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Spotlight Monaco Residential Market 2016 ultra prime Monaco remains an attractive destination for the global wealthy

savills.com/research 2016

Spotlight Monaco Residential Market

High demand for prime property meets with low supply in an extremely limited land area Executive summary

onaco continues to traded each year, meaning that the be an exceptionally average Monégasque home changes attractive location hands only once every 37 years. for the global This compared to prime London Monaco is attractive to a broad base of wealthy and has properties, for example, where the Mall the key ingredients for real estate norm is nearer once every 20 years. global occupiers and investors. Prime residential price growth. is in high demand. At a global level only Against this low annual supply Hong Kong rivals it on pricing. A very strong local economy of resale properties, new builds in See page 05 employs more people than can be Monaco are a drop in the ocean. physically accommodated within A mere 3.5% of transactions the city state. High demand for between 2010 and 2015 were both residential and commercial newly built apartments. Only a space meets with low supply in an handful of new apartments are extremely limited land area. earmarked for delivery in 2016 so Median residential prices grew by 5% in the supply shortage will appear 2015 to €2.1m. Total sales volumes in euro Monaco’s residential property market even more pronounced. terms were down but only by 6.3% on their may be very valuable but it is also 2014 record, to €2.25bn. very small. Transaction numbers While delivery is anticipated See page 06/07 topped only 547 in 2015 but, even to increase after 2017, we anticipate then, this represented less than 4% that it will still add no more than an of private housing stock numbers in average of 0.4% a year to stock and Monaco. On average, since 2006, will be inadequate to subdue the less than 3% of private stock has market by saturating latent demand. n A strong economy supports demand for  Attractive to the global wealthy commercial real estate. Short supply and strong demand means that commercial rents in Monaco rival central London. See page 08

Targeted at the international elite, newly built properties accounted for 7% of all sales by number in 2015, but 20% by value. See page 08/09

Monaco is building to meet modern day occupier demands. Safe haven credentials, Notes about the publication political and economic stability will continue This document was published in May 2016. The data used in “The average Monégasque home to underpin its appeal. the charts and tables is the latest available at the time of going changes hands only once every 37 years” See page 10 to press. Sources are included for all the charts.

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Economy scheduled to last four years, Monaco of turnover is generated outside Residential Monaco at Monaco has experienced very strong has lost 7% of its occupancy Monaco, in which case a rate of a glance and sustained economic growth since capacity. This has put upward 33.33% applies. market 2010, with official figures reporting pressure on the average price paid 9.6% and 7.2% GDP growth in 2013 per occupied room, up by 1.3%. With a high density of UHNWIs Monaco is a sovereign city- and 2014 respectively. This is in and HNWIs, Monaco also has a Monaco’s residential market saw state of just 2 sq km in area and contrast to lacklustre performance Wealth infrastructure very strong private banking another strong year in 2015 with a home to the world’s highest in neighbouring France, while the Monaco is part of a network presence. Twenty-one banks are total of €2.25bn sales undertaken, €90,900 concentration of wealthy individuals. Eurozone as a whole has contracted of global destinations where listed in the Principality and several slightly down on 2014’s record of A truly cosmopolitan city with a over the same period. Monaco wealthy individuals choose to own more agencies of foreign banks are €2.4bn. In the resale market, which Monaco’s ultra-prime Mediterranean character, it is both recorded a budget surplus for the homes. A property in Monaco is located there. accounted for 93% of deals, 509 a global centre of commerce and third year running, with a current frequently paired with a home in sales were recorded. This was 8% price per square metre a leisure destination. account balance of €25.7m. London or New York, the major Residential demand from a broad, below 2014 volumes, but still 11% world city complementing the global base, coupled with restricted above 2007 levels (Figure 3). The Monaco has low taxes and a business An important centre of employment low-tax Principality. supply, means that Monaco very upper tiers of the market friendly environment and plays host in the region, Monaco is a net remains one of the most expensive have been most liquid and total to numerous prestigious international importer of labour. As of Q4 2015, The preservation of wealth is an destinations for ultra-prime property euro volumes stand 67% above sporting events, contributing to a the total number of people employed increasingly important consideration in the world – only Hong Kong tops their 2008 peak. profile that sees it punch well above its stood at 50,533, a number that has for footloose wealthy individuals, it at €109,800psm compared to weight on a global stage. These factors grown by 5.8% since 2012. This and Monaco’s low tax environment Monaco’s €90,900psm (Figure 2). Price trends make it attractive to a broad base of compares to Monaco’s permanent is attractive. In this regard the Monaco is a small market and global occupiers and investors, and population of 37,800. Principality does not levy any Prime prices in Monaco remained average prices are prone to real estate here is in high demand. income tax, wealth tax or capital stable in 2015 at €36,000psm in fluctuation depending on the sample Thanks to its busy sporting calendar, gains tax. Instead, it uses social local currency. While US Dollar of properties sold in any one year. In Monaco has a strong tourist industry insurance, payable by both denominated (and pegged) markets 2015 the average resale price in and hotel occupancy is high. Some employers and employees, and have become relatively more Monaco stood at €3.5m, down 4.8% “Monaco has experienced 535,915 rooms were rented in 2015, VAT payable on goods and services, expensive due to a strengthening on the year prior, while the median the equivalent to 14 rooms per capita. to raise income. of that currency, Monaco still offers price, at €2.1m, was up 5.0%. The very strong and sustained currency savings to dollar buyers, in long-term median price trend shows economic growth since 2010” With the iconic Hotel de Paris in Corporations are exempt from tax spite of some strengthening of the consistent growth, averaging 5.8% now under renovation, – except where more than 25% euro since November 2015. per annum since 2010 (Figure 4).

FIGURE 2 Ultra-prime prices: prices per square metre The Monaco Grand Prix around the world The Monaco Grand Prix is one of the most prestigious – and demanding – motor racing events in 2015 price movement the world. First held in 1929, it has been a permanent fixture on the F1 calendar since 1955. The City € psm annual event has a seating capacity for 37,000, nearly equivalent to Monaco’s entire population, $187,650 in local currency while up to 200,000 more watch from balconies and other vantage points. The Grand Prix is GDP per capita, Hong Kong 109,800 estimated to generate over €100 million for the Principality each year. the highest globally  The 2016 F1 season features five city tracks. In Monaco, prime two bed apartments in proximity Monaco 90,900  to the circuit have a typical price of €8,500,000, nearly nine times the cost of comparable properties in proximity to the Singapore track, the Marina Bay . At 3,337m in Tokyo 58,900 length, the runs through the heart of Monte Carlo and , some  of Monaco’s most exclusive districts. If the equivalent track area was measured as dwelling New York 57,000 floorspace it would be worth €3 billion. 89.5  FIGURE 1 Years life expectancy, London 55,900  F1 Grand Prix 2016 season city circuits the highest in the world Moscow 45,100  Prime 2 bed apartment Location (Circuit) Grand Prix in proximity to circuit Paris 31,100  Monaco (Circuit de Monaco) Monaco Grand Prix €8,500,000

Singapore (Marina Bay Street Circuit) Singapore Grand Prix €950,000 Shanghai 25,000 

Montreal (Circuit Gilles Villeneuve) Canadian Grand Prix €530,000 18,700 People per square km, 2nd Singapore 13,400  Melbourne (Albert Park) Australian Grand Prix €450,000 highest population density Dubai 10,900  (Baku City Circuit) €180,000 in the world after Macau Source: Savills World Research Source: CIA World Factbook, UN, Savills World Research Source: Savills World Research

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In common with other top-tier metre of a one bed property FIGURE 5 global prime markets, the largest at €31,900psm. New development in Monaco: properties in Monaco achieve a price Recently completed and pipeline premium on a square metre basis. Occupier profile projects in the Principality With developable space limited, Purchasers of prime property in large, single, units are in short supply Monaco are diverse, providing a and priced accordingly. There is a broad demand base. Less than a price premium for size. Between quarter of Monaco’s residents are Testimonio II 2013 and 2015, the average resale Monegasque, the remainder are of Tour Giroflées 25 storey tower with 73 156 unit residential price of a four bed (or larger) property 144 different nationalities, of which residential units and a development for stood at €40,700psm. This is 28% the French, Italian and British are the fitness centre. Monégasque nationals higher than the price per square largest groups. Tour Odéon In the last year, increased purchasing Completed in 2016 this 49 storey, 70 unit development activity has been seen from British contains a five storey and Greek buyers seeking a move 3,300sqm penthouse. for wealth preservation. A range of Europeans and those from the Middle Palais de 88,225 East are active, while Russians have Helicopter passengers seen a small decline (but are still la Plage present). Many relocating individuals 15 storey development in 2015 also seek to move their businesses to Petite Afrique replacing the oldest building Monaco (see boxout on p. 09). n Due for completion at the end in the area. of 2016, overlooking Monte Carlo Casino gardens, it will FIGURE 3 comprise seven apartments Resale transactions: 2015 volumes down on 2014 peak of 400-700sqm. n Studio n 1 bed n 2 bed n 3 bed n 4 bed + n Villa Total € volume

600 €2,500 Project Portier 500 This six hectare land €2,000 reclamation scheme will 400 add 54,980sqm of habitable €1,500 space, including 10 villas, 115 apartments and retail 300 26 Carré d’Or premises. Completion 2025. €1,000 A contemporary mixed 200 use development to be Number of transactions completed in 2018. Transaction volume (millions) Transaction €500 100

0 €0 Sporting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: IMSEE D’Hiver A mixed use redevelopment designed by Richard Rogers FIGURE 4 comprising six residential Mean and median resale price: steady upward trend in median price Le Méridien pavilions and commercial 14 storey residential and and cultural space. Mean price Median price €4.0 mixed use development completed in 2015. €3.5

€3.0

€2.5

€2.0 KEY Le Stella €1.5 Mixed use scheme of 99 apartments and two €1.0 ■ Completed 2016 or prior Median resale price (millions) Median resale villas, including retail and ■ Completing 2017 or later commercial space. €0.5

€0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: IMSEE Source: Savills World Research

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New build FIGURE 6 market Office property Grade A office rent comparison As an international centre of business Monaco attracts a range of Rent per square metre

Newly built properties made up 7% occupiers in the professional services sector as well as relocating family per annum of total sales by number in 2015 firms. Office space is in short supply and high demand, pushing rents to but 20% by value. Sales volumes new heights. Grade A office rents stand at €1,140 per metre per annum, London (West End) €1,410 reached record levels last year. well above neighbouring Nice, for example, and not far off prime rents in Thirty-eight new build sales were London’s West End. Monaco €1,140 registered, up from just 11 in 2014, with a total sales value of €454 The majority of Monaco’s office space is concentrated in Fontvieille, while Paris (CBD) €790 million (Figure 7). financial services firms and private banks are dotted around Monte Carlo, La Rousse and La Condamine. New delivery has been limited in recent Nice €200 During the global economic years. The small amount of new supply set to come forward as part of Source: Savills World Research downturn, developers in Monaco mixed-use schemes will do little to ease the shortage in the near term. shifted their focus to the global ultra prime segment They built large, well-appointed units in schemes with extensive on-site amenities In July 2015 Monaco’s latest FIGURE 7 targeted at wealthy end-users. expansion project was agreed. New build transactions: record number of sales in 2015 The six hectare Tour Odéon completed in early reclamation project will include n Studio n 1 bed n 2 bed n 3 bed n 4 bed + Total € volume 2016 and La Petite Afrique is to be six hectares of mainly residential 40 €500 completed in late 2016 and exemplify space, an extension of Grimaldi €450 these standards. Such schemes Forum, a marina, park and seafront 35 command a significant premium over promenade. S.A.M. Anse du Portier/ €400 the resales market, a trend most Bouygues Travaux Publics Group 30 €350 apparent in the largest units. Four have been awarded the contract and 25 bed (and larger) units accounted for work is scheduled to begin in 2016, €300 29% of all new build sales last year, to complete by 2025. 20 €250 with an average price of €28.7m. This represents a 231% premium Elsewhere, more new development €200 15 over the same size properties in the is in the pipeline, much of it to be resale market, where the average concentrated in the Larvotto district. €150 10 Transaction volume (millions) Transaction Number of new build transactions sale price was €8.7m (Figure 8). This will include the 73 unit Les €100 Giroflées tower, targeted squarely 5 Investors are also active in at the global super rich, and the €50 Monaco’s new build sector. More 150 unit Testimonio II in St Roman, 0 €0 than half of new build sales (21 for Monégasque nationals. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 units) were one bed units with an Source: IMSEE average sales price of €3m apiece, While delivery is anticipated to mainly accounted for by Le Méridien. increase (after 2017), we anticipate Monaco has a large rental sector that it will still add no more than an FIGURE 8 which is, typically, institutionally average of 0.4% a year to stock and New build premium: average sales price and new build premium in 2015 owned and let to Monégasque will be inadequate to subdue the n New build n Resale New build premium over resales market nationals, but there is demand for market by saturating latent demand. €30 250% rental property from international occupiers too. New developments In response to strong demand such as Le Méridien have catered for office space, meanwhile, €25 directly toward these markets. many residential schemes will 200% include an office component. Le Expanding Monaco Stella, a 99 residential unit scheme, €20 With a population density of 18,700 also incorporates four floors of 150% per square kilometre and all its office space. €15 land developed, Monaco is taking innovative approaches to new urban Sporting D’Hiver in Golden Square is 100% development. The city state has, in a Richard Rogers designed, mixed- €10

common with many modern land- use redevelopment that will deliver sale price (millions) Average €454m market over resales Price premium constrained cities, been reclaiming six residential pavilions (for the rental 50% Record new build land from the sea since the late market), along with commercial and €5 19th century. The Fontvieille district, cultural space. Prominent sites are developed in the 1970s, extended being repurposed to make them fit sales volumes in 2015 €- 0% Monaco’s land by 20%. for modern occupier demands. n 1 bed 2 bed 3 bed 4 bed + Source: IMSEE

08 savills.com/research 09 Spotlight | Monaco Residential Market Date

 Monaco has a cachet that few can replicate Outlook World Research Publications

■ Stability: In the face of global economic n Spotlight | French Riviera Residential Market uncertainty, Monaco’s safe haven credentials, n Spotlight | Alpine Property Market political and economic stability will continue to n Spotlight | Gibraltar Residential Market underpin its appeal. n Spotlight | Algarve Residential Market

■ City and retreat: While the ultra prime markets of many world cities cool, in terms of price and/ or turnover, Monaco will continue to benefit from its dual status as both a business destination and a recreation centre. Prime prices are set to show stability or modest growth particularly given limited new supply against sustained demand.

■ Evolution: Monaco is expanding and rebuilding to remain relevant to modern-day occupier demands. In addition to new residential and For more publications, visit savills.com/research commercial space, the Le Portier reclamation Follow us on Twitter @Savills project and Sporting d’Hiver will bring new and enhanced public spaces and cultural facilities.

■ Cachet: Thanks to its history, heritage and busy sporting and social calendar, the Principality has an unrivalled global reputation as a destination for the world’s wealthy. Many new competing city enclaves are emerging around the globe, but status takes time to foster and very few currently have the cachet of Monaco.

Savills team World Research

Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. Yolande Barnes Paul Tostevin Vladimir Tikhnenko It is a company that leads rather than follows, and now has over 700 Director Associate Director Analyst offices and associates throughout +44 (0) 20 7409 8899 +44 (0) 20 7016 3883 +44 (0) 20 7016 3043 the Americas, Europe, Asia Pacific, [email protected] [email protected] [email protected] Africa and the Middle East. This report is for general informative purposes only. It may not be Global Residential Monaco Residential published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or Hugo Thistlethwayte Jean-Claude Caputo Irene Luke part of it in any form is prohibited Nathalie Gamory without written permission from Head of International Partner Partner Sales Director Savills Research. +44 (0) 20 7409 8876 +377 97 70 42 00 +336 80 86 24 91 +336 12 08 53 17 [email protected] [email protected] [email protected] [email protected]

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