Younger investors build momentum in Monaco

Younger investors are building momentum in Monaco’s prime property market.

The city has long been one of the most desirable luxury property hotspots in the world, with a reputation as a playground for the wealthy. Now, though, the wealthy investors buying up property are getting young.

“Monaco residents are global, well-travelled and possess great wealth, often self-made. As Monte Carlo sees upgrades to its landmark buildings, squares and sporting facilities such as the new yacht club, the age of new residents is falling,” explains Knight Frank’s latest market report. “These are people who have created wealth early in their careers, not just retiring business people, and they feel that Monaco can offer them not just the tax breaks, but the full package of safety, proximity to some of the most beautiful beaches in the Mediterranean, a social calendar that takes in world-famous film festivals, sailing regattas, tennis tournaments and Formula 1.”

The nationality of buyers is also contributing to the market’s shifting buyer profile, with their country of origin increasingly defined by their budgets. Below €10m, British, Italians, Swiss and northern European buyers have been active in the last year, while above €10m, Russian buyers, previously absent, are house-hunting once more, joined by Middle Eastern and Chinese buyers.

Last year, sales activity was driven by the lower end of the market, with more than 80 per cent of the 500+ resale properties changing hands priced below €5m.

The city’s new-build supply, though, is expanding and opening up a gulf between new home prices and resale prices. Data from 2015 shows the average price of a resale property stood at €3.5m, while the average price of the 38 new-build apartments sold in 2015 was closer to €11.9m.

“This appetite for new product and modern specifications means buyers – both owner occupiers and investors – are more likely to refurbish an older property compared to properties just across the border in France and Italy,” says Knight Frank.

With the population rising 62 per cent in the 10 years to 2015, thuogh, and the principality spanning no more than two square kilometres, the limited space in the face of climbing demand means that the prices are nonetheless on the up, with the Monaco Statistics Office reporting a rise in value of 27.8 per cent in the last five years.

Monaco property market enjoys another strong year

31st May 2016

2015 was another strong year for the Monaco property market, which remains hugely appealing for investors.

Monaco saw sales dip slightly in 2015, with transactions totally €2.25 billion – down from 2014’s record of €2.4 billion. Even with that dip, though, demand for the city’s property has rarely been stronger: in the resale market, which accounts for 93 per cent of deals, 509 deals were completed last year, 8 per cent below 2014 but still a healthy 11 per cent above the levels recorded in 2007.

The city’s appeal, though, is just because of its low taxes and reputation as a playground for the world’s rich and famous. Savills’ latest market review notes that Monaco has “all the key ingredients” for price growth: a strong economy that employs more people than there are properties. With accommodation stretched to its limit, demand for both residential and commercial space means that prices are only heading in one direction. In 2015, median residential values jumped 5 per cent to €2.1 million.

Land area for new properties, meanwhile, is limited: new builds accounted for just 3.5 per cent of transactions between 2010 and 2015, with only “a handful of new apartments” earmarked for delivery in 2016.

“While delivery is anticipated to increase after 2017, we anticipate that it will still add no more than an average of 0.4 per cent a year to stock and will be inadequate to subdue the market by saturating latent demand,” comments Savills.

Who is investing in Monaco? The lucky buyers come from over 140 countries around the world, with over three-quarters of sales going to those from overseas. The French, Italians and Brits are the biggest spenders, though, with investors from the UK and Greece, in particular, stepping up activity in a bid to preserve wealth during uncertain economic times. Russians, on the other hand, have slightly declined in number, while a range of Europeans and those from the Middle East remain active.

Photo: Shesarii