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Monaco set to continue to be most expensive place to buy a home

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Residential property in Monaco is now the world’s most expensive with average prices rising by 180% in a decade, new research shows, a trend that is expected to continue.

A record €2.7 billion of sales were recorded in 2012, the third year that total transactions exceeded €2 billion, with strong demand for limited supply pushing prices to new highs, according to the latest report from real estate firm Savills.

The average resale price in 2016 was €4.3 million or €41,400 per square meter, with the growth rate since 2006 largely unseen in other developed economies. By comparison, prime London prices grew by 70% over the same period according to Savill’s world cities data.

The Monaco insights report explains that in common with other prime markets across the globe, large properties are in high demand and trade at a price premium. Indeed, one bedroom properties averaged €36,300 per square meter while four bedroom and larger homes were €48,500 per square meter.

It explains that Monaco attracts a diverse range of international buyers seeking security, wealth preservation or a business base. British, Italian, Scandinavian and South African buyers were especially active last year.

However, towards the end of 2016 and into 2017 market activity slowed as buyers adopt a ‘wait and see’ approach ahead of the elections in France, a major trading partner, and wider global political events. With prices at record highs, wealthy vendors are unwilling to negotiate down and sales volumes are now falling.

The research also found that in 2016 the average price of new build properties in Monaco was €13.7 million, three times higher than resale properties of a different, sometimes dated, specification. Indeed, a large proportion of Monaco’s housing stock was developed in the 1960s and 1970s and many of these properties are looking dated and ripe for renewal and refurbishment.

In total, only 553 properties were sold in 2016 and of these some 33 were new build, just 6% of the market. However, in terms of value, these properties represented 17% of the market.

The report says that new developments, such as Tour Odéon and La Petite Afrique, have brought property to Monaco that’s up to the standards of other major world cities. Designed to meet the demands of wealthy international occupiers, the well appointed, spacious residential units offered are priced accordingly.

Monaco is home to the highest concentration of millionaires in the world. Wealth Insight counts 31 millionaires per 100 residents, an increase of 7% since 2014. Fast and direct connections to the rest of the continent have helped this figure rise, the report point out.

‘Wealthy residents hold their properties for long periods, so market liquidity is low. Monaco’s position on the global stage is assured, but owning a piece of it will be more di cult and come at an ever-higher price,’ said Paul Tostevin, Savills associate director.

He explained that the next decade will see expansion and land reclaimed from the sea, ambitious urban renewal projects and interests outside Monaco’s borders. Three projects alone will bring two new marinas, new cultural facilities and public spaces, and more than 100,000 square meters of residential and commercial floor space.

Tostevin expects prices will remain at record highs. ‘Buyers are becoming more price sensitive, but with an ongoing supply-demand imbalance, we don’t foresee any potential for downward adjustment. There were no completions in 2016 and we anticipate a shortage of new product in the near term,’ he added.

‘There is ongoing global political uncertainty but while some are adopting a wait and see approach, in the long term Monaco’s safe haven credentials will underpin demand. Changes to the UK’s non-domicile rules from 2017 could see more expats choosing Monaco as a base,’ he concluded.