On the ground in Monaco

It’s the principality where Maseratis (in the form of taxis) are part of the public transport infrastructure. At the end of last month, I was in Monaco, taking the temperature (literally and figuratively) of the market there.

Here are my top four takeaways.

1. It is Monaco the proposition which drives the value of its properties, rather than the stock itself

Many would know Monaco as a desirable location for tax efficiencies and that being a sufficient reason for high-net-worth investors to base themselves there. However in 2017, its appeal reaches beyond that.

First, Monaco has an excellent healthcare system, with three hospitals and specialist centres serving its comparatively small population. Second, it has a growing reputation for security. Monaco has one policeman for every three inhabitants. It is considered to be a safe place to walk around in the evening, but more than that, there is a culture of privacy and an intolerance of intrusion, which I’m sure many would appreciate. The quality of properties do little on their own to explain their valuations.

2. Total sales volume and price per square metre are growing

Data from Monaco’s Official Statistics Institute (IMSEE), shows that the total sales volume (re-sale and new properties) achieved in 2016 was over €2.6 billion. This was the highest ever, surpassing the previous record total of around €2.4billion in 2014.

The average price per square meter was €41,000 in 2016. This represented a 15% increase from 2015’s €36,000 per square meter! Nothing I encountered during the visit indicated that a dramatic course change will come in future years. Clearly, the high transaction costs in Monaco have not been much of a deterrent for buyers.

3. There is a way of doing things and a lot of people doing it

Officially, Monaco has 150 practicing estate agents, a few more are said to operate unofficially too. For a small place, that feels like a lot. Interestingly, estate agents can represent a buyer and seller engaged with the same property, which isn’t something we see in London. If I receive a similar brief from two different clients, I have to consider my position.

There is said to be a very collaborative relationship amongst solicitors and estate agents. It’s worth noting that any refurbishment work needs to be signed off by a Monegasque architect too.

4. There is a lot of construction and it is impacting on the quality of life of some residents, depending on where they live

At the moment, the national bird of Monaco is said to be the ‘crane.’ When I arrived, there was a noticeable amount of construction going on, mainly residential, either properties or supporting infrastructure, but also redevelopment of the port. While admiring what turned out to be his magnificent 40ft sail yacht, I spoke to a long-term resident about his experience of living in Monaco. During the conversation, he said he was considering whether to spend as much time in Monaco owing to the levels of construction that were going on at the moment.

Having said that, this was not a problem in the tranquil Fontvieille, which sits on the other side of the port. According to local estate agents, it is increasingly popular and I could see why, it was a lovely area.

Summing up

In summary, with a small but growing population, Monaco has a lot of upside. As an investment, Monegasque property hasn’t been known to lose value. It is still a beautiful part of the world, especially if you factor in the wider French and Italian Riviera, which are easy to reach thanks to Monaco’s ‘soft’ borders.

I look forward to delving deeper into it as I continue the work on behalf of my clients.

This blog post was first published on LinkedIn in April 2017. It reflects the views of the author and not necessarily those of Warnerheath Ltd.