Blog on real estate in Monaco
LUXURY REAL ESTATE MARKET AND THE WEALTH GAINS EFFECT IN MONACO
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.
Even if we strongly believe in the current strengths of the US economy for the short and middle term, we also want to warn our exclusive clients that what goes up might come down at some point in time. As real estate markets in Europe and especially the real estate market of Monaco plays in time of economic troubles the role of a safe heaven, we see the current situation as a great opportunity for investors to secure their gains in investing in a real estate property in Monaco.