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A Guide to Real Estate in the World's Most Expensive Market

It seems like everybody wants to move to Monaco right now—everybody who is super rich, that is.

Real estate in the sunny principality on France’s Mediterranean coast is experiencing a surge in demand. Last year, home prices in the city-state’s secondary market rose to €48,800 per square meter ($4,560 per square foot), an 18.1% increase from 2017. The value of total transactions came to €2.7 billion, according to Monaco's statistics office.

Interest is being driven by exclusive, large apartments. Sales fetching €5 million or more set a record in 2018, almost doubling the number logged five years ago. According to data from Savills Plc, Monaco has surpassed Hong Kong as the most expensive city in the world in which to buy prime property.

Stock remains tight in the family-led principality. The unpredictable twists of Brexit have created a wave of interest from wealthy British families worried about potential upheaval in the U.K., including in the real estate market. Some have already made up their minds. Monaco is home to high-­profile Brits such as cyclist Chris Froome and Philip Green, chairman of Arcadia Group Ltd. and owner of Topshop and other clothing companies. To the global rich, Monaco offers a singular enticement—most living there don’t pay tax on income or capital gains. Inheritance taxes can vary, but they’re particularly low compared with those in other countries.

Photographer: Balint Porneczi/Bloomberg

The process of buying a home here is unusual for several reasons. Most newcomers must fulfill various conditions to get long-term residency and qualify for the tax benefits: They must buy or rent ­housing ­proportionate in size to their family’s need, provide a clean criminal record, and deposit at least €500,000 into a bank account in Monaco. (The principality’s tax regime generally doesn’t apply to those with a French passport, and Americans must pay U.S. taxes wherever they are.)

Other quirks are more real-­estate-centric: External areas such as a terrace can be priced the same as interior space, for instance. A three-­bedroom, 280-sq-m apartment with a 100-sq-m terrace that looks out on Cap d’Ail is listed at Sotheby’s for €26.9 million.

These sky-high prices reflect Monaco’s strengths as well as the light-tax policies. It’s centrally located in Europe, has a steady political system, and enjoys a mild coastal climate. “Making a safe choice in terms of real estate investment is clearly a major worry for those considering to move in,” says Florian Valeri, who founded an eponymous agency in the city. “After a peak of buyers from Russia and Eastern Europe a few years ago, we see lots of interest from U.K. residents.”

Only about 1 in 4 of its almost 40,000 residents holds Monegasque citizenship, and a quarter of all its population in 2016 had moved in during the previous eight years. Almost half are 50 or older. “Of course there are retired businessmen, and also media stars and sports champions, but most of those moving in are not under the spotlight,” says Irene Luke, managing partner at Savills Monaco. "They are generally entrepreneurs between 40 and 60 years old, often still active and successful, who are attracted by Monaco’s advantages.”

But property is scarce. The total land area is less than a square mile—the only country on Earth that’s smaller is Vatican City—and the housing market is dominated by apartments in multistory buildings often a few decades old. Last year only 89 new builds came to the market; there were 15 in 2017.

Appetite is strong for buildings of all ages. As can be expected, sea views come with a premium, and high-floor, four- and five-bedrooms command the market.

MONTE CARLO AND THE CARRE d'OR - The primary hotel and shopping district in the city is adorned with belle epoque buildings, including the legendary casino and opera house. It’s also Monaco’s most expensive: The average price reached €56,000 per square meter last year. The in-demand neighborhood also encompasses the Carré d’Or (“Golden Square”) shopping district. Quintessential landmarks, including the Hôtel de Paris Monte-Carlo and the Casino de Monte-Carlo, are all located here. A 1,915-sq.-ft., two-bedroom apartment in the Mirabeau residence with a terrace that has views of the casino and the ocean is listed by Christie’s for €21.9 million.

FONTVIEILLE - Built on land reclaimed from the sea, the infrastructure here is relatively recent. It’s a popular option for newcomers testing the market or families seeking to avoid the noise of the many renovation projects under way elsewhere. The neighborhood has a relatively deep offering of two- and three-bedroom apartments, a park, several restaurants, and sports facilities. A 90-sq-m one-bedroom, which includes a 13-sq-m terrace, is listed with agent Caroline Olds for €3.9 million.

La CONDAMINE - If you’re looking for an authentic Mediterranean neighborhood, the closest you’ll find here is La Condamine. An easy stroll from the International School, a picturesque market, and the harbor of Port Hercule, this neighborhood had the sharpest increase in price per square meter in 2018. The area consists of a mix of three- or four-story “bourgeois buildings” and newer, taller ones. The Valeri Agency has listed a one-­bedroom apartment in the new Le Stella building for €4.6 million. It’s not a palace, but there is a view of one—the home of Prince Albert II on Le Rocher—from its 14-sq-m terrace ­facing the Mediterranean.

By: Fabio Benedetti Valentini for Bloomberg


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