For decades, investors have believed that property is one of the safest places they can put their money –...
February 27, 2019
Monaco property in 2019
It’s two square kilometres of glamour and glitz – Monaco remains effortlessly stylish and sophisticated making it one of the world’s most desirable places for the world’s wealthiest to set up home in. But with such a small area of space to build on and an ever increasing demand for properties, how can we expect the Monaco property market to develop in 2019?
In this article, Lisa Kinghorn examines the pros and cons of buy to let and property bonds.
- – Monaco, its population, and its geography
- – The Monaco property market in 2017 and 2018
- – How to buy a property in Monaco
- – What the future holds for Monaco property in 2019 and beyond
Monaco, its population, and its geography
Spanning an area smaller than Hyde Park in London and on the Mediterranean’s Cote d’Azur, Monaco is a tiny Principality which punches well above its weight internationally. Cosmopolitan, sophisticated, and safe, it’s one of the most sought-after locations for residential property in the world – there is a wide variety of reasons behind the demand to own a villa or a flat in Monaco.
Nestled between Italy and France, Monaco is an independent sovereign state led by Prince Albert II (source: Palace of Monaco). With the exception of insurance and banking which are subject to international treaties, the Principality is responsible for its own laws, rules and regulations including those related to tax (source: Thomson Reuters).
Because it’s independent of the European Union, none of the EU’s laws and directives apply to Monaco but it forms part of the EU Customs Zone (source: European Commission). There are no border controls between the Principality and its neighbours because of a treaty with France. The lack of an income tax (except for French citizens) is made up for by the collection of VAT receipts from resident businesses which are the country’s primary source of taxation (source: LowTax).
As part of the Eurozone, Monaco’s local currency is the Euro (source: Lonely Planet). Despite that, it is otherwise completely independent of all other EU financial controls, whether pan-European or member-state led.
Monaco covers over 200 hectares along a Mediterranean coastline stretching four miles. 20% of the available land has been reclaimed from the sea and great care is taken to preserve the surrounding wildlife and protect the sea bed.
Monaco has two ports and a beach (the only area in which people are allowed to wear swimsuits in public). Even though the area is small numerous urban planning and land reclamation programmes have been undertaken to utilise as much space as possible meaning there is more green space per capita here than in most other cities.
At just 38,000, Monaco’s population is smaller than that of your average UK town. Around 16% of the residents are native to Monaco with the majority of the other inhabitants hailing from other parts of Europe and the world. French nationals make up for 33% of the local population, with natives of Italy, Britain, Switzerland and Russia following behind. In total, 139 different nationalities make up the population of Monaco (source: Monaco Statistics).
French is the national language in Monaco, but Italian and English are both commonly spoken (source: Hello Monaco).
There are five main districts which make up Monaco – Monaco-Ville, Monte Carlo, Fontvieille, Moneghetti, and Condamine.
- – Monaco-Ville is home to the Prince’s Palace, ramparts, cathedral, a museum and impressive gardens.
- – Monte Carlo is the best known and arguably most glamorous area of Monaco. Monte Carlo was created in 1866 and is home to numerous high end hotels, a prestigious leisure club, beach, gardens and the world famous casino. In the heart of Monte Carlo is the Carré d’Or (Golden Square), featuring some of the area’s most expensive and luxurious homes.
- – Fontvieille is a new area created as part of a land reclamation project, Fontvieille was born out of the sea and features a man made waterfront with its own harbour, leisure centre and heliport. There are also plenty of glamourous shops and restaurants in the area along with the famous Columbus hotel.
- – Moneghetti is a tourist favourite known for its Exotic Gardens and the Révoires, this glitzy hideaway is on the western border.
- – The Condamine is Monaco’s second oldest area, the Condamine has Monaco’s main port at its heart.
Monaco property sales in 2017 and 2018
2017 was a record year for Monaco with the highest level of property sales for over a decade. Although 84% of sales were for studios and one bed apartments, even one bed apartments can reach figures of €3m here (source: Quintessentially Estates).
The overall cost of sales fell from €453.5 million to €228.9 million in the twelve month period with more small apartments being sold.
62.7% of the total property sales were or properties with one bedroom or less compared to three consecutive years before in which mainly four and five bed homes were sold (source: John Taylor). A huge marketing campaign for the new Stella development, which focuses only on one bedroom apartments, is thought to have played a major role in this new trend (source: Monaco Spotlight, Savills).
In 2018, the new build market remained “healthy”, according to Knight Frank, with the “most notable trend [being] that growing appetite for new-build apartments”.
89 new apartments came onto the market (the Stella complex) in 2018 and this boosted the number of new build sales to the second highest number in a year since 2010. This was the highest number of new sales in a year since 2015 when 195 transactions were completed with the construction of four new developments.
Last year, 80% of new sales were 2-room apartments, 11% 3-room, 5% 4-room, and 4% 5+ rooms. The combined value of these new sales was €371m, an increase of 62% over the previous year. 60 sales were for €5m, 6 for €5-10m, 6 for €10m+ (source: IMSEE).
Resales went down by over 21% from the previous year in 2017, returning to the figures seen back in 2013. This decline has been seen in all types of properties apart from large detached houses, many of which are expected to be demolished to make way for new developments over the coming years. Sales of studio apartments have remained relatively stable at -0.8%, accounting for just under 30% of all resales. But it was sales of three bed houses that have seen the sharpest decline.Monaco-Ville and Larvotto were the only districts to see an increase in sales from the previous year, and almost 60% of the total transactions were in La Rousse and Monte CarloThere were 451 re-sales in 2018 comprising 99 studio apartments, 127 2-room apartments, 135 3-room apartments, 41 4-room apartments, 43 5+ room apartments, and 6 villas. The average price increase in 2018 14.4% (a median price rise 18.5%). Looking back over the past 10 years, the average price of a resale has more than doubled – 133%
For the market as a whole, the average price per square foot has jumped from €41,335 to €48,799 (18.1% jump). The most sought-after district of Monaco, Monte Carlo, now has an average price of €56,343 per square foot. (source: Monaco Statistics).
Buying a property in Monaco
Buying property in Monaco requires abiding to the country’s related legal and commercial processes and even well-seasoned investors have been known to struggle. Local knowledge and networks are key to successful house hunting in Monaco meaning that most prospective buyers undertake all aspects of the journey from finding the perfect location to understanding the local laws and regulations with estate agents based in the country.
Once you have found a property you want to buy, you will need to instruct a local notary to act on your behalf. This is because only professionals local to Monaco can handle the monies and contracts required to purchase a property.
After the initial deposit has been made, the remaining fees and registration duties will be due when the purchase is complete, usually amounting to around 19% of the overall purchase price – although this may vary.
Property purchasing in the next few years
A report from premium real estate agents Knight Frank showed that the average price per square metre of property in Monaco was €53,000 in 2017 with premium homes in the most desired locations commanding as much as €100,000 per square metre. Hello Monaco explains that the reasons for property place inflation is caused by an acute imbalance in supply and demand – there simply aren’t enough properties available to satisfy house hunters in the area.
Overall, properties (average of new and existing) in Monaco have increased by an incredible 180% in just ten years with experts (including us at Azurite), predicting the average value per square metre to be over €100,000 within the next five years.
Monaco boasts the most glamorous and expensive homes in the world and the increased challenge of actually buying a property here makes it all the more desirable.
Azurite employs a team of local experts with years of experience in the Monaco property market concentrating in particular on developing older apartment blocks. Working in partnership with high-end architects, they plan to turn these run-down buildings into highly desirable residencies for house hunters.