Monaco is known the world over for her Grand Prix, million and billionaire residents, glamour…and some of the most expensive property in the world.

But with the world on on the brink of a possible recession and falling house prices both in the US and Europe, Monaco could buck the trend in the years ahead and see surprisingly big gains in prices while those around her go into freefall.

Part of Monaco’s price increases in recent years, and for the medium term future too, is that new housing being built is for locals, and a strong new supply of openly available apartments is unlikely to happen for ten years - and with strong demand and little supply it suggests further price rises are likely for 2008.

British citizens have moved to Monaco in high numbers in recent years and as UK taxes show no sign of falling this large group is expected to swell further in 2008.

Previously a relatively small group of Monaco residents, the number of British people living in Monaco has doubled in the last two years since 2005, with some 3000 now claiming residency in Monaco.

Attaining residency in Monaco necessarily means renting or buying an apartment. The lowest priced property on the market at the moment is a 30m2 studio with a 7m2 balcony in the Fontvieille district at 720,000 Euros. With closing costs this rises to over 800,000 Euros. As well as buying a property, to gain residency in Monaco a bank account needs to be opened in the Principality, with account opening deposits varying between 100,000 and 500,000 Euros.

Mid range is a 210m2 3 bedroom 2 bathroom apartment in Monte Carlo, close to Casino Square, at 4,200,000 Euros. And at the top end is a three floor penthouse apartment in the well known Eden Star development at 25,000,000 Euros, equivalent to around 16 million Sterling.

At the opening of Monaco’s new consulate in London recently, Prince Albert of Monaco acknowledged the important contribution British people are making to his country, and said he would like to see more in the Principality. Prince Albert is particularly keen to see British entrepreneurs move to Monaco, but one travel guide for the country doesn’t think Prince Albert has fully thought through his ideal scenario.

‘Prince Albert said recently that he welcomes British entrepreneurs moving to Monaco, but that he wouldn’t be distributing leaflets on London’s streets to get more to do so. But he is missing the point. The costs involved in moving to Monaco are prohibitively high, even compared to London standards, and if he is serious about British talent moving to Monaco while we don’t expect Monaco to remove the financial barriers he could move to lower the bar a bit at least.’

A well respected US magazine recently claimed Monaco has the most overpriced real estate in the world, claiming the rental returns as part of their figures meant the tax haven’s property costs were unduly high.

In response a Monaco internet site says the American magazine are wrong, and have forgotten why Monaco’s property prices are high in the first place.

‘The error they made was comparing Monaco with places like Rome, Warsaw, Los Angeles and Vancouver, and they also overestimated closing costs. While admittedly high in Monaco at around 11 per cent, it’s not common to be 20 per cent that their research was based on.’

Monaco property buyers would find it difficult to find anything at all for 700,000 Euros, even for the smallest studio apartment, and realistic starting prices are from a million Euros.

Prices in 2007 rose dramatically, with the Casino Square area seeing price increases close to forty per cent, and in Fontvieille, close to the helicopter pad which connects Monaco with Nice Airport, prices nearly doubled.

Overall it is thought that demand has grown by around thirty five per cent over the last five years, with few new Monaco properties becoming available to meet the new buyers expectations.

By: Roger Munns

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Buyers are already paying US $1,000,000 for studio apartments and Monaco property prices could still rise steeply in the next couple of years, and Europe’s favourite tax haven could be out of reach for some millionaires according to a local travel guide.

Different recent surveys have all been good indicators for Monaco, showing more people likely to apply for residency and buy property in Monaco. Buyers from the UK in particular are expected to rise in number.

Commenting on the findings, Monte Carlo and Monaco destination guide http://www.yourmonaco.com say ‘While we would like perhaps to imagine that it’s the fine cuisine and good weather in Monte Carlo that is attracting the British to Monaco, we know realistically that it is because residency entitles them to a zero rated income tax.

One survey says that the number of millionaires in the UK will increase four fold in the coming years, and the UK has become a very important market for Monaco real estate recently – that will boost prices as the demand feeds through. Another survey coming out of the UK predicts that house prices will rise by 70 per cent over the same period. Inheritance tax in the UK is quite a big issue at the moment as many more people are above the government threshold due to their house price, and in Monaco there is no inheritance tax, which gives an added incentive for some to move to a tax haven. People choose to leave their money to their children, cutting out the government that would take a large share.’

A CBRE report on world property also noted that Monaco real estate prices match those of London and New York’s Manhattan.

‘Apart from the very obvious financial advantages that can be had by moving to Monaco’, conclude YourMonaco.com, ‘Perhaps the most telling survey for us was the one by Laura McKenzie, a US travel expert. She rates Monaco as the number one destination for safety. For people with money preserving and optimising what you have in the bank is important, but so is the ability to walk down the street without fear. Monaco provides both the financial and personal security the wealthy seek, and it should come as no surprise when they decide Monaco is the best place for them and their families to live.’

Weather In Monaco

Apart from being a tax haven, the principality is perhaps best known for the Monaco Grand Prix.

In addition to the race that takes place each May, the world’s premier yacht show is held in September, attracting millionaires and billionaires to view what the yachting world has to offer.

Monte Carlo real estate specialists Tribune properties say that the yacht show in September is symptomatic of the way Monaco has progressed in recent years in attracting high profile events to the principality.

‘Apart from the Monaco Grand Prix and the yacht show, there is the tennis in April and this year for the first time a flower show. If it goes the same way as the other events it will be a success in its own right before too long. Having different events throughout the year benefits the Monaco hotels and the tourist sector generally’.

The European tax haven is the second smallest country in the world, but the map of Monaco was re-drawn twenty years ago when land was reclaimed from the sea. Earlier this year bids were invited for an island to be built off Monte Carlo.

‘When complete the island will add to the Monaco housing stock’, say Tribune Properties, ‘And this might help dampen the property prices a little. But we anticipate that the apartment blocks will be low rise as Prince Albert is very keen to promote Monte Carlo as an environmentally sound place to live. We expect some of the properties will be reserved for key workers while the rest will be available for general sale. But overall we doubt if the new apartments will keep up with increased demand, and property prices in Monte Carlo will stay as high as London and Manhattan’.

It is also possible that when the island is complete that the Monaco Grand Prix circuit will change. Monaco has long been notorious for a lack of overtaking places, and this might help alleviate the situation. Included in the plans will be new Monte Carlo hotels.

‘Overall all the key elements are in place to see a significant rise in Monaco property prices in the near and medium term’, claim Tribune Properties. ‘Quite ordinary one bedroom apartments are changing hands at a touch under a million Euros at the moment – over a million US $’s. Give it two or three years and it’s possible that you won’t be able to buy even a studio apartment suitable for under a million Euros.’

By: Roger Munns

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