Why Monaco’s allure to the wealthy endures

October 7, 2024

Panoramic view of Monaco cityscape with Port Hercule, yachts and mountains

Monaco, with a population of 38,367, is home to nearly 141 nationalities – all within an area that is just over half the size of Central Park.

Despite its small footprint, Monaco remains a top contender among global safe havens and low-tax jurisdictions, as Kate Everett-Allen, Knight Frank head of European residential research, explains in this piece below:

According to Knight Frank’s wealth sizing model, the number of ultra-high-net-worth individuals – those with a net worth of $30 million or more – is expected to rise by 23 percent in the next five years, while the population of dollar millionaires is projected to grow by 43 percent during the same period.

Map of Monaco. Image credit: Knight Frank Research

With just 21,123 dwellings, 81 percent of which are privately owned, Monaco faces significant pressure to expand to meet housing demand.

After years of undersupply, two major projects are slated for completion this year, though both are mostly sold out.

The first, Bay House, consists of two 25-storey towers that will add 56 apartments and five rooftop villas. Developed by Groupe Marzocco, the same firm behind Le Tour Odéon, Bay House is part of the larger Testimonio II project, which also includes a nursery and a new site for Monaco’s renowned International School.

The second project, Mareterra, is a €2 billion land reclamation effort that will expand Monaco’s surface area by 3 percent. Most units have already sold, with some commanding prices of €100,000 per square meters or more.

The development features 110 apartments and 10 villas, six of which will be waterfront properties.

With renowned architect Renzo Piano a key draw, the project will also offer a waterside promenade, a retail plaza, and a small marina.

However, it is not just the ultra- wealthy facing housing challenges.

Monegasques, who make up a third of Monaco’s 39,000 residents, are also feeling the strain.

To address this, Prince Albert launched a 15-year housing plan in 2019, aiming to boost the number of state-owned apartments by 43 percent, reaching 4,548 units.

The attractions of Monaco. Source: Knight Frank Research, World Health Organization

Why is Monaco in demand?
“We are seeing a significant increase in enquiries from buyers considering relocating to Monaco,” said James Davies, who oversees Knight Frank’s Monaco desk.

Higher taxes, geopolitical tensions and sudden policy changes are placing Monaco, along with Switzerland, in the spotlight.

A recent survey by Knight Frank confirmed security and privacy were the top motivation for high-net-worth individuals (HNWIs), looking to relocate, followed by employment and then tax.

Top 3 foreign buyer nationalities, second-quarter 2024. Source: Knight Frank Research

“With an eye on the shifting political and economic landscape, some prospective buyers, after contemplating the idea for several years, now believe the time is right to make their move,” Mr. Davies said.

The U.K. Government’s decision to scrap the rules relating to non-doms, the 74,000 individuals who live in the United Kingdom but do not pay tax on their global income, and the uncertainty over new inheritance tax rules in particular mean Monaco may be on their radar, along with other HNWIs who have been affected by wealth and flat tax changes across Europe.

Monaco sales decline and square meters for 1 million euro. Source: IMSEE, Knight Frank Research

Market update
In 2023, Monaco recorded 418 residential sales, with 388 being resales. This segment of the market experienced a 10 percent year-on-year decline in sales.

The steepest decline occurred in the resale of smaller apartments. This was most likely due to changes in the residency application process.

Since 2020, Monaco’s residency rules have required individuals or families applying for a residency card to rent or purchase a property that matches the size of their household. This has driven increased demand for larger homes.

According to Monaco’s Statistics Agency, IMSEE, more than 60 percent of newbuild sales and 21 percent of resales last year were apartments with three or more bedrooms.

Developers are also responding to this trend by offering larger units in the new build sector.

New housing delivery in Monaco is highly variable due to limited land for development.

While no new units were added in 2023, major projects such as Bay House and Mareterra are expected to deliver over 180 homes, leading to a significant rise when the official figures are published for 2024.

Despite some short-term declines, property prices in Monaco have remained strong, growing 38 percent over the last decade.

Price growth returned to positive territory in 2024 with a 1 percent increase overall.

The La Condamine neighborhood saw the highest year- on-year growth at 19.7 percent based on completed sales.

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Why Monaco’s allure to the wealthy endures

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