The sky’s the limit: Exploring the unusual influx of new property in Monaco

It’s onwards and very much upwards for Monaco’s booming property market, says Ruth Bloomfield.

When house-hunters come to Monaco for the first time, they understandably expect to be blown away by the sheer luxury of one of the most expensive strips of real estate on earth.

The reality, however, can be something of a let-down. The vast majority of homes in the tiny principality are compact apartments within dated post-war apartment buildings. The only extraordinary thing about them is their price tags – average prices in the principality are well over €50,000 (£42,800) per square metre and twice the price of New York or Geneva.

“Most of Monaco was built in the 1960s, 1970s and 1980s,” says Irene Luke, head of Savills Monaco. “A lot of those buildings are looking tired. Gradually, apartments and buildings are being renovated, but it is true that when people come here, they are a bit disappointed by what €50 million buys.”

For decades, a chronic undersupply of property has underpinned Monaco’s real-estate market, irrespective of the quality of the stock and what is going on in the world around it. Monaco’s diminutive size – it measures slightly over 200 hectares – means new developments are rare and when they happen, tend to be small in scale.

An exception to this rule is Mareterra, an ultra-luxury €2 billion development of 120 flats and  14 houses on a 5.7-hectare strip of reclaimed coastline between Port Hercule and Larvotto Beach. In addition to new homes, Mareterra has a marina, a park, a waterfront promenade, shops and a public square.

The seven-year building project formally completes in November and most of its homes have already been sold – at prices reported to have approached €100,000 per square metre. Half of them, says a spokeswoman for the development, have been sold to first-time Monaco buyers.

Despite this unusual influx of new property into the Monaco housing market – not to mention the global headwinds caused by inflation and instability in Europe and the Middle East which have dragged many property hotspots into negative growth territory – Monaco remains in the black. And while the Principality’s 2023 growth was muted at an 0.9 per cent, this is a highly nuanced market with some strong outperformers.

Larvotto, parts of which were built on land reclaimed from the sea after the Second World War, is the principality’s most expensive neighbourhood thanks to its beaches and front-row homes. Its prices increased by six per cent per square metre in 2023 to an average €65,000 per square metre, says Luke.

Jardin Exotique, which is convenient for the French border, and La Condamine saw the highest price per square metre growth of 19 per cent and 22 per cent, respectively. Jardin Exotique’s boom can partly be explained by the sale of the 66 new homes at L’Exotique, which was completed in 2022. This development has hoisted local prices to €41,600 per square metre.

La Condamine is more affordable than Larvotto at €54,000 per square metre, but still has good sea views and amenities, which helps explain its growth. Luke believes average prices will hold steady, and that records will continue to be broken within Monaco. “Mareterra is sold out, off plan, and we are starting to see resales priced at €100,000 per square metre,” she says.

Buyers in the Principality, traditionally approaching or past retirement age, have started getting younger. “They are not ‘young’ young”, says Luke, but “maybe between 45 and 60. They are coming here with children; the schools are full and expanding.”

Luke has seen plenty of British buyers over the past year, not just because of the scrapping of the UK’s tax-friendly non-dom system as much as because of fears of further political change. “They are thinking that a Labour government is not going to be friendly to wealthy people,” she says.

These buyers are joined by Italians and Scandinavians, as well as a smattering of Americans – interesting because these buyers will not benefit from the low-tax environment that traditionally draws the wealthy to Monaco. “They want to be somewhere safe that is in Europe,” said Luke, highlighting geopolitical security as yet another draw to living in the glamorous Principality.

First published in the October 2024 issue of BOAT International. Get this magazine sent straight to your door, or subscribe and never miss an issue.