC has been through for many, many years, it's important to get this place to positive momentum, and then you can discuss the details of everything else.
40:31
SPEAKER_00: In terms of space, to give you a bit of a broad answer to your question, the place is so much bigger than everyone thinks.
40:38
SPEAKER_00: People arrive here and then I walk them around for three hours, and then I tell them you've just seen like 20% of the island, and then they all say, This is just so much bigger than I thought.
40:48
SPEAKER_00: So space is not as constrained as it may sound.
40:52
SPEAKER_01: Right.
40:52
SPEAKER_01: So just by fixing up the existing housing stock, that'll that'll take you far in terms of increasing the population density.
41:00
SPEAKER_00: It would probably take you closer to a thousand.
41:03
SPEAKER_00: Right, right.
41:04
SPEAKER_00: And then not overnight.
41:06
SPEAKER_01: Right.
41:07
SPEAKER_01: And then only after that would you have to consider new construction, right?
41:11
SPEAKER_00: Correct, yeah.
41:12
SPEAKER_00: So incredibly enough, the existing real estate on SARC, we've we've calculated that once, could easily house 1,200 people without adding a single building.
41:22
SPEAKER_00: It's just a better use of properties.
41:25
unknown: Right.
41:25
SPEAKER_00: And there are multiple complications with that.
41:27
SPEAKER_00: Just to give you one example.
41:28
SPEAKER_00: So I mentioned to you there is a hotel that burned down, and there is a genuine question to be asked: does SARC really need another hotel, or should this be repurposed to something else?
41:39
SPEAKER_00: Currently that's not possible under existing law, but it it's a conversation to be had, and every single building here makes a difference.
41:48
SPEAKER_01: And so, in in your initial development plan, what I understood was that uh your argument is rather than having you know six or seven tiny hotels, why don't we consolidate it into a single offering that could have more amenities?
42:04
SPEAKER_00: Is that correct?
42:06
SPEAKER_00: Yes.
42:07
SPEAKER_00: So what you've got here right now is and anyone in the hotel industry will tell you this: all the hotel rooms taken together in SARC are something like 210 or 220 rooms split between seven hotels, and in any other place that would be one hotel, basically.
42:22
SPEAKER_00: And managing these small units is very inefficient.
42:26
SPEAKER_00: And SARC needs to have a discussion and a conversation about you know, what type of visitors do you want here?
42:32
SPEAKER_00: How many of them do you want here?
42:34
SPEAKER_00: And then out of that falls a decision, you know, do you want to have all of these seven hotels in production?
42:40
SPEAKER_00: Another one has been closed for years.
42:42
SPEAKER_00: So, you know, we're just looking at the five that are in this particular portfolio, but we'd certainly be interested in having conversations with the others about, you know, where's the future of tourism in Sark?
42:52
SPEAKER_00: This place is expensive to get to.
42:55
SPEAKER_00: Sunshine is not guaranteed nowadays.
42:56
SPEAKER_00: You've got EasyJet and that that takes you from London to Spain.
43:00
SPEAKER_00: So whether the future of Sark lies in tourism is a genuine question.
43:04
SPEAKER_00: And you know, it's not been fully explored yet.
43:07
SPEAKER_01: How do you propose to even out the you you say that the tourism in Sark is very cyclical?
43:14
SPEAKER_01: So it's uh between May and September, that's when the tourists come, and then not in winter.
43:19
SPEAKER_01: How would you spread that out more evenly throughout the year?
43:22
SPEAKER_00: So we've engaged with many potential partners and specialists who can help us with this entire task.
43:28
SPEAKER_00: And we believe that most things have been done successfully somewhere in the world already.
43:32
SPEAKER_00: So let's find these people and learn from them.
43:35
SPEAKER_00: In the UK, there's an organization called the Eden Trust.
43:38
SPEAKER_00: They manage the Eden Project, which is a very iconic sort of biosphere visitor site project in Cornwall, which was opened 24 years ago.
43:46
SPEAKER_00: And they had the exact same problem because Cornwall, in terms of weather, is a bit challenged as well.
43:51
SPEAKER_00: So they had a lot of visitors, they had like a million coming in summer, and then in winter it was a trickle.
43:56
SPEAKER_00: And the Eden project became very successful with creating.
44:00
SPEAKER_00: Especially events for winter that drew in visitors.
44:04
SPEAKER_00: And they used to have 200 visitors a day in winter, and now they're getting 1,100 visitors.
44:10
SPEAKER_00: And that has literally changed the hospitality industry of that region.
44:14
SPEAKER_00: And we spend a lot of time talking to them, and they'd be very interested in helping us learn from their experience to reduce the seasonality in Sark.
44:22
SPEAKER_00: They're also just some easy, quick wins.
44:24
SPEAKER_00: So Sark is next to Guernsey.
44:26
SPEAKER_00: Guernsey has 62,000 people.
44:28
SPEAKER_00: They tend to be a bit bored in the sense that Guernsey is very wealthy, but there's not that much to do.
44:34
SPEAKER_00: So if we added something like a wild spa to one of the hotels here, that's something that doesn't exist in Sark yet.
44:40
SPEAKER_00: I don't think it exists in Guernsey either.
44:43
SPEAKER_00: So what's a what's a wild spa?
44:45
SPEAKER_00: A wild spa is like an outdoor spa, like a very Nordic, rustic kind of spa where you've got sort of like wooden tubs where you sit in hot water outside in winter and stuff like that.
44:57
SPEAKER_00: That would certainly, you know, immediately attract people from Guernsey.
45:01
SPEAKER_00: And these some of these solutions don't need to be very complicated and can be gotten off the ground quite quickly.
45:07
SPEAKER_01: Yeah.
45:09
SPEAKER_01: In the second round of investment, uh you say that uh so so round round one is uh raise 35 million, develop uh or renovate so it's to buy the portfolio and to renovate, and then second round more of the same.
45:25
SPEAKER_01: Third round you hope for an IPO.
45:27
SPEAKER_01: But in the second round, I I read that you would then buy up to as much as 40% of all the land on the island.
45:37
SPEAKER_01: Now, I'm a big supporter of movements like the Free Cities Foundation, uh which I'm sure you know about Tipulis, the Cedas in Honduras, and all of this.
45:46
SPEAKER_01: And when I hear that you're aiming to own 40% of the land of an island that's essentially a self-governing free state, I begin to wonder what if you know one day you ended up owning close to 100% of it?
45:57
SPEAKER_01: Could we essentially see a private country?
46:00
SPEAKER_01: I mean, the idea must have occurred to you.
46:03
SPEAKER_00: We've we've actually made a clear decision and a commercial decision to we don't want to go beyond 40%.
46:09
SPEAKER_00: So the the starting point here is that not only is the island below critical mass, but to make a real estate project like this worthwhile and and commercially feasible, you also need to have a critical mass to make that happen.
46:24
SPEAKER_00: And we believe that for a company to thrive here and create as much value for residents and visitors and investors alike, you need to have somewhere between 30 and 40 percent of the island.
46:36
SPEAKER_00: Outside of that, you really want an active real estate market so that you have real values here and you also have, yeah, you don't you don't want to enter that entire political discussion about you know wanting to dominate the island.
46:50
SPEAKER_00: We don't think there it's possible, and we also don't think it's a good case.
46:54
SPEAKER_00: We're also looking at it simply from the perspective of what might be for sale here, and we obviously know pretty much you know who's on the island, who owns what, and we have a good grasp of what may be available in the foreseeable future.
47:06
SPEAKER_00: And then based on that, we want to build our investment case because we like to stick to things that are feasible.
47:11
SPEAKER_00: And if something only gets you into political problems, then we just consider it not feasible and we don't want to do it in the first place.
47:17
SPEAKER_00: So this is really phase two.
47:20
SPEAKER_00: Uh it's important to understand that there's a real backlog of transactions.
47:25
SPEAKER_00: There are a lot of inheritance cases that have already happened or will happen at some point in the future where something is for sale, and that's what we want to deal with clear away, turn it from a problem into an opportunity.
47:36
SPEAKER_00: Beyond that, really, we think SART needs to have a discussion about a long-term development plan, and then maybe some of the reserve land that we're looking to buy will come to a better use.
47:47
SPEAKER_00: But there's just no intention and it makes little commercial sense to buy too much because then you you also become responsible for infrastructure, which you don't want to be responsible for.
47:57
SPEAKER_00: It's quite nice to be a landlord that can also say, you know, infrastructure is a matter of the government, and that's not for us for us to pay for.
48:06
SPEAKER_00: So yeah, that's the bottom line of that.
48:08
SPEAKER_01: What sort of return targets are you setting for for the different phases?
48:14
SPEAKER_00: So for series A, which is really buying this portfolio that we mentioned earlier, we're looking to double the money of our investors within three to four years.
48:23
SPEAKER_00: And we also have worked out a worst case.
48:26
SPEAKER_00: And the worst case is if if we just end up owning this portfolio and we end up doing nothing else but fixing back this portfolio together, then our investors would probably get a return of about 8% net from the fifth year onwards and rising towards 10%.
48:43
SPEAKER_00: That's not a bad worst case.
48:45
SPEAKER_00: So, and I think we need to offer that to be able to raise that money because it is a highly complex case where people perceive this to have execution risk.
48:55
SPEAKER_00: It's a distressed portfolio right now.
48:57
SPEAKER_00: If you offered a 2% rental yield, then you couldn't mobilize the capital for that.
49:02
SPEAKER_00: Equally, we think if things go reasonably well, we'll have double the value of the portfolio within three to four years.
49:07
SPEAKER_00: And then longer term, there's a lot more potential.
49:10
SPEAKER_00: SARC is amazingly enough, actually only about the same price as London's zone three, and it's only about 30 to 50 percent the price of Guernsey.
49:20
SPEAKER_01: You can then like 400,000 pounds for a single-family home, a normal home, this kind of thing.
49:26
SPEAKER_00: Yeah, I I would have said 500, but yeah, basically that's what you're looking at.
49:30
SPEAKER_00: Right.
49:30
SPEAKER_00: So and and then you have to look at different parts of the market.
49:34
SPEAKER_00: As I said, there needs to be a part where you've got affordable homes, but then you also need to have some very high-end homes, and it all always comes as a package, and it's difficult to speak in generalities because there are always so many details involved with it.
49:48
SPEAKER_00: But there's basically a lot of upside here, there's complexity in unlocking it, but that's what we've worked on for three years, preparing the investment case.
49:55
SPEAKER_00: And we're now a week into our fundraising, we're at eight and a half million pounds, which is what I call a good start within the first week.
50:02
SPEAKER_00: And what we're what we're offering to investors is is outlined in that deck that you've also read, and that's basically what I just described to you.
50:11
SPEAKER_01: And so from the deck, I understand that the the it's a distressed sale, as you say, and you're buying it or you're bidding for this portfolio of properties that it belongs to the a trust, not uh it doesn't belong to the family or the descendants of the Barclay brothers.
50:30
SPEAKER_00: I I I'll choose my words very carefully, but the family is renowned for structuring their affairs in a very opaque way and saying one day that it's it's something is owned here and then the next day it's owned somewhere else.
50:42
SPEAKER_00: That's not a worry for me right now.
50:45
SPEAKER_00: The the trust where the real estate is currently held has hired an estate agency, a specialized estate agency in London to sell it as a portfolio.
50:56
SPEAKER_00: I in turn have retained the best estate agency in Guernsey who are representing us.
51:01
SPEAKER_00: So it's two agencies speaking to each other.
51:04
SPEAKER_00: So that's you know a professional grown-up conversation, and that's all I need really.
51:09
SPEAKER_00: The missing bit now is for us to have the money available, make a bid, and then we shall see where the where the chips fall.
51:16
SPEAKER_01: Right.
51:17
SPEAKER_01: And by when do you need to raise all this money?
51:21
SPEAKER_00: So we have been working on this for three years, and we use these three years to conceptualize and plan the entire case.
51:29
SPEAKER_00: And I've, for example, I've lined up an entire management team as well.
51:33
SPEAKER_00: We went public with this a week ago, literally to the day.
51:36
SPEAKER_00: So we've been fundraising for a week.
51:38
SPEAKER_00: I do not want this to drag on very long now.
51:41
SPEAKER_00: I also don't think it needs to drag very on very long.
51:44
SPEAKER_00: At the same time, there's paperwork and investor onboarding involved.
51:47
SPEAKER_00: So am I going to make an offer for this tomorrow?
51:50
SPEAKER_00: No, I won't.
51:50
SPEAKER_00: Is this going to drag on to Christmas?
51:52
SPEAKER_00: No, that won't be the case either.
51:54
SPEAKER_00: I think in the next weeks and maybe two months, we'll certainly see some decisions and we will know where this ends.
52:02
SPEAKER_01: And you already have one big anchor investor, Cuppy.
52:06
SPEAKER_01: What can you tell us about him and what how did he get involved?
52:08
SPEAKER_00: So, Harris Kapperman, widely called Cuppi, is a hedge fund manager who is known for two things.
52:14
SPEAKER_00: First of all, he's currently, I think, the world's best performing hedge fund manager in the sense that he made investors more than 10 times their money since 2019.
52:24
SPEAKER_00: So, in the last five or six years, and that's outstanding performance.
52:28
SPEAKER_00: He's also known for being very active on Twitter.
52:31
SPEAKER_00: He's got 140,000 Twitter followers, and he's got more followers on other platforms.
52:36
SPEAKER_00: He's very much out there, but he's just primarily really a brilliant investor.
52:40
SPEAKER_00: And I I know him.
52:42
SPEAKER_00: I visited him in his home in Puerto Rico last year, and we got speaking about Sark, and he just couldn't believe what he heard.
52:50
SPEAKER_00: And he said, I must see this place.
52:51
SPEAKER_00: And two months later, he came.
52:53
SPEAKER_00: He came to the Sark Sheep Racing Weekend.
52:56
SPEAKER_00: So once a year we've got sheep racing on the island.
52:59
SPEAKER_00: And then he also looked closely at Guernsey and Capi said, you know, I want to be the backer of this project.
53:04
SPEAKER_00: And he is an anchor investor, and he's also in the process of joining the board of directors.
53:10
SPEAKER_00: And he's a he's a great partner in this because he just totally gets what we what we're intending to do here.
53:16
SPEAKER_01: I was also listening to a podcast with one of my old heroes, Doug Casey, the other day.
53:22
SPEAKER_01: And he also mentioned that that you have spoken about this project.
53:26
SPEAKER_01: Is he involved in any way or might he become involved?
53:29
SPEAKER_00: So Doug Casey is an old friend, and I'm an a member of an online cigar smoking club where once a week he he entertains various people and I join occasionally.
53:39
SPEAKER_00: He's not involved as such.
53:41
SPEAKER_00: I I do have it on my list to speak to him about SA, but um, I just simply haven't gotten to it yet.
53:45
SPEAKER_00: But yeah, Doug's a great guy.
53:47
SPEAKER_01: Yeah, I mean, uh, I can tell you that he is the reason I got into this investment migration business to begin with.
53:53
SPEAKER_01: I remember back when I was in my late teens listening to or reading reading internationalman.com.
54:00
SPEAKER_01: It was really an inspiration to me.
54:03
SPEAKER_01: He is uh on my wish list for for this podcast.
54:06
SPEAKER_01: So if you have a chance, put in a good word, recommend uh this uh podcast to him, and I would love to have him.
54:13
SPEAKER_01: Okay.
54:13
SPEAKER_01: I I think we've covered.
54:15
SPEAKER_01: I mean, is there anything that we should cover that we haven't discussed?
54:20
SPEAKER_00: Well, I think we should make it clear again how beautiful a place Sark is to visit.
54:24
SPEAKER_00: So anyone who's curious about it, you know, do come.
54:27
SPEAKER_00: We love having having visitors.
54:29
SPEAKER_00: I'm always available for a cup of coffee if I'm on the island from May to September, and really September is the best part of the season, so that's coming up.
54:37
SPEAKER_00: Make some plans, go to sark.co.uk, which is the Sark Tourism website, and come and visit, check out Guernsey as well, Jersey.
54:45
SPEAKER_00: It's a very interesting part of the world.
54:47
SPEAKER_01: And how can people get involved in uh the Sark property company?
54:51
SPEAKER_01: I understand the minimum investment is£100,000.
54:55
SPEAKER_01: Where should they go?
54:56
SPEAKER_01: Would you would you like to mention some URLs perhaps?
54:59
SPEAKER_00: So there's Sark PropertyCompany.com.
55:02
SPEAKER_00: If you just sign up to the email list there, then I send you the deck in exchange.
55:06
SPEAKER_00: And the minimum investment we can actually go lower than that.
55:09
SPEAKER_00: We can actually 25,000 pounds is fine.
55:12
SPEAKER_00: I can't go lower for regulatory purposes because we're a licensed fund management business and we're not allowed to deal with retail investors.
55:19
SPEAKER_00: So but 25,000 is fine and it's all in the deck, and yes, send me an email.
55:26
SPEAKER_00: I I reply to every email personally.
55:30
SPEAKER_01: That's it for today, folks.
55:32
SPEAKER_01: But we'll be back soon with another episode of the Mobility Standard.
55:36
SPEAKER_01: Now, this podcast is open to the public, so there's a limit to the names we can name and the rumors we can discuss openly.
55:45
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55:53
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56:01
SPEAKER_01: Just go to mydaily.comslash pro.
56:05
SPEAKER_01: I wish you all a great week and thank you for listening.