Evolution of real estate prices in monaco

  • Virtually Properties by Virtually Properties
  • 1 year ago
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Evolution of real estate prices in monaco

The evolution of real estate prices in Monaco has been remarkable over the past few decades. With limited space and a high demand for luxury properties, the principality has seen a steady increase in real estate values, making it one of the most expensive places to buy or rent property in the world.

The introduction of new residential developments and the rise of high-end amenities have contributed to the upward trend, along with the principality’s reputation as a tax haven and a desirable location for wealthy individuals and businesses.
Despite occasional fluctuations in the global economy, the real estate market in Monaco has remained resilient and continues to attract investors and buyers from around the world. As a result, the outlook for the future of Monaco’s real estate market remains positive, albeit with ongoing efforts to balance the need for growth with the preservation of the principality’s unique character and charm.

After experiencing a slowdown in 2020 due to the global pandemic, according to the Monegasque Residential Property Observatory, the Monegasque real estate market resumed its growth in 2021 . Despite the ongoing presence of COVID-19 in our daily lives, we have gradually adapted and become accustomed to it, leading to an upturn in economic activity during the summer season when sanitary restrictions were relaxed. However, the first quarter of 2021 saw only 98 transactions recorded, which is a 4% decrease in volume and a 27% decrease in value compared to 2020. Nevertheless, from the second quarter onwards, the market rebounded, enabling an increase in the number of transactions (sales and resales) by 7.1% compared to 2020, equivalent to 29 more transactions.

There was also a rise in volume from €2.172 billion in 2020 to €2.331 billion in 2021, representing a 7.3% increase. Despite these gains, the historical records achieved in 2019 in terms of volume (€2.507 billion) and the number of transactions (452) were not reached.

In March 2021, we concluded that the health of the Monegasque real estate market depended partly on the evolution of the global health situation, but we were confident in its attractiveness in times of crisis. Even though 2021 did not allow us to get rid of all the restrictions linked to COVID-19, which remained and lasted throughout the year, the safe haven represented by property investment, combined with low bank interest rates, and the specific characteristics of Monaco that reassure and benefit from the uncertainty of neighbouring countries, led us to be confident in the Monegasque market’s attractiveness. This was confirmed at all levels, especially regarding the price per square metre, which broke the €50,000 barrier on average for resales, reaching €51,912 for the first time.

Evolution of residential real estate prices in monaco

Evolution of real estate prices in monaco

A total of 440 transactions were recorded in the Monegasque residential property market in 2021, consisting of 23 sales and 417 resales. This marks a 7.1% increase compared to 2020, although it falls short of the level observed since 2014, when the market saw over 500 transactions on four occasions. In terms of cumulative value, the market in 2021 generated €2.331 billion, representing a 7.3% increase over 2020 but a 7% decrease from 2019.

 

Evolution of real estate prices in monaco

The average price of resales in 2021 saw a slight increase while that of new flats dropped, likely due to the specific types and standards of properties sold. This is in contrast to 2019, where the average price of resales decreased while the average price of sales increased.

The property sales market

10-years delivery of new apartments in the private sector
 
Evolution of real estate prices in monaco
 

In the past decade, a total of 557 new apartments have been delivered in the private sector, with 90 of them being completed in 2021. Despite the significant number of new properties, only 23 sales were recorded, of which 30% were sold off-plan. This can be attributed to two factors. Firstly, the Mona Residence project, Villa Parana, and Villa Esmeralda, comprising a total of 62 units, were mostly retained by the developers, leaving only Villa Palazzino, with 25 units, available for sale. Secondly, buyers often sign purchase agreements well in advance of the delivery, as soon as marketing is announced. Nonetheless, the number of sales in 2021 has increased compared to the previous year by seven units or 44%.

10-years Evolution in the amount of sales by type of apartment

 

Evolution of real estate prices in monaco

 

Despite a rise of 8% in sales, totaling €235.6 million in 2021, the increase was relatively modest due to the sale of primarily 2-bedroom flats and the lower average price per square meter of the Villa Palazzino operation compared to other recent or upcoming developments. It is worth noting that this falls significantly short of the sales record of 72 units set in 2018 or the sales value record of €453.5 million achieved in 2015 Evolution of real estate prices in monaco

Due to the aforementioned factors that are closely linked to the type of flats that were sold, the average price saw a decline of 25%, while the median price fell by 11% compared to 2020. However, it is important to note that these figures may not be statistically significant, and it would be premature to draw any conclusions based solely on this data.

Resales market

Global market

Changes in the quantity of apartment resales by category over a decade:

Evolution of real estate prices in monaco In 2021, the distribution of resales according to flat type is comparable to that of the previous year, with the exception of larger units, which saw a rise of 41.7% (or an additional 10 units) and 1-bedroom flats, which experienced a proportional increase of 8.4%. Together, studios and 1-bedroom properties accounted for 243 resales, comprising over 58% of the total number of units sold, similar to the proportion observed in 2020

Changes in the quantity of apartment resales categorized by type over a decade

Evolution of real estate prices in monaco The combined total of apartment resales has returned to over €2 billion, matching the figures for 2016, 2018, and 2019. However, the amount for 2021 is still 15.3% lower than the highest point reached in 2019.

Evolution of average resale prices by apartment type

Evolution of real estate prices in monaco

It seems that in 2021, there has been a shift in the real estate market for apartments and villas. Studios and 1-bedroom apartments have increased in average price compared to the previous year, and are projected to return to record prices seen in 2019. However, 4-bedroom and more apartments are expected to reach a new record average price in 2021, while 4-bedroom apartments will experience a 15% decrease. Villas, on the other hand, have seen a significant drop in their average price, falling to €15.4 million.

Number of apartment resales by year and price range : Evolution of real estate prices in monaco The most significant changes in price range from 2020 to 2021 have occurred in the €5-€10 million transaction range. The average price for this type of apartment has increased, causing some resales that were previously classified in the under €5 million bracket to now be included in this range. This price range now accounts for 22.5% of the total number of resales, up from 18.5% in 2020 and 18.8% in 2019. The number of transactions involving high-end properties continues to decline, both in absolute value and as a proportion of total transactions.

10-years evolution of average and median resale prices: Evolution of real estate in monaco

The average price for properties has experienced a slight increase from €4.9 million in 2020 to €5 million in 2021, reflecting a 1.6% rise compared to the previous year. Similarly, the median price has increased from €3.1 million to €3.2 million, also showing a 1.6% increase. However, it is important to note that these prices are still significantly lower than the 2019 level, with a decrease of 12.9%. Additionally, half of the transactions involve properties that are valued at over €3.2 million.

10-years evolution of the price per square meter by type of apartment : real estate in monaco In the period spanning from 2020 to 2021, there will be a rise of 9% in the price per square meter, causing it to exceed the significant €50,000 mark for the first time. Only properties that have less than three rooms will still be priced below €50,000 per square meter, while those that have five or more rooms will have surpassed the €60,000 per square meter mark.

10-year evolution in the average price per sqm and the cumulative property resales amount: Evolution of real estate prices in monaco

The resale price has been steadily increasing over time, with a noticeable pattern of increasing every two years, except for the years 2018-2020 due to the pandemic. In contrast, the cumulative number of resales has been more volatile, without a clear trend, with the level in 2021 being similar to that in 2014. The reason for this difference in the trend of the average resale price and the cumulative number of resales is that the supply of goods for resale is becoming scarcer while the demand is increasing, leading to an exponential inflation of prices. Additionally, wealthy HNWI sellers, who are not in urgent need of cash, often set their own prices and are generally inflexible due to the disparity between supply and demand.

By district Distribution of the property resales number by district in 2021: Evolution of real estate prices in monaco 10-year evolution on the property resales number by district: Evolution of real estate prices in monaco

Not surprisingly, the Monte Carlo district has the highest number of resales, with no significant difference compared to last year (134 versus 135 in 2020), as does La Rousse-Saint Roman, which saw a slight decrease (-3.8% compared to 2020). In contrast, the Condamine district has experienced a significant increase in resale activity, with 48 transactions, representing a 71.4% increase from last year, and now ranking among the top three districts. Monaco-Ville, with a small volume, also experienced a significant increase (+50% compared to 2020). The trendy Fontvieille district, which surpassed Monte Carlo in terms of price per square meter in 2020, continues to attract new residents, with resale transactions increasing from 35 in 2020 to 43, representing a 22.9% increase.

Number and surface of buildings per district on 1 January 2022: Evolution of real estate prices in monaco In the Principality, housing, which includes state-owned housing, accounts for 61% of the total built surface area. Among the residential areas, nearly 43% of the built surface area is concentrated in the Monte-Carlo (24.1%) and La Rousse (18.8%) districts. Number of dwellings per district in 2021 Evolution of real estate prices in monaco The analyses exclude state-owned housing reserved for Monegasques and the Caisse autonome Retraites housing for certain population categories because they cannot be subject to a transaction; instead, they are subject to a “housing-capitalization” contract between the State and the occupants. Most of these dwellings are located in the Fontvieille, Moneghetti, Jardin Exotique, and La Condamine districts. It is worth noting that Monte-Carlo and La Rousse together have a total of 8,340 private dwellings, which is more than 51% of the total number of dwellings in Monaco.

Pourcentage of available housing sold by district in 2021: Evolution of real estate prices in monaco In 2021, Fontvieille had the highest turnover among all the districts, with 3.43% of available housing being sold. On the other hand, the district with the lowest turnover is Larvotto, mainly due to the fact that the majority of flats are owned by a few families who keep them as part of their estate, similar to Monaco-Ville, but to a lesser extent.

Average price per sqm of a property resale by strict in 2021: Evolution of real estate prices in monaco 10-years evolution of the price per square meter per district: Evolution of real estate prices in monaco In certain areas, the number of transactions is insufficient to calculate meaningful statistics. As of now, the Monte-Carlo district has taken the first place as the most expensive district, closely followed by Fontvieille and Larvotto. Over the past year, Monte-Carlo, Fontvieille, and La Rousse have experienced the highest increase in prices. Over the past decade, Fontvieille has seen the most significant growth in its price per square meter, with an increase of 125.5%, while Monte-Carlo has seen a rise of 74.5%.

Summary

The economic activity in Monaco has been very active in the first few months of the year, and the property market has reflected this trend. This dynamism is expected to continue throughout the year as the various Covid-19 restrictions are gradually lifted. Although current rents are returning to their 2019 levels, it is still difficult to find tenants for exceptional properties with monthly rents exceeding €30,000. While the luxury real estate market has been performing well globally, the unstable political and fiscal context in Europe may discourage real estate investors who require medium to long-term visibility. The Monegasque property market is expected to perform well this year with strong demand, but it may slow down depending on the evolution of the various factors mentioned above. The Russian-Ukrainian conflict may also impact the property market, especially for exceptional properties over €20 million.

© Images processed by Virtually Properties  2023

 
 

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