A new analysis of both markets show they both cover similar land areas, are experiencing a huge global demand and have upward pressure on property values due to their locations.
The findings from Pastor Real Estate, which has offices in both locations, also says that buyers are attracted to them because of their political stability, advantageous tax regimes, concentration of luxury hotels and shopping facilities and ultra-prime residential markets.
It points out that both have seven ultra-prime districts which together represent 14 of the most valuable addresses in the world. At £3.43 million, the average apartment price in Fontvielle, Monaco’s most expensive address, is higher than the equivalent in Knightsbridge at £3.27 million, but the price gap between Monaco and London has been closing.
A significant proportion of Ultra High Net Worth buyers who acquire or rent ultra-prime property in London also have an address in Monaco. Just as Monaco’s Fontvielle district has challenged Monte-Carlo, traditionally the most expensive area, in terms of highest residential prices achieved, so Mayfair is challenging Knightsbridge.
Overall the report analysed seven ultra-prime districts which it describes as ‘city villages’. In London they are Mayfair, Marylebone, Knightsbridge, South Kensington, Marylebone, Belgravia, Westminster and Chelsea. And in Monaco they are Fontvielle, Monte-Carlo, Boulevard des Moulins/Saint Roman, La Condamine, Larvotto, Monaco-Ville and Jardin Exotique.
The residential markets and new development in central London and Monaco are both constrained by planning regulations, protected historic buildings and geography. Geographical constraints in London refers to the protected Royal parks, the Thames and protected views, whilst Monaco is constrained by the sea from which over 100 acres of land has been reclaimed since the early 1960’s, the mountains and the border with France.
Both central London and Monaco are viewed by global wealth as highly attractive islands of stability in an often turbulent world, according to the report. Each has as heads of state highly popular Royal dynasties, benefits from stable political systems and has strong economies based on banking/finance, tourism, cultural facilities and commerce. Both locations are also economically stronger than the regions surrounding them.
Both locations have a high proportion of foreign nationals, who comprise over 80% of those who live in Monaco and an estimated 50% to 75% of those who reside in Knightsbridge, Mayfair, Belgravia and parts of Kensington and Chelsea.
In addition, a significant proportion of UHNW buyers who acquire or rent ultra-prime property in London also have an address in Monaco. There are an estimated 2,000 British high-net-worth individuals who reside in Monaco, many of whom also own homes in central London.
It says that Fontvielle, the most expensive area and the main beneficiary of land reclamation in Monaco is similar to South Kensington in London. Fontvieille has the highest proportion of Monaco homes which have yacht/boat berths, at 12%, reflecting the general clientele of the area. South Kensington has the highest percentage, 33.3%, of households with a second address in London.
Monte Carlo, the most famous of the Monegasque districts is similar to Mayfair. Both locations have a similar high concentration of luxury boutiques, five star hotels, leading restaurants and other leisure facilities. Monte Carlo contains four five star hotels around the Casino and the Carre d’Or, a shopping arcade noted for boutiques such as Hermes, Celine, Dior, Chanel, Prada and Louis Vuitton. Likewise Mayfair contains five star hotels such as Claridge’s, the Dorchester and The Connaught, along with high end shopping destinations including Bond Street, Burlington Arcade, South Molton Street and Mount Street.
The report also points out that Larvotto and Belgravia share a large proportion of rented homes, at 73% and 46% respectively. Like Belgravia, Larvotto contains highly sought after high end property with developments that could happily sit within the confines of Belgravia.
With its famous high-end shopping and luxury residential quarter, Boulevard des Moulins / Saint Roman can be twinned with Knightsbridge, both viewed as luxury destinations, popular with high-net-worth-individuals.
La Condamine and Marylebone both provide a combination of office premises and homes, with La Condamine having the Princess Caroline pedestrianised area whilst Marylebone has the pedestrianised quarter at St Christopher’s Place.
While Monaco has the most valuable residential real estate market in Europe, the sales price gap between Monaco and London has closed over the last four years. Back in 2011, Monaco sales prices had a 79% premium over the prestigious London areas but this has now closed to 41%.
The report suggests this is because the prime central London residential market has recovered strongly since the global recession, with residential values rising by 28% since 2011. Monaco’s price stability is also an indication of the ‘cushioning’ that Monaco enjoys from its strong state revenues and banks.
Other reasons for the average price per square foot being higher in Monaco is the fact that the luxury housing market is just one twelfth the size of the equivalent luxury market in central London so space commands a higher premium.
It is also because the majority of sales in Monaco, some 72%, were conducted in its most expensive city villages of Boulevard des Moulins/Saint Roman, Monte-Carlo and Fontvieille whereas only 39% of sales in London occurred in Knightsbridge, Mayfair and South Kensington, the city’s three most expensive city villages. So Monaco has more ultra-prime sales than central London.
In terms of highest average prices achieved, Monaco’s most expensive address is Fontvielle, where the average apartment price is £3.43 million. Fontvielle has overtaken Monte Carlo with average prices for the latter now £2.71 million.
Of the seven city villages in London, the most expensive address is Knightsbridge, where the average apartment price is £3.27 million. London has a similar Fontvielle vs Monte Carlo rivalry, with average values in Mayfair, Knightsbridge’s traditional rival, closely following at £3.22 million.
In terms of residential sales values, the government quarters in both locations are the most undervalued districts. At £1.01 million average sales values in Westminster are the lowest of the capital’s seven city villages, likewise at £1.77 million average sales values in Monaco-Ville are the lowest in the principality. This reflects the fact that both locations are more associated with government and tourism rather than residential property.
At £2.04 million, prices in Boulevard des Moulins/Saint Roman are similar to those in South Kensington at £2.12 million, whilst values in Jardin Exotique and Chelsea are also equivalent at £1.85 million and £1.37 million respectively.
Due to land and planning restrictions and the large demand for housing in relation to supply in both locations, the new homes market in Monaco and central London is dominated by higher density apartment and penthouse schemes, as developers in both locations have had to build upwards in order to create new housing.
In Monaco, another solution has been land reclamation from the sea and over 100 acres has been reclaimed since the early 1960’s, whilst London’s equivalent has been the regeneration of formerly developed brownfield land sites, with the current government wanting to build an extra 200,000 new homes on brownfield land by 2020.
Another key feature of both locations is the undersupply of large family houses and Ambassadorial residences in relation to demand, so that when these types of super-prime properties come to market headline grabbing prices are achieved in both locations.
The lettings markets in Monaco and prime central London are also highly comparable, with Monaco keeping a slight lead overall. The Carre d’Or in Monte Carlo remains the most prestigious location in which to rent exclusive apartments in Monaco, at £61 per square foot whilst London’s Knightsbridge is currently slightly more expensive at £65 per square foot per annum.
One of the key differences between the two markets is that in London, the majority of tenancy agreements are ‘assured short hold tenancies’ for a fixed term of no less than six months. In contrast, in Monaco, the duration of a lease is typically one year, while in the luxury segment, almost all rented properties are leased on average for three years or more.
‘Both markets are characterised by global demand and constrained supply, both have economies based on finance, tourism and commerce, and both rival each other for the role of Europe’s most valuable and sought after luxury property destination,’ said Susan Cohen, director at Pastor Real Estate.
‘We have observed that certain areas tend to attract certain types of buyer Both markets are extremely cosmopolitan with a strong Arabic influence in Knightsbridge and Boulevard des Moulins/Saint Roman and a large English community in both Chelsea and Jardin Exotique,’ she explained.
‘A large proportion of homes in Monaco are owned by individuals with primary residence in London and vice versa who are drawn to the unique charms of the various city villages,’ she added.
