Stavila, a complete service for your peace of mind
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Monte-Carlo with its famous Golden Square is definitely the most famous and prestigious district of Monaco. The district is well known for its Luxury shops, expensive cars, gastronomic restaurants, Palaces and historical places. The great “Casino de Monaco” with its garden stands in its centres and is surrounded by the great mall of “Le Metropole”, the famous Hotel de Paris and the renewed Café de Paris.
The real estate market of Monaco has been particularly dynamic since the beginning of 2018. As stated in our newsletter from February 2018, there has never been tow consecutive years of decrease in the average value of real estate transactions in the principality. The trend of the first half of 2018 is confirming this statement and we believe that the dynamism of the market is currently being supported by the so-called wealth gains effect. As investors are experiencing extraordinary positive returns from their financial assets invested in the equity markets of developed countries, they can thus reinvest their gains in real estate properties. The graphic below shows the extreme strong correlation between the logarithm of the 12 months moving average of the S&P 500 Price Index (blue line) and the 12 months moving average of real estate transactions in Monaco (yellow line). The S&P 500 is the worldwide leading stock market index of the 500 largest companies in the United State (US) and it is experiencing a very solid growth thanks to the strengths of the US economy.
The Larvotto and La Rousse districts in Monaco are through several urban projects being deeply transformed. A well advised investor would not need too long to understand that this is the place to put your money in. With the Odéon tower, second highest building on the Mediterranean, offering the world most expensive properties, prices are being pulled into the high. And momentum is expected to keep on going, with two new urban projects that are under construction and will be both finished in the coming years:
Average value of transactions in Monaco real estate market [2000 – 2017]
Looking back at the year 2017, the average value of transactions in the real estate market of Monaco decreased from 6% in comparison with the year 2016. This decrease is the consequence of the rise of the nominal interest rates in the US and the reduction of the quantitative easing program in Europe, which were both followed by the rise of government bond yields. Investors have thus to support higher interest rates on their investments.
Monaco is leading an ambitious development strategy to promote blockchain technology-based businesses with the creation of an international incubator “Monaco Tech” co-financed by the renewed tycoon Xavier Niel. A draft law promoting the development of businesses in the blockchain and smart contract technology has been recently issued by the government and further actions have been planned.
In that context several businesses related to the real estate industry have already been started such as the creation of Monaco Estate Token. The Initial Coin Offering (ICO) of this company will be the first real estate backed ICO. The collected money will be invested in properties, which will then be rented. The use of the blockchain smart contract technology will allow token holders to receive a monthly profit share via Ethereum payments.
Most of the investors in Monaco are looking to achieve yield on their investments in purchasing and reselling properties at a higher price in a time lapse of 1 to 4 years. But what about long term investors willing to build up an estate of properties that will provide them with regular incomes over a long period of time. Where should they invest and in which type of properties? The following table made from the current sale and rent prices of about 200 properties in Monaco shows that investments in Studios offer for most of the districts in Monaco, the highest yields. In the same way, the less popular districts such as the Condamine and Monaco Ville offer on average higher yields than the most popular ones such as the Carré d’or and Monte Carlo.
Rental yields in Monaco by apartment size and districts