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Monaco will this weekend be the focus of the world - well, the world’s motor sport anoraks - when the annual Grand Prix takes place. But what of this tiny, super-rich enclave’s property market?
Its image is of a market consisting only of multi-million-euro homes snapped up quickly...but it’s not quite like that.
To start, some context: there are 8,000 Monagasques permanently resident in the principality, but 20,000 others who work there, crossing the ‘border’ from France daily. Although Monaco-based tax exiles are by definition affluent, most of those actually working in the place are on average salaries for the jobs they do.
Housing space is limited not only by the high price of land but by very few plots - the existing community is built into a large hillside with only limited land reclamation going on.
There are some moves to ‘build up’ with ever-taller towers, but there are planning constraints against this: in addition, some long-standing tenants are protected against severe rent increases and against eviction, making it difficult for developers to acquire old ‘knock downs’ which they can replace with spanking new towers.
Purchasing in Monaco has some elements which may prove surprising too. Buyers pay 19.6 per cent VAT on each property - not just new-builds - and in some cases there are additional fees of 4.5 or 6.5 per cent. That adds up to a lot of tax on some of the most expensive properties (when I visited last month, the highest-priced apartment I viewed was a cool Euros 57m).
Just to show the world is not so very different even in a tax haven, some of the VAT is used to fund social housing - yes, there is quite a lot in Monaco, in a sector expanded when the principality’s new railway station was built in 2007. The private rented sector is proportionately fairly large, too, although typical rental yields are currently running at only two to three per cent.
The sales market, perhaps contrary to expectations, has been buffeted by the global downturn. In 2008 there were 410 residential sales (to individual or company purchasers) but in 2010 it was just 212. Last year it recovered a little to 267.
Yet there are 120 estate agents’ offices in Monaco - you do the maths. It means they have to be as fleet-footed as this weekend’s drivers negotiating Casino Square...
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