It is experiencing a luxury housing boom that includes the world’s most expensive penthouse as developers prepare for an influx of millionaires and billionaires escaping higher taxes or a loss of banking privacy in Switzerland.
Wealthy buyers have always been drawn to Monaco’s security, sophistication and climate but now it is the financial rules that are seen as a must have, according to Jean Claude Caputo of Savills on the French Riviera.
New taxes on luxury homes in London and the United States are also adding to the attractions of buying in Monaco and it is estimated that one in three of Monaco’s 38,000 residents are millionaires.
As a result some of the world’s most expensive properties are being built including the Tour Odeon, a double skyscraper being built by Groupe Marzocco near Monaco’s Mediterranean seafront which has a 3,300 square meter penthouse with a water slide connecting a dance floor to a circular open air swimming pool. It is set to go on the market next year priced at around €300 million.
So far, the developer has found buyers for 26 of the 36 luxury homes that have been offered for sale in the Tour.
While Switzerland also has some of Europe’s lowest tax rates, it’s becoming less attractive to luxury home buyers as the country’s financial secrecy laws are eroded amid a move toward a global standard of information exchange between tax authorities.
Other jurisdictions, including Monaco, are looking for ways to tap into the wealth held in the Alpine country and Monaco has emerged as an obvious successor.
Asking prices for luxury homes in Geneva have fallen by an average of about 30% in the last 12 months and values have dropped by as much as 6%, according to Alex Koch de Gooreynd, of Knight Frank.
Central London’s luxury home market has also shown signs of cooling amid new taxes and more on the horizon. There is a capital gains tax being introduced on properties sold by people living abroad and the idea of a mansion tax is constantly discussed.
Larger apartments are in demand from home buyers moving their families to the principality. While just 15 new apartments sold there last year, the average price was €9.3 million compared with €2.9 million two years earlier, according to government data. The average price of homes with five bedrooms or more rose 24% last year compared with a 9% fall for studios, according to the report.
The Tour Odeon will be Monaco’s first high rise development since the 1980s. A quarter of the apartments sold on the open market by Groupe Marzocco have gone to expats from the former Soviet Union.
The lower floors were sold to Monaco’s government for use by local citizens, who will enter the building through a separate entrance.
But the tax advantages may be short lived. Monaco has come under pressure to increase transparency and the Organization for Economic Cooperation and Development (OECD) has removed Monaco from its black list after if agreed to new tax sharing agreements. To benefit from the low levels of tax property owners have to live in Monaco for more than six months.
One of the problems is that Monaco is running out of space and develops have little choice but to build upwards or renovate former commercial buildings. Two apartments in the former Mirabeau hotel on Avenue des Citronniers are being offered for sale at €45 million and €55 million.
Bouygues is in talks with Monaco’s government to build a six hectare land extension project in the Portier district. Monaco will have to further expand into the sea and build more residential skyscrapers like Tour Odeon to cater to the expected influx of wealthy buyers, according to Savills.
