New properties coming to market in Monaco could affect London prime market

Property Wire

Prime property is snapped up in Monaco when it comes onto the market due to decades of limited supply as land for building in the tiny principality is scare but now more new properties are being built.

At just two square kilometres Monaco is smaller than Hyde Park in London and millionaires flock to buy real estate as it is regarded as offering privacy and security, as well a benign tax environment.

Its population of wealthy individual, those with net assets of US$30 million plus, has increased by 62% in the 10 years to 2015 and a new analysis report from international real estate agent Knight Franks reveals that due to high demand and limited supply average prices have soared.

The report predicts that Monaco could benefit from wealthy buyers moving out of the London market. The British Government’s decision in July 2015 to change the rules that apply to those claiming non-dom status has put Monaco back in the spotlight, it suggests.

It is suggested that from 2017 some non-doms living in the UK will find it harder to claim non-dom status and benefit from the remittance basis. Agents surmise that this, and not the Brexit decision, will in the long term prove the key determinant of inward capital flows to Monaco.

Indeed, data from the Monaco Statistics Office shows that prices have increased by 27.8% in the last five years but there has also been a widening gulf between the price of new and resale properties.

Data from 2015 shows the average price of a resale property stood at €3.5 million, whilst the average price of the 38 new build apartments sold in 2015 was closer to €11.9 million.

According to the Knight Frank report this appetite for new properties with 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.

Rental demand is also strong. Residency is conferred on those who rent as well as buy in Monaco, provided the tenant occupies an appropriate size property, for example a minimum of a two bedroom property for a family of four. Families will often rent close to the International School of Monaco in La Condamine before deciding where to buy.

Monaco’s constrained supply pipeline improved in 2015 when 195 new apartments housed within three new prime developments of Tour Odéon, Le Meridien and Le Petitie Afrique, which was sold out before it was built, came to the market.

The next single largest contribution to housing stock will be the delivery of Testimonio II, which will provide some 150 apartments in 2019. It will be built by the Marzocco’s, the developers responsible for Tour Odéon which provided a new high level of finish and amenities unseen in a large scale development in recent years, the report explains.

The report also reveals that Monaco’s buyer profile is shifting. Not only is the age of buyers lower than it was a decade ago, but the nationality of buyers can increasingly be defined according to their purchasing power.

Below €10 million buyers tend to be British, Italians, Swiss and northern European and have been active in the last year. Above €10 million, Russian buyers, previously absent, are house hunting once more, joined by Middle Eastern and Chinese buyers.

Sales activity in 2015 was focused at the lower end of the market. Of the 509 resales properties that changed hands in 2015 some 423, or 83%, were priced below €5 million.

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