Monaco is tiny but its diminutive size is no reflection of its personality and character. Nearly 700 years old...
February 12, 2019
Contributing factors to the rise of Monaco house prices
Known for its glamorous royals, prestigious sporting events, and high society lifestyle, Monaco is one of the most sought-after places in the world to live in and visit.
This tiny, independent Principality, set in France’s glittering Mediterranean coastline, offers the ultimate in luxury with everything available from opulent casinos to high-end boutiques. Dotted with A-listers and premium properties, it’s a must-visit for anyone who appreciates the finer things in life.
But what is it about Monaco which has caused the price of a property to rise to be the most expensive in the world? Personal finance journalist Mark Fairlie investigates.
It’s a place the world’s wealthiest really want to live. Why?
Monaco is secure
Monaco is one of the safest places in the world to live.
More than 38,000 people live in Monaco, ably protected by 515 police officers, with a further 116 policemen and women specifically employed to protect the Prince of Monaco and the Royal Palace. Wikipedia cites the Principality as having the largest police presence per capita and per area on the planet, with 11 police stations throughout Monaco (source: Where Is) – equating to about 1 for every 3,000 people.
According to Monte-Carlo.mc, the overriding goal for the police force is to provide Monaco citizens and tourists with “total security”. If local crime and punishment figures are anything to go by, this certainly seems to be the case.
Justice is absolute too. Whenever a Monaco judge is presented with a case, they almost always pass the maximum sentence. There is a sophisticated system of 24/7 camera surveillance throughout the Principality. If any suspicious behaviour is identified, the whole country can be locked down within just seven minutes.
In addition to the extensive security precautions taken in public areas, the banks, casinos and businesses in Monaco all have their own security systems and teams of guards.
Monaco’s taxation policies
Monaco is a tax-friendly place to live, work and play. And it has been since Monaco’s Prince Charles III did away with all personal income tax in 1869 (source: La Costa Properties). From that time to the present, the Principality has been known across the globe for its favourable personal tax regime.
Monaco is one of the only places in the world in which residents don’t have to file tax returns. Individuals do not have to pay wealth tax, council tax or property tax, and even investments and earnings generated outside of Monaco are completely tax free. The only organisations who are expected to pay tax are companies that do more than 25% of their business internationally (source: Monaco Government).
This tax-friendly environment makes the Principality hugely popular with high earners and successful business people. Anyone wishing to make the most of Monaco’s tax perks and exceptional standard of living may want to consider investing in property in the area but that’s easier said than done – and we’ll discover why later in this article.
Monaco’s healthcare system
With an average life expectancy of 85 years for men and 93 for women, Monaco residents enjoy long, healthy and fulfilling lives (source: Telegraph).
As reported on by Pacific Prime, businesses and employees contribute to the country’s public healthcare system through the tax system. Healthcare is available to both natives of Monaco and those legally working in the Principality.
The contributions are made to the Caisses Sociales de Monaco and they cover between eighty and a hundred percent of the cost of treatments. Any additional funds are payable either via a private healthcare plan or as a lump sum at the time of treatment.
Accident and Emergency services are available at the Princess Grace Hospital Centre – the only state run healthcare facility (source: Internations).There are also excellent emergency services operated throughout the whole of Monaco.
The Principality is renowned for its exceptional dentists but, as with many other things in the area, dental patients should expect to pay a premium for such quality of delivery and service (source: Now Health International).
Monaco’s education system
Children in Monaco start school at six years old and the quality and standard of education on offer is exceptional. There are ten public schools in the Principality which are attended by 75% of school age children while the remaining 25% attend private schools. The education system in Monaco follows the French National Baccalaureate and delivers impressive results – the average pass rate is almost 90%.
Those younger than six have access to a broad selection of nurseries and day care centres including seven state-run child care facilities. However, only native citizens and people who have worked in Monaco for at least a year are permitted to send their children to nurseries run by the state (source: ExpatFocus).
There is the International School of Monaco too, a popular choice with parents who wish for their children to be educated in both French and English. This prestigious school is open to children between the ages of 3 and 18, with annual fees ranging from €5,430 for kindergarten and €19,440 for seniors. Fees are paid in two instalments, with the first 40% made in March and the 60% balance being paid in August. (Source: Relocation Monaco). Monaco also has its own small University which offers its students mainly business courses.
What’s stopping the wealthy moving there now?
Demand far outweighs supply
Monaco may be grand but it’s very small – just one third of the size of New York’s Central Park.
There are severe residential housing supply shortages in the Principality – so much so that the government is currently investing in a new land reclamation project in order to create more space to meet the ever-growing local population. The Government predicts that there will be another 2,700 millionaires resident in Monaco by 2026 with the proposed new properties priced at over £75,000m2 (source: Daily Mail).
Premium estate agent Knight Frank’s Edward de Mallet Morgan said that high price tags are not likely to put off house hunters looking for a premium property in Monaco because they’re thinking long term about preserving family wealth (source: Guardian).
There are some fabulous opportunities for property developers in Monaco with Savills reporting a rise in the presence of international architecture studios. This is because, as counterintuitive as it sounds, there is a surfeit of tired properties which be found in the less expensive parts of the Principality. Architects and developers are increasingly teaming up to breathe new life into these older properties, selling the end results on at a premium.
Sales have declined over the past two years with only 520 transactions made in 2017 according to Knight Frank (source: Property Wire). Of the 520 properties sold in 2017, 23% went for over €5 million, a 12% increase from 2008.
Land reclamation project hopes to ease this
According to the FT, the land reclamation project planned for 2025 could be a part of the answer to Monaco’s property supply problem.
The €2.1bn project will enable the government to reclaim 15 acres of land direct from the sea in Larvotto at the far east of the Principality. The plans have fuelled huge interest from developers who are expecting to reap profits of more than three billion euros.
Global wealth experts Wealth X state that the very high demand for the new properties means that there will be no downward pressure on price. After all, this is a country where one in 50 homeowners live in properties valued at over $30m.
The land reclamation project may sound revolutionary but it’s not new for Monaco. A luxury district in the west of the country, Fontvieille, was built entirely from reclaimed land back in the 80’s and the government has also expanded other areas in this way.
Although any large-scale works of this kind may spark concerns with environmentalists, Prince Albert II made it his personal mission in 2012 to ensure that the diversity of marine life in the area should be protected. Following his wishes, all new developments are required to be built on stilts in order to preserve and minimise damage to the sea bed (source: Independent).
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