The Monaco real estate market is in many ways unique compared to luxury property markets in other countries. It is still the most expensive place to buy a house in the world, and prices per square meter continue to rise. The Principality is investing billions in infrastructure. Here seek wealthy investors from around the world, but there is not enough new objects to buy. ServiceAzur has prepared a brief overview of the real estate market in Monaco.
Monaco, the international real estate market
Monaco - an independent principality of 202 hectares with 38,700 inhabitants, located on the Mediterranean coast between France and Italy. This small area between the Alps and the Mediterranean Sea, attracts investors from all over the world. Some of them are looking for exceptional quality of life, comfort and security, which are represented here at the highest level. For some, tax haven is a priority, as it is the tax system which has made the Principality the most prestigious jurisdiction on the planet.
In fact, the residents of Monaco have many different nationalities. The most numerous are, of course, the French, about 10,000 people, followed by neighbors Italians (6,600). Of the really foreign nationals, the British (2,600) and Germans (2,600) are in the lead. The Belgians (1,000), the Swiss (900), but the Americans (250) and the Russians (250) are only rapidly catching up with their European neighbors.
Monaco, a dynamic real estate market
Over the past 10 years, an average of about 450 properties sold per year. As shown in the chart below, transaction volumes are currently at a historically high level. The current upward trend, which began back in 2010, is being driven by a gradual decrease in interest rates on real estate loans, which are now at record lows.
The cost per square meter in Monaco
Monaco is the city with the highest price per square meter of living space in the world, thanks to the exceptional quality of life, positive economic dynamics and political stability. An interesting feature of Monaco's real estate market is that the price per square meter of a small apartment is on average cheaper than the price per square meter of a large apartment, as shown in the chart below. The reason is that spacious apartments are very desirable among buyers who generally want to accommodate their family and provide them with adequate comfort and security. As the number of spacious apartments on the real estate market in Monaco is limited, the prices per square meter continue to rise subtly.
Price increase per square meter depending on the size of the apartment in Monaco
Rental yields in Monaco
The rental yield of apartments in Monaco is relatively low compared to other real estate markets. This is due to the steep rise in rental prices seen in Monaco in the last 10 years. Investors are mainly looking for a high return on capital gains derived from the resale of real estate due to the lack of income tax. To do this, they do not hesitate to invest in the renovation of their apartments to make them more attractive and thus increase their price. As you can see from the table below, the areas with the lowest prices per square meter are generally the most profitable places to rent.
Average rental yield per area
Liquidity of the Monaco real estate market
The real estate market in Monaco is divided into apartments owned by the state of Monaco, and the free market. International investors can only purchase free market properties. In total there are around 17,000 apartments and apartments on this market, with an average of about 450 transactions a year. We can conclude that each object is sold on average only once every 30 years. Of course, this is an average that hides the real situation on the market. As can be seen from the chart below, most transactions are concentrated around Monte-Carlo (including the Golden Quadrant) and La Rousse Saint-Romain. Then the queue moves on to the neighborhoods of Moneghetti, Fontvieille, Condamine and the Exotic Garden. Larvotto and Monaco-Ville are the neighborhoods with the lowest number of transactions.
Dynamics of the number of resales per neighborhood in Monaco
Conclusions
Monaco has maintained its "safe haven" status and remains one of the most popular destinations for wealthy people from different countries. The political instability in the world only adds points in the eyes of investors, and a unique tax system encourages foreigners to become residents of Monaco. Given the strong demand we can expect further growth in property prices in the range of 5-10% per year depending on the area and type of object.
The main problem of the market - the lack of new luxury proposals - will be solved by the construction of the district of Le Portier. It is obvious that this landmark project will attract international investments and give an additional boost to the market development.
