Why Ukraine May Be the Most Mispriced Market in the World

Hello and welcome to the INSEAD Emerging Markets Podcast, where we interview business leaders and emerging market experts on business innovations, market opportunities, and macro-level trends in emerging and frontier market countries. Join us for the next hour to dive deep into the world of emerging markets as we speak with top performers who are successfully investing, working, and living in these markets themselves. Welcome to the INSEAD Emerging Markets Podcast.

I'm your host, Mick Law, and I'm here today with Bruce Talley. Bruce is an American entrepreneur and international market strategist who connects Western capital to undervalued opportunities in Ukraine and select frontier markets. He is the founder of Destination Ukraine and the architect of the Ukraine Prime Property Fund, which he's developed in collaboration with the CEO of Leopard Capital to give global investors early access to deeply discounted residential markets that in many

cities trade at a fraction of comparable assets in neighboring European economies. Bruce's career began in U.S. capital markets. He worked in the municipal bond business, where he'd built a significant book of high net worth in investors and executed thousands of client transactions. He later focused on selling loan participations, including financing for hotel developments, condominium projects, and Native American casinos. Over the course of his career, he closed more than $2.1 billion in

lifetime sales. And early in the post-Soviet era, Talley moved into southern Russia's Black Sea region, where he bought and sold land using his own capital and partner's funds. He also launched Destination Sochi in the run-up to the 2014 Olympic Games and became the largest destination services provider in the market, serving over 45 Olympic broadcasters, partners, and sponsors. He operated in a commercial

environment marked by opacity and intense scrutiny, during which he was monitored by the FSB. 2014, as Russia began its war in Ukraine, the FSB asked his views. Talley stated that Ukraine should make its own decisions without Russian interference, and he then exited Russia shortly thereafter and reoriented his work towards markets better aligned with transparent, rules-based commerce. And he's been involved in destination services work in Brazil, Korea, Japan, and Ukraine ever since then,

and he also recently founded Destination Moldova. So I think there's a lot to cover here, obviously, but maybe it'd be interesting to start out by going back to your earlier days when you had that decision to move out to Russia and make your mark out there. I was curious what sparked that. I mean, I'm sure that you saw the economic opportunity, but also just curious if there were any lifestyle or life reasons that someone made for your, obviously been very successful in the States already,

would decide that going to move out to Russia, to the Black Sea region, and try my luck out there. Yeah, that's a great question. People ask me all the time, why would you do that? Even people in Southern Russia ask me. And I, you know, when you live as an expat in provincial Russia, you run across an odd mix of people. Also living out of your home environment forces you to discover things about yourself. Wherever you go, there you are, as Buckaroo Banzai said in that famous film. But in my case,

it was really born out of, I think, some intellectual curiosity. I probably over-romanticized Russia. You know, I saw several films about the early Soviet era, like the Dr. Zhivago riot. And then I read some Russian history, read a lot of Soviet history, some Russian literature. There's something fascinating about Russia. It just, it spoke to me. And I don't know why. I know some people have the similar reaction

to, I don't know, France or India or United Kingdom or any one of a number of places, Mexico. And it just sort of hit me. And I started to go, I did a lot of traveling for fun when I was in the bond business. I did a lot of scuba diving. I was traveling all over Europe and Southeast Asia and lots of places. And I went to Russia just out of curiosity the first time. And this was some years after the Soviet Union had collapsed a decade

after. And it was really an interesting time and place. And I sensed there was a lot of opportunity. And at that time, I thought that Russia was probably going, was likely to develop in the way that we've seen, say, the Czech Republic develop, where they've got the rule of law and they have free and fair elections. And I had this expectation as an American, we're always kind of optimistic. And so I had this

expectation that that was the opportunity. At the same time, it's a giant market. And I thought that, look, people experience the kind of growth and the economy grows in the way that, say, Czech Republic or Poland has. Wow, there's a big market there. There are a lot of things that's going to happen. And I was drawn down to the Black Sea region by friends and having worked in the bond business in California for many years and participated in the growth, really, by working for an investment banking

fund that are. firm that underwrote, sold, traded municipal bonds. It financed a lot of the infrastructure, the streets, water, sewer, and hospitals, all of these things. A lot of that was built in California using bond issues. So I expected the Black Sea region, which was a much smaller area than California is, and that's really their warm water coastline. I thought that area was going to grow in the way that California did, or maybe not quite like that, but it started out at such a low

base. So I saw opportunity. I mean, there was a combination of intellectual interests, emotional interests, I guess, and then opportunity. Yeah, that's really interesting. I mean, I hadn't thought of it that way, but I guess coming from California, if you're looking for sort of similar geography in Russia, that might be the place to pick. So that's smart. Well, it's also, it's a danger too, because you tend to think in terms of what you've seen and

experienced before. And it's not always the same way, right? And I think early in my time in Russia, I realized that, yeah, I'm sure about the Dunning-Kruger effect and the peak of Mount Stupid. And the danger is sometimes, you know, a little bit and you think, you know, much more than you do. And Russia has a way of letting you know that you may have overestimated your knowledge. But that's been a valuable lesson in my life. I think about that very often that

I need to be confident about what I didn't know, but I also need to understand the limitations of my own knowledge. Totally. I mean, I guess that's how it is whenever you're exploring something new and you need to just do it and get through that phase. Curious. I mean, I guess you did start out sort of in real estate there and then ended up with your destination services business. I was wondering if you went, when you first went out there, was there a plan in terms of what industries you

wanted to work in? I know that you had a lot of experience selling loan participations, etc. I was wondering if that informed what you did in Russia at all, or you just went looking for opportunities and then decided to act on what you saw. Yeah, I think it was, it was a recognition that so much of the wealth that has been created in the United States has been created through real estate. I looked at a

lot of doing several different things when I was there. We thought about one time I took the owner of a small burger chain from Hawaii out there. We looked at establishing something along the lines of a simple in and out, because at this time there wasn't even a McDonald's in Krasnodar, which is a capital Krasnodar region where I live. And so I thought that those kinds of things would offer a real opportunity. But there's so many choke points in running a restaurant business, even in

a country that's, that functions pretty well, let alone Russia. So ultimately I decided against that. But yeah, I looked at a lot of things. I thought that land offered some good opportunities. And actually I did pretty well on the first couple of purchases that I did. But again, it's so difficult, the permitting process. And there are so many lessons that I learned along the way. For instance, if you buy a piece of land in Russia, at least this is the case while I was there,

you own the land, but you don't own the trees. And so there was this wild situation. This didn't involve me. We, we were successful in removing trees and some parcels that I, commercial parcels that I owned. I bought some land and unified it and I was seeking a building permit, but there was a development. They were trying to build a large development around a golf course near Crescent, our city. And it turned out that first off, they had a problem because, oh, well, we don't own the

trees. So you had to get state permission, government permission to remove the trees. Well, that was a problem. And then they discovered that the value of the trees that they had, the cost of removing the trees far exceeded their value because of the kinds of trees that they were. And they had to remove tens of thousands of these trees. What do we do with them? And they didn't have any, there was nobody around to process the pulp or do any, it wasn't suitable for lumber. What do we do

with these things? So what they did was they dug this massive pit and this is maybe five or seven miles from the center of the city of Krasnodar, city of a million people. That's regionally very important in Russia. They dug this enormous pit, they dumped all the trees in there and they set them on fire. And so for weeks and weeks, there was smoke and ash billowing through Krasnodar. And I don't know. There were certain limitations, but there are always sort of loopholes. And I

suspected that these people had some connections or a roof, as they say in Russian that enabled them to to do that and pollute the air for, I mean, I'm kind of laughing about it, but it really wasn't that pleasant for a lot of people for weeks. It was just, it went on and on. Totally. Yeah. I mean, I guess those are, we'd begin in any new place that you'll encounter things like this that you're not used to.

And I guess, especially in frontier or emerging markets, things may not be done. Yeah. Well, that, those were actually Russians who were involved in that. But yeah, you always need to understand what you don't understand when you're in those places and it was useful. I said, after we left Russia, I set up operations in Brazil and some of the same problems. And so you tend to think in terms of the universe, you begin to think in terms of the

universe of problems that you maybe could not have conceptualized. Yeah, definitely. And I know in the intro, I mentioned that there was a lot of opacity and you also had a visit from the FSB there. I was wondering if you have any interesting stories about times that you may have dealt with the government there or things that, you know, I'm sure they also were kind of curious, why is this American guy here trying to run a business?

So interested to hear if there were any dangerous or strange experiences there that you might have encountered. Quite a few. The first time that I really was encountered, that I encountered the FSB was actually not, I later spent a lot of time being questioned, even interrogated, followed. They talked to a lot of people that I was working with, people in restaurants, you know, virtually everybody, because I was working in Sochi where the Olympics were going to be held, and

this was sensitive to them. And then I was also trying to bring development monies into this nearby de facto independent country called Abkhazia that separated from Georgia. I thought that there was an opportunity there to help the folks get out of poverty. And the Russians seemed to want to help me, but really what they were doing is they just wanted to appear to be helping. They didn't really want Abkhazia to develop and grow independently of their control.

So that was when my greatest scrutiny happened, really, was during that period of time. But several years before this, I owned some land in a city called Kropotkin, which is again in Crescent, our region, and I had been going there in a regular, I was spending a lot of time there. Well, in Russia, you had to get your documents registered in any city that you're in for more than three days. And so if you're going to one of the larger cities, they just do it through the hotel.

But if you're actually living someplace, you have to get registered at the home of where you're, the people that you're renting from, for example, and their documents are required. So I did this for several years without any problems. But then the officer that was doing, managing this changed. And instead of walking in and it being that formality took five minutes, he asked me a lot of questions. Oh, you are the American investor that's bought this piece of land and I see you bought a nice

fence around it. Well, law required that you build these steel fences that were about, I don't know, a little over five feet tall around your commercial property. And so it was an expense, but not something I really wanted to do. Well, he noted this fence. He said, it'd be nice if you would buy the fence like that for us. And that was significant. It was a $20,000 fence or something like that. And I refused.

And maybe I used some words that I didn't think that he would understand in English. And those were the few words that he did understand in English. And after that, probably it was more of my refusal to bribe him. And that's what he was after, right? So the next time I came in to get registered, well, you got this problem. He read the law on registration and he said that I needed to go to the city where my business

visa was issued, which was Samara first. Well, I was just impractical to go from Moscow to Samara and then back here. And I couldn't be going back and forth all the time. It was just it was beyond impractical. It was impossible. And so but he indicated he would go ahead and do it anyway. So they registered my documents. I think I fear I'm making this story a little more involved than it should be.

So he went ahead and registered my documents. But I discovered about a year later that what he had been doing is putting violations on my visa. So I had a total of four violations. And one wasn't good, but it wouldn't cause you a huge problem. But two, they could deport you. They could cancel your visa, make it impossible for you to ever return. So I invested in property there. I was just panic stricken.

And I at one point we went to some folks at a higher level than him in Krasnodar to solve the problem. But I understood by the kind of. predatory looks on their faces that I was just going to be buying a bigger problem. So I opted to not have them solve it. And eventually the time went away and I was able to get another visa and within some period of time, those violations were just gone. But in the meantime, I'm going

back and forth between Krasadar and Kropotkin. I'm living mostly in Krasadar. So I'm walking down the street one day and I go into the night market and these officers see me. Well, I'm not registered there because they haven't seen me get registered. They assume I must be living there. If I'm not, you know, if I'm there, but I'm not registered, then I must be violating the law. So they grabbed me, threw me in the back of the car. They took me to the police station. And this is kind of

intimidating, right? I'm there about five minutes and they take me upstairs to the offices of the FSB. And the FSB officer was young and bright, but he spoke to me or questioned me for about five hours about what I was doing there. They really had a lot of questions about this person. I was the only foreigner living in Kropotkin. And I remember thinking, well, the training wheels are off now. I'm being interrogated in Russian by the FSB, you know, the successor agency, the KGB. And I'm about,

I don't know, 900 miles south of the American embassy. So I'm on my own here. And, but after some time, I got a little bit tired and I stretched my neck a little bit. And I turned around and on the wall immediately behind me, no further away than that wall is, there was a picture. And I would say it was maybe four feet high and two and a half feet wide or something like that. And it was a picture of this guy, Felix Jerzynski. And for any student of Russian history, Felix or anybody interested in

Felix, their Russian history, Felix or Soviet history, Felix Jerzynski was an ethnic Pole born in Belarus who became a committed, he came from a no family of nobility, right? But he became a committed Bolshevik. And he started the, I believe he started the Cheka, which was then eventually became NKVD, KGB, FSB, right? So he was a founder of this state security service. And old Iron Felix, as he was known, had a lot of people killed and tortured. And so I'm just appalled looking at this

picture. As I've told people before, I'm pretty sure you can go to any police station in Germany and there are no pictures of Heinrich Kimmler on the wall, right? So I was just visibly, I know the shock registered on my face. I read a biography of this guy and he was a nasty piece of work and his image does not come across as kind and friendly either. And so he sees the shock in my face and said, you know, well, what? And I said, well, the guy had a lot of blood in his hands.

And his very typical response was, well, difficult times. So that was kind of the genesis of that. But I would show up in the train station there in Kropotkin and be looking at the wall, you know, with for several years, I could show up anywhere in town and the guy would magically be there in five or 10 minutes. So they were, even then they were monitoring my movements. And then later when I was down in Abkhazian and in Sochi, then it was, it was not occasional. It was every week or two,

somebody was talking to me. Wow. Yeah. Yeah. That's certainly an interesting aspect of doing business there, I guess, which is even different from other frontier markets. It is. And the really interesting thing is we left in 2014. As you stated, they asked me my opinion and right around the time of the games, maybe slightly after, maybe even during that, that's when the revolution of dignity was going on in, in Kyiv. And they, they asked me my opinion. I said, well,

you know, I think Ukraine should be able to chart its own course without Russian interference. And I knew at that point that it was only a matter of time until they began to drop flash drives in people's luggage and claim that they were spies. And that has happened. And I thought somewhat locally prominent, I've been featured in Russian television and the news and virtually every foreign media outlet

that came through Sochi talked to me for three or four years there. So I thought I was a pretty good target for that. But the interesting thing is that I have been to Ukraine now since I went to Ukraine many times during the time that I lived in Russia, just out of curiosity. I always want to know what's around the next corner. And I was familiar with pretty familiar with Ukraine anyway. But since

February of 2022, I've been spending a lot of time in Ukraine. And the interesting thing is, despite fact, I married a Russian woman, I lived in Russia for a long time, have lots of connections connections there. And this, the difference couldn't be. more stark. I expect that at some point somebody is going to come to me from the Ukrainian government and say, who are you? What are you doing here? Explain yourself a little bit to us because we

see you have all these connections with Russia. It hasn't happened. Now I've been very, as I was in Russia, I've been very transparent about who I am. But Ukraine is a country that's been invaded by Russia. And so Ukraine under attack is a more free place now than, much more free place now than Russia was then. What would you attribute that to? What are the differences between Ukrainian government or society, civil society compared with Russia? That is such a fascinating

question because I think what has happened is that this war has really forged a stronger sense of Ukrainian national identity. And there are a lot of people going back and forth. There were something like 8 million refugees immediately, and most of them went through Poland in the beginning. They wound up in a lot of places, but Poland was a common transit point. And a lot of refugees are still in Poland. And I think that that exposure that Poland has changed so much in the post-Soviet

period. I think that's part of it. I think that younger people especially don't want to live like people are forced to live in Russia. They're rejecting the Soviet mentality. I think they're looking to the West for their inspiration and lifestyle and freedoms. In terms of some sort of government policy about that stuff, I just don't have any real insight as to how that operates. I suppose that being an American, especially up until we stopped supporting them so much,

but there's still residual goodwill also. That opens doors that people feel like Americans, there are a lot of Americans that have gone there to fight. There are Americans that have given money and their time in this effort. And certainly the prior administration put a priority on supporting financially and with military material. Totally makes sense. I guess going to, before what you're doing now in Ukraine, which is the property fund, you initially started doing

destination services even during the middle of the war there. Maybe even taking a step back further, if you could just talk about the genesis of Destination Sochi, how you initially got into destination services and then... Yeah. I was in Sochi in 2007 with a great friend of mine, American guy. I had a number of friends who came over and some became partners on these land projects and super guy. So Mike and I were in Sochi and he looked around and he said, they're going to need so much here.

And he said, look at, think of all the, I don't know, port-a-potties and all the help that they're going to need here. And I really had that, that was, I mentioned 2007 because that was the period when they won the bid for the 2014 games. And so it was kind of in my head and a couple of other people talked to me about it. I was through Sochi a lot because that was the corridor that I used to get in and out of the public of Al-Khazia where I spent much of my time from 2009 through,

you know, 2010 for a couple of years there. I was there about half the time. And so, you know, it was kind of in my mind and, um, I just began, began to create content. I had a newsletter about Sochi. I had, uh, did a video channel. I started to connect with people about that. And I really didn't know. I didn't know much about destination services. I didn't know anything about the business around the Olympics. I just knew that there was a big difference between what I felt locals were

ready to provide in terms of deliverables and what outside companies were going to expect. So I didn't really know, um, what the business model was, how to charge and what I was going to charge for. And, uh, we set it up and, uh, pretty, it was really a lot of effort. I, I spent a lot of time learning about the, you know, the hotels that weren't branded hotels around. There were these mini hotels off grid, um, crawled on top of every building to determine, is this a place somebody

might put a TV studio? And eventually people started coming and you learned what their needs were. They might need transportation or they might need guide service in the beginning, interpreters. And then workforce relocation became a big thing. So we provided a long-term workforce relocation together with financial management of the contracts. And you couldn't go in and rent a hundred apartments in a, in a complex. It just doesn't work that way. The, the, the apartments

are all sold out during the building process or sold out that the, the builders don't retain ownership. And so you have, um, that kind of situation where there isn't something standard. And so we would. find the apartments and standardize them for the customers and pay the taxes, rent, utility, Wi-Fi. We'd even clean. We provided transportation. And as I said, we did TV studios and offices, interpreters, laundry, sponsor houses. And we were very transparent. We weren't inexpensive,

but we were very transparent about what our costs were and what we were charging. And word spread around the games through the Olympic broadcasters, partners, and sponsors that we were there. Eventually, we became the largest provider of destination services in Sochi. We had over 60 employees and contracts with about 45 Olympic broadcasters, partners, and sponsors. And so I found every customer, negotiated all of the services and all the contracts. We didn't fail

on anything. And, you know, I took great pride in that. It was a fun and busy and fast time. But when I started, I really, I didn't know anything about Nick. I knew nothing about destination services. And, but as I said, I used the tools that I, that I could get the word out about me to the Olympic world. It's amazing. And then I guess you took that to Ukraine. First of all, why did you choose to go to Ukraine? I think we touched on it a little bit already, but at that point, you

had the visit from the FSB and you decided it was time to get out of Russia. And then I guess you chose to go to Ukraine. And then I'm also curious about the destination services there, especially during wartime. I mean, why was there a need? And then what, what were you providing to people? Yeah, well, it kind of happened in a couple of steps because I had a customer come to me and we had moved something like, I don't know how many hundreds of their people around and buses and

breakfasts and just, and we provided long-term workforce accommodation. And so they asked me to go to Brazil. And so I went down to Brazil. So it wasn't, you know, I didn't, there were several steps and a number of years in between. And what drew me back to Ukraine was what happened in 2022. I thought that my knowledge of the post-Soviet world would be beneficial to companies that were looking to participate in the eventual reconstruction in Ukraine. I didn't want to be a tourist to misery,

but I was in Ukraine within about four weeks of, you know, they started the war in 2014, right? They illegally occupied Man X, Crimea, and then destabilized southeastern Ukraine. But the escalation in 2022 was in February. By the end of March, I was in Ukraine. And I was, again, I didn't want to be a tourist to misery. And there is so, I don't want to downplay any of the terrible things that people go through on a day-to-day basis there. And virtually everyone has a horrible

tragic story in Ukraine. You know, somebody connected to them very closely. But I went over there because I thought maybe my experience in Russia would be valuable. Ukraine and Russia are very different places in a lot of ways, but they do have, there are some similarities in their legal and their business systems. And Ukraine is digitizing their economy and they're increasing their transparency and they're looking westward. This whole experience has pushed Ukraine 20 years

further closer to the West, in my estimation. But yeah, I just believe that my experience and understanding, I speak Russian with a very imperfect grammar and a bad American accent, but I can quite easily move around over there. And I thought that there was an opportunity to add value for Ukraine to help out. It really was a big, big deal and still, and remains this way. I mean, for weeks I was glued to my phone watching events unfold and talking to people and seeing what's

happening. It was just horrifying what the Russian military or what the Russian government through its military is doing to Ukrainian countryside and its people. And the lies about, oh, they're Nazis and it's NATO's fault and America is threatening us and bioweapons labs and all of this just bullshit. I'm sorry for using this word, but it's just so many stories and false. And they're repeated. You would hear the lies that are repeated in Russian media several days later, they would be repeated by

quite famous talking heads and even some politicians here in the United States about what the motivations were. So I want to say something very strongly in support of Ukraine here that Ukraine is a less nationalistic society than Russia is by far. If you look at Eglashton results in Ukraine, the far right has never won more than 3% of the vote. So the idea that they're goose-stepping around Kyiv or someplace is just...

absurd. Ukraine wasn't a threat. NATO is a defensive alliance. It's not a threat. It's simply that Russia is threatened by ideas, freedom, and democracy. And there are so many cross-border connections. Many Russians have Ukrainian relatives and vice versa, or friends, and business connections. And so freedom and transparency and fair elections, that is a seed that the Russian government does not want to see growing in Ukraine because it would spread

across the border quickly. Yeah, absolutely. And your point that depending on the outcome of this war, it seems that Russia has actually pushed Ukraine much more towards the West. And so I was wondering if you could talk a little bit about the implications of that and also how you got involved in your property fund there and kind of what the thesis is there and why you believe that there's a lot of opportunity right now in Ukraine. Yeah. Well, Ukraine's economy is, of course,

it contracted, I don't know, 30 or 40% in the first year. It's grown back. But Ukraine's economy is only something like a little more than 20% of what Poland's is. Ukraine's got 25% of the world's black earth, the best agricultural soil in the world, more than any other nation. They've got the widely discussed rare earths. The value on that and the processing, that's something I'm not particularly clear about. But also the costs for labor, land, everything like that is much cheaper

than it is even in Poland, much less the Netherlands or Germany or someplace else in the EU. So costs are much lower. An employee, out the door employee costs we've calculated are about 28% of what they are in Poland. May not be completely 100% accurate, but I think that that's about the latest calculation that we did here a few weeks ago. That looks like that's, you know, for a laborer, that's fairly

accurate. So you've got lower costs and you've got a motivated population that is looking west that wants the kind of infrastructure and freedoms that you see in the west. And so I think there's a big opportunity to help out in the development. Certainly there'll be hundreds of billions of dollars in public monies, I believe, going in for the reconstruction of infrastructure and cities and so forth all over Ukraine. And then private money will follow or maybe be in advance, as we say.

What really spurred the idea behind Ukraine Prime Property Fund is that of all the things that I did in Russia, the best opportunity would have been or was in buying residential because the law works pretty well for buying, selling, and renting out residential. And by residential, I primarily mean apartments. Something like 80% of the population in Ukrainian cities lives in apartments. And that's where the folks that run the government, where they put their money, people have less confidence in

the public. In the securities markets, there just aren't as many places to put your money. And that works pretty well. And people always need a place to live. So if you look at analogous markets to the three primary markets that I see in Ukraine as being a great value, in places they're between four and 10 times less. There's so much cheaper than their analogues. So I think it's the safest place to invest.

And I think that ultimately that's probably where the best returns will lie or some of the best returns. Sure. Yeah. That certainly makes a lot of sense. I guess, given that you're closer to this situation than probably most people listening to this, do you have thoughts on what the ultimate outcome of this conflict will be, how it'll resolve, when it'll resolve, or any outcomes you hope for at least?

I don't know. I mean, one scenario is some sort of a frozen conflict. The best thing that can happen for everyone is if Russia loses. If you follow Dr. Timothy Snyder, he points out that Germany and Japan, we think of those places as free societies and have got functioning markets and got the rule of law. Why is that? Well, they lost wars, you know, that killed tens of millions of people. But for a lot of reasons, it was fortunate that they lost, but that's the reason that they

were able to recalibrate. And until Russia loses, it's probably not going to recalibrate the way it operates. And so what does losing look like? It, that means... getting crimea back that means russia not occupying any ukrainian territory and then maybe the russian government is forced to maybe there's a new form of government maybe they're forced to a reckoning there what ultimately happens it's it's hard to say but i think that russia's got really a lot

of problems they've got they had a demographic problem before this and then you you subtract a million people from the workforce or something like that that's and men that's especially a problem there they have issues with their infrastructure the ukrainians are very being very successful right now they destroyed more than 20 percent of russia's oil finding uh capacity and what i read is it gets around 30 or 40 percent problems are almost untenable it's an interesting time and place

and the other thing i wanted is mentioning going back to talking about apartments and investing and so forth that i think when we want look at social media or television we see the damage you think oh my gosh how can anyone possibly uh think about that well all of ukraine does not look like bakhmut the damage is not uniform some cities have been absolutely destroyed i was in kharkiv which is close to the russian border and was the second largest city in the country i was there just a

couple weeks after they booted the russians out and really profound damage there and i wonder if kharkiv will ever recover to its pre-war levels it's it's very close to russia so as long as russia is a threat that's going to be a problem i i i think there are cities in western ukraine that laviva's had i think less than 200 apartments destroyed out of a total stock of something like 280 000. even kiev the latest numbers i've seen are less than somewhere around six five six seven thousand

apartments damaged or destroyed well they're around 800 000 in that city so again horrible tragedy each time but the war discount is probably too great for the actual risk there sure yeah i mean i think if you're actually looking at the infrastructure in the real estate in these places it probably hasn't changed as much as the valuation has changed since the war has happened absolutely absolutely i guess

maybe if you talk a little bit more about the legacy you hope to leave i'm sure that you see a huge opportunity economically here in ukraine but are there any other reasons that you think this is important to do and why you're so interested in being involved in ukraine and the property fund there yeah and there might be kind of a an unspoken question or thought there too which is geez bruce are you guys being predatory i don't know if you're thinking that but it's a reasonable question

and the really interesting thing is that if you're going to invest in a frontier market or a post-war market the spending multiplier for investing in resident residential is actually greater than anything else you can do and if you think about it how does that happen well you add liquidity to the market that increases you know those people that are selling maybe are buying someplace else professionals are employed there are lawyers and real estate agents notaries involved if you are

uh buying apartments and that are new or or being constructed that that adds that the developers were will go out and build and or construct other ones and and so actually the effect on consumption also in by buying residential is greater than any other effect that you can do if you go out and build a factory and i hope a lot of people do i think there are great opportunities to build factories on the near the polish border

but that takes several years before you're employing lots of people and so the effect on consumption actually from buying residential is faster than it is in anything else and i think and this is this speaks to the legacy as we go in and get involved it increases the or decreases the perception of risk on part of other folks well these guys are there maybe we should take a look at it too so i my argument is

that it's the moral choice yeah definitely making a more attractive market for people is very needed right now because they do need investment maybe just one last question be you know there are probably a lot of young mba's listening to this podcast and thinking the world is kind of in flux right now maybe the us isn't the place it was anymore given that you're someone who went out and lived in russia brazil other places like that i was wondering if you have any thoughts on

what a person who's considering what to do with their life right now where where should they go what should they do what would be your advice to them nick i had this conversation with guy last night i was we were talking about ukraine and i said kiev is going to be the hot city to live in for digital nomads, young people, people looking to find themselves, find a fortune, find a foothold. I think Kiev is going to be one of the most important cities in

Europe. We kind of think of it as a sort of a backwater, right? But it's a population of more than 3 million people. It's beautiful. It's already got this kind of buzz. You know, when you go, there are certain cities that you go into. I imagine Hemingway in the 1920s in Paris, right? Or Berlin has had it for a while. And certainly London and New York have had a buzz for very long times, but there are kind of peaks and valleys in this, right? Around 20 years ago, I thought,

ah, Vietnam. I was in Vietnam, spent some time over there. And I thought this, you can feel this place is going to happen. This is a happening place. And it still is. But I think that, um, that Kiev is going to, well, as I said, it's already got that buzz. And when, when this war stops and all wars do stop, I think there will be a lot of young people that are there that will be, you know, they'll be brought in by companies or they work in tech. Um, there are a lot of very sharp folks in

Ukraine that are involved in lots of different businesses. There will be a lot of opportunity there. The analog, closest analog to Kiev in my mind, and maybe some people will argue with me on this, but I think it's Moscow. Again, Moscow doesn't have any right to be, the Russians don't have any right to be invading, attacking and killing Ukrainians and trying to occupy the country. But Moscow has this outsized influence on the rest of Russia, uh, Moscow and St. Petersburg. And then

there's a big drop off in terms, you know, we've got in the United States, we've got all these regionally and even internationally important cities like Atlanta and Detroit, Boston. And it's not just New York and San Francisco and Washington or Los Angeles. Right. I mean, there are lots of cities beyond the Chicago's, the Minneapolis and Dallas and Phoenix, San Diego. Yeah. There are a lot, there are a lot of cities in the United States that are important regionally, nationally,

internationally. In Russia, it, there's a big drop off from, um, Moscow and St. Petersburg in terms of that kind of influence and importance. And I think that Kiev is going to occupy a place like Moscow does for Russia, that all the businesses, that's the governmental, the business, the legal, the cultural capital of the country. It's a beautiful place. So I think that Kiev is going to really, really blossom. I also think Odessa is going to be an important place because it's

seaport. It's right now, it's the only beach resort. So you've got an important city for commercial and touristic reasons. And the center of Odessa is beautiful. And then you've got Lviv, um, and Lviv is kind of a second cousin to Prague and Krakow. It was part of the old old Austro-Hungarian empire. So you've got the cafe culture and the cobblestone streets and, you know, it's pretty close to the

border of Poland. And so I think young people will go to all these places, but especially Kiev. I look for Kiev to be really an exciting city and an important place in the next coming, in the coming decades. Definitely. Yeah. Sure. There'll be a lot to do there in the near future. And it is a beautiful place. Well, thanks so much, Bruce. It was really very interesting conversation. I wish you the best

of luck with your property fund. Yeah. I just wanted to add one thing. This is, we've talked about that a bit, but this isn't an offer to buy or sell securities. I'm not selling securities here online. We're just talking about what we're doing. So sure. Absolutely. Well, thank you so much. Yeah. Thanks a lot, Nick. Thank you for joining us for this episode of the NSEAD Emerging Markets Podcast. To stay up to date on events we may be hosting, emerging market news, and to build your

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