Monaco's Residential Property Market Analysis 2024

Despite global headwinds in recent years, the Monegasque housing market maintains its appeal to high-net-worth and ultra-high-net-worth investors, property prices driven up by sparsity of offer, limited new development, and the micro-state's perceived safe haven status.

This extended overview from the Global Property Guide covers key aspects of the Monegasque housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Monaco's housing market demonstrates exceptional resilience and strength, even amid short-term fluctuations. Over the past decade, the average price per square meter for housing units sold has risen by a substantial 38.1%. Following a minor decline of 1.8% in 2022, prices rebounded in 2023, with a 0.9% increase reported by Monaco Statistics (IMSEE). The average price per square meter in 2023 reached EUR 51,418 (USD 55,619), which is less than 1% below the historical peak previously recorded in 2021. While this growth is slightly below the 2.2% average increase observed across 30 cities in the Savills World Cities Prime Residential Index, Monaco's property prices have reached and maintained an exceptionally high plateau, note Savills experts.

Data Source: IMSEE.

Five of Monaco's seven districts achieved record-breaking price levels in 2023, with La Condamine and Moneghetti registering the most significant increases of 19.73% and 18.33%, respectively. Larvotto remained the Principality's most expensive district for the second consecutive year, with average prices rising 5.62% year-on-year to EUR 65,857 (USD 71,238) per square meter. It is important to note, however, that Larvotto's averages are influenced by the limited number of properties sold annually, with an average of just four transactions per year since 2010, leading to potential data variability.

Price of second-hand properties sold EUR/sqm, by district:

The market for newly constructed properties saw exceptional growth, with the average unit price in 2023 soaring to EUR 37.1 million (USD 40.1 million), nearly tripling the previous year's average. This increase is attributed to a shift in transaction composition, with 60% of sales involving properties with three or more bedrooms, as well as the inclusion of high-value units from offshore extension projects. Among the 28 newly constructed properties sold, 17 exceeded EUR 20 million (USD 22 million), and four surpassed EUR 100 million (USD 108 million). Meanwhile, resale market transactions averaged EUR 5.7 million (USD 6.2 million), reflecting a year-on-year increase of 5.56%.

Data Source: IMSEE.

Overall, Monaco's real estate market is underpinned by its distinctive combination of limited land availability and sustained appeal to high-net-worth (HNWI) and ultra-high-net-worth (UHNWI) individuals. Looking ahead, price growth is expected to persist, driven by continued strong demand for luxury properties and the scarcity of space for new developments. Territorial expansion initiatives, such as recent offshore projects, will play a critical role in addressing supply constraints. Representatives from the Monégasque luxury real estate agency Ageprim commented: "Property prices [are seen to] continue their upward trajectory as more ultra-luxury developments, such as Marterra and Bay House, come to market."

Demand Highlights:

Lower Sales Activity Offset by Elevated Transaction Values

According to IMSEE, in 2023, Monaco recorded 418 residential sales, with resales accounting for 93% of total transactions. The number of completed deals in both segments declined, with resales dropping by 10.4% year-on-year and new home sales experiencing a more significant decrease of 68.2%, largely due to a lack of new property completions. Of the new sales, two-thirds involved off-plan properties, while one-third pertained to units delivered within the last five years.

The total transaction volume by value, though 8.7% lower year-on-year, remained above EUR 3.2 billion (USD 3.5 billion), making it the second-highest annual total since records began in 2006, second only to the post-COVID boom of 2022. This underscores the trend of fewer, higher-value transactions, reflecting the resilience of Monaco's housing market in a context of reduced availability.

Data Source: IMSEE.

In terms of apartment size, the steepest decline was observed in sales of smaller units, a trend amplified by Monaco's evolving residency requirements introduced in 2020. These rules mandate that applicants for residency cards must rent or purchase properties matching the size of their household, driving increased demand for larger homes. Consequently, sales of apartments with three or more bedrooms accounted for over 60% of new-build sales and 22% of resales in 2023. As demand for larger properties has grown, the share of smaller flats, such as studios and one-bedroom units, has declined.

Data Source: IMSEE.

The slowdown continued into the first half of 2024, with new home sales falling 63.2% compared to H1 2023, and resales declining 15.5% year-on-year. Despite this, the decline in total transaction value was mitigated by an increase in average property prices. While volumes remain below the peak years of 2022 and 2023, they are still the third-highest recorded since 2006, according to IMSEE's Q2 2024 Economic Bulletin.

Industry professionals attribute the slowdown to several factors, including elevated interest rates, geopolitical tensions, and overall uncertainty in the global economy. "One reason clients hesitate to purchase real estate is that they are required to tie up a substantial amount of capital. Over the past three years, financial markets have offered very attractive returns," explained Florian Valeri, Director of Valeri Agency, quoted by the local news magazine L'Observateur de Monaco. "As a result, some clients don't see the benefit of immobilizing so much capital in a purchase. This will change as financial markets fluctuate."

The geopolitical landscape is another key factor contributing to buyer hesitancy. "Indeed, several global factors are likely influencing this slight slowdown in sales: elections, particularly the US presidential election, the war in Ukraine, and tensions in the Middle East," noted Christian Miceli, Managing Partner at CM Monaco Real Estate in L'Observateur de Monaco. Miceli emphasized, however, that "this international context affects Monaco less than other regions of the world."

The inclusion of Monaco in the Financial Action Task Force's (FATF) "grey list" of jurisdictions under increased monitoring in June 2024 is also a point of consideration. While it is too early to quantify the impact, industry professionals have not yet observed significant shifts in buyer behavior. Florian Valeri of Valeri Agency remains confident, stating: "Monaco remains a niche market, with few offerings and high demand. The scarcity of properties and the many advantages of the country ensure that demand remains, and will continue to be, high. It is also important to remember that Monaco is only listed on the FATF grey list at this stage, not on the European Union's list, and has not faced any sanctions."

Nonetheless, some stakeholders express caution, anticipating potential delays in decision-making as buyers wait for the Principality to exit the grey list. "The publication of the Moneyval report in January 2023 created a psychological impact on buyers," believe Eric Cancemi and Nicolas Croesi, negotiators at Miells Christie's, quoted by L'Observateur de Monaco. "The uncertainty surrounding this grey list entry did create a general wait-and-see attitude, which has slowed down investors."

Additionally, stricter regulations related to anti-money laundering have led to transaction bottlenecks. "Bankers have walked away from many cases, particularly for politically exposed persons and when the source of funds was unclear," said Kate Dorfman, Director of Caroli Real Estate

Despite these challenges, industry professionals remain cautiously optimistic. The Principality's real estate market has historically demonstrated resilience, with property prices consistently remaining high despite external crises. "Being on the grey list is certainly not pleasant, but Monaco will adapt. The Principality has been on the grey list in the past and has always continued to move forward. The country has overcome several crises and will overcome this one as well," concluded Gilles Graille, Head of Pacific Agency in the same October 2024 article.

Supply Highlights:

New Deliveries Limited, Coastal Expansion to Support Future Growth

Monaco's property market continues to be defined by chronic under-supply, a structural characteristic of the micro-state, where global demand consistently outpaces availability. According to the latest population census published by IMSEE, Monaco's total housing stock stood at 21,123 dwellings as of 2023. Of these, 81% were private-sector units, while 19% were state-owned. The Monte-Carlo and La Rousse districts accounted for nearly 10,000 units, representing 45.9% of the Principality's total housing supply.

Data Source: IMSEE.

New housing delivery remains highly constrained due to the limited availability of development land. In 2023, no new units were delivered in the private, non-regulated sector accessible to foreign residents. At the same time, several major developments currently underway are expected to generate opportunities for off-plan sales. Key projects slated for completion in 2024 and early 2025 include Mareterra and Bay House Monaco, along with smaller developments such as Le Luciana and Villa Ninetta. Combined, Mareterra and Bay House will add 166 new apartments and 15 villas to the market. Nevertheless, "each of these projects will bring much-needed stock but will do little to keep up with the consistently high demand across the Principality," believe the experts from Savills.

Data Source: IMSEE.

New residential projects delivered in the non-regulated sector, 2019-2024:

Given Monaco's geographic constraints, a significant surge in new residential spaces in the future is unlikely. In these conditions, offshore expansion remains one of the few viable solutions, albeit a costly and time-intensive one. The most notable ongoing project is Mareterra, a six-hectare land reclamation initiative extending the coastline from the Grimaldi Forum to the Formula 1 Grand Prix tunnel. Set for delivery between late 2024 and early 2025, Mareterra will feature luxury residential properties, commercial spaces, public amenities, a marina, and a wooded park.

In addition to new construction, renovations of existing properties have become an increasingly popular strategy to meet modern buyer expectations. "Large-scale renovations like those at Schuylkill or the Beau Rivage building, which will also be raised, illustrate the modernization of Monaco's real estate stock," said Eugenia Petrini, Head of Petrini Exclusive Real Estate, in an interview with L'Observateur de Monaco. "More and more buildings are being renovated, addressing facades and common areas."

Supply constraints are equally pronounced in state-owned housing reserved for the Monegasque nationals. To address this, Prince Albert launched a 15-year housing plan in 2019, targeting a 43% increase in state-owned apartments to reach 4,548 units. This initiative aims to alleviate pressure on the public housing sector and provide long-term stability for Monaco's residents.

Rental Market:

Surging Demand Drives Up Rental Prices

Compared to other European markets, rental yields in Monaco are relatively low, estimated around at 2%. A local real estate agency Monaco Properties reports rental yields between 1% and 3.5%, depending on neighborhood and type of property, with stronger performance generally shown by studios and larger 4-bedroom units in such areas as Monaco-Ville, La Condamine, Jardine Exotique, Moneghetti, and Fontvieille.

Despite these relatively low estimates, the market maintains attractiveness to investors. Combining rental yields with a long-time average property value appreciation of about 5% a year brings overall potential returns to approximately 7% per year, according to industry experts interviewed by L'Observateur de Monaco. "What's important to remember is that the primary investment argument in Monaco has never been rental yield, but rather capital appreciation. And in this respect, Monaco has no competition in the Eurozone," explains Florian Valeri, director of Valeri Agency, quoted by the outlet.

During the sales slowdown in recent quarters, rental prices in the Principality have experienced significant growth, according to local real estate agents interviewed by the L'Observateur de Monaco for their October 2024 article. The experts surveyed estimated current monthly rent levels for various types of units in Monaco:

• Studios - between EUR 2,000 (USD 2,181) and EUR 3,500 (USD 3,816);
• 1-bedroom apartments - EUR 3,500 (USD 3,816) to EUR 6,000 (USD 6,542);
• 3-bedroom apartments (the most sought-after category) - up to EUR 10,000 (USD 10,904);
• 4-bedroom and larger apartments - from EUR 15,000 (USD 16,356).

In November 2024, Monaco's Real Estate Chamber (Chambre Immobilière Monégasque) had around 350 residential properties listed for rent across the Principality: from studio apartments under 20 sqm to exclusive furnished residences over 300 sqm. The district with the largest number of properties listed was Carré d'Or (110), while the most limited offer at the time of research was in Monaco-Ville (8) and Anse du Portier (6) - a new neighborhood under development on an artificial peninsula of around six hectares, scheduled for completion in 2025.

The upward trend for rents in Monaco is likely to continue, as the demand for such properties currently significantly outsizes the supply on offer in this small niche market, placing landlords in a strong position. "Towards the end of 2023 and into early 2024, we've indeed observed a significant rebound in the rental market. Demand has exploded, but the number of available properties remains extremely limited," Eugenia Petrini of Petrini Exclusive Real Estate Monaco, recently commented to L'Observateur de Monaco.

The shortage of available rental properties of all categories and budget ranges that currently affect the market is further exacerbated by the segmentation of housing stock in Monaco. All housing in the Principality is divided into several sectors, each regulated by different legal acts implying specific ownership and use restrictions. The only housing sector allowing for properties to be rented freely, regardless of the tenant's nationality, with lease length and rent rate set by landlords independently, is the so-called non-regulated sector (secteur libre), primarily containing privately owned apartments in buildings constructed after September 1, 1947.

According to the Real Estate Observatory published by IMSEE, no new residential units were delivered in the non-regulated sector in 2023.

On the demand side, the additional pressure on the rental market has been placed by resurgence of international travel after the pandemic, as well as several ongoing rehabilitation and restoration projects, such as the renovation of the iconic 25-story Schuylkill Tower (to be completed in 2027), which created an influx of former tenants looking for alternative rental spaces.

Local real estate agents also point out a "prolonged wait-and-see approach" characteristic of many potential buyers who prefer to live in Monaco as tenants before purchasing luxury properties and put off substantial investments during periods of global economic uncertainty. "Newcomers prefer to rent for two to three years before deciding whether they want to settle down long-term. They use this time to discover Monaco and adjust their expectations," said the director of Valeri Agency. "Currently, clients prefer to rent rather than buy property in the Principality," agreed the head of Petrini Exclusive Real Estate Monaco, quoted by L'Observateur de Monaco.

Mortgage Market:

Real Estate Sector Expected to Benefit from Rate Cuts in Europe and the US

While, compared to other countries, residential lending conditions are generally seen as having less impact on buyer activity in Monaco due to the market's focus on luxury properties and HNWI/UHNWI clients often paying in cash, the real estate sector is expected to benefit from the lowering of mortgage costs across Europe and in the US driven by a series of rate cuts started by the respective central banks in 2024.

Lower interest rates are expected to have a positive effect on the activity of property dealers and developers, who borrow around 70% in the hope of reselling in the following years, stipulates Sébastien Cavernes, investment director at Edmond de Rothschild Monaco in his recent analysis for Monaco Hebdo.

"Concerning Monaco, the impact [of rate cuts] will be especially visible on the real estate market, although with the uncertainty linked to the "grey list", it is difficult to project. This could still revive real estate transactions, which have been at a standstill for 12 to 18 months," says Christophe Barraud, managing director, chief economist, and strategy officer at Market Securities Monaco in another article by the outlet.

According to IMSEE reporting, the total value of housing credit in Monaco's financial system decreased by 1.6% year-on-year in 2023, reaching EUR 12.6 billion (USD 13.6 billion). As of Q2 2024, 26 banks (including branches of foreign banks) and 6 financial services companies operate in the Principality.

Socio-Economic Context:

Strong Growth Above the Eurozone Average Continues

After a sharp rebound acceleration in 2021, Monaco's economy returned to steady growth levels observed in the pre-pandemic decade between 2010 and 2019. Based on the figures published by IMSEE, the country's nominal GDP reached EUR 9.24 billion (USD 10 billion) in 2023, up from EUR 8.36 billion (USD 8.80 billion) in 2022. Adjusted for inflation, real GDP growth moderated from record-high 22.2% in 2021 to 11% in 2022 and 5% in 2023.

According to IMSEE reports, the main contributors to the GDP continue to be scientific and technical activities, administrative and support service activities (24.4%), financial and insurance activities (18.6%), and wholesale trade (9.3%). Together, they account for more than half of the wealth created in the state. Other notable economic sectors include construction (8.6%), accommodation and food services (7.9%), and real estate activities (6.6%).

Compared to the regional benchmark, the Monegasque economy has been showing more pronounced year-to-year fluctuations but generally outperforming its neighbors. Between 2006 and 2023, the Principality's real GDP annually grew by 4.4%, on average, against the Eurozone average of 1.1% during the same period, based on the International Monetary Fund (IMF) data.

Data Sources: IMSEE, IMF.

The tourism industry, which plays an important role in the Monegasque economy, has been recovering from the severe contraction brought by COVID-19 travel restrictions, with visitor arrivals gradually approaching the pre-pandemic baseline. In 2023, IMSEE reported a little over 341 thousand arrivals, 17.6% more than during the previous year, but still below the 2019 benchmark of about 377 thousand. The latest data shows that tourist arrivals continue to grow, reaching 160,933 in H1 2024 (up 2.2% compared to the same period last year).

At the same time, the recovery in the cruise travel segment is much slower. Only about 71 thousand cruise passengers were reported by IMSEE in 2023, which was nearly 61% below the 2019 level of over 182 thousand passengers. The situation does not appear to be improving in 2024: in the first half of the year, cruise ship calls dropped by 13.7% compared to the same period in 2023, leading to a sharp 32.2% drop in passenger numbers.

As of 2023, most overnight visitors arrived in Monaco from neighboring France (26%) and Italy (13%), as well as the USA (10%) and the UK (9%). The majority of cruise passengers are traditionally from the USA and Canada.

Data Source: IMSEE.

In addition to significant (in relation to the micro-states population) international tourist traffic, Monaco maintains a uniquely high proportion of foreign residents. According to the 2023 Census data, the total population of Monaco stands at 38,367 inhabitants, of which only 23.9% are Monegasque.

More than 5,000 foreigners over the age of 18 have moved and settled in Monaco since the previous census in 2016. Among the 141 nationalities currently living in Monaco, the largest groups of foreign residents are of French (8.5 thousand), Italian (7.5 thousand), and British (2.9 thousand) origin. Other notable communities include Russian, Swiss, and Belgian, with over 1 thousand expats each.

Due to the continuous inflow of new residents from abroad, its small territory, and tight connections with European neighbors the Principality's labor market remains very dynamic and difficult to measure with traditional statistical indicators, such as the unemployment rate. Surrounded by French municipalities and close to the Italian border, Monaco is a major employment center for the entire French Riviera region. As of 2023, Monegasque companies and administrations employed over 60,000 people, the majority of whom lived outside the Principality. At the same time, the 2023 census showed a 36.9% rate of salaried employment in Monaco for residents aged 18 to 64, meaning only a little over a third of residents were employed within the state.

According to the Employment Observatory figures, during 2023 employment increased in all three segments of the Monegasque labor market, reaching 58,326 private sector employees (+5.1% year-on-year), 5,153 civil servants (+2.1% year-on-year), and 5,948 self-employed workers (+3.1% year-on-year). The total number of jobs on the market increased by 3.4% and reached 73,707, of which 62,186 were in the private sector.

As of Q2 2024, IMSEE reported 65,729 jobs in the private sector, which was 2,271 jobs or 3.6% more than during the same period a year ago. With the exception of industry and information and communication, the number of jobs was up in all economic sectors, with the most pronounced growth recorded in accommodation and food service activities (600 additional jobs, +6.4% year-on-year).

In general, despite its unique features characteristic of a financially independent and wealthy micro-state, one of the very few countries without sovereign debt, the outlook for the Monegasque economy is tied to global developments and its relations with the European Union.

"Monaco is a special case. Real estate, tourism, and catering are very resilient sectors, but finance and services could be affected by the "grey list". Monaco could gradually converge toward European economic performance, while it usually "outperforms". The year 2025 will probably be a transition year, hoping that 2026 will mark a restart," Christophe Barraud of Market Securities Monaco said to Monaco Hebdo in October.

In September 2023, Monaco's Government and the European Commission decided to suspend the negotiations on the Association Agreement between the Principality and the EU that had been conducted since 2015. The main aim of the agreement was to enable deeper trade, financial, and legal integration, which would allow Monaco and all of the country's economic stakeholders to be a part of the European internal market. The specific conditions stipulated by parties, however, could not be reconciled, both sides reportedly having concerns over the prospects of closer ties. It remains to be seen how the decision will impact Monaco's economy and EU relations in the long term.

Sources:

1. Government of Monaco
   1. Monaco and the European Union: https://en.gouv.mc/Policy-Practice/Monaco-Worldwide/Monaco-and-the-European-Union
   2. Monaco in 2023: GDP Up, Highlighting Principality's Economic Strength: https://en.gouv.mc/Policy-Practice/The-Economy/News/Monaco-in-2023-GDP-up-highlighting-Principality-s-economic-strength
   3. The Various Housing Sectors: https://monservicepublic.gouv.mc/en/themes/housing/access-to-housing/general-information/the-various-housing-sectors
   4. MonServicePublic: How to Apply for a Residence Permit: https://monservicepublic.gouv.mc/en/themes/nationality-and-residency/residency/new-entrants/how-to-apply-for-a-residence-permit
   5. Press Release: Monaco Added to FATF's Grey List: https://en.gouv.mc/Policy-Practice/The-Economy/News/Monaco-added-to-the-FATF-s-grey-list-the-Prince-s-Government-commits-to-being-removed-from-this-list-according-to-the-timetable-agreed-in-Singapore
   6. Housing for Monegasques: and Ambitious National Plan: https://en.gouv.mc/News/Housing-for-Monegasques-an-ambitious-national-plan
2. National Council of Monaco
   1. The National Council Presents the Results of its Socio-Economic and Legal Study on the Consequences of an Association Agreement with the European Union (FR): https://www.conseil-national.mc/2023/10/17/le-conseil-national-presente-les-resultats-de-son-etude-socio-economique-et-juridique-sur-les-consequences-dun-accord-dassociation-avec-lunion-europeenne/
3. Monaco Statistics (IMSEE)
   1. Population Census: https://www.monacostatistics.mc/
   2. GDP Reports: https://www.monacostatistics.mc/
   3. Employment Observatory: https://www.monacostatistics.mc/
   4. Real Estate Observatory: https://www.monacostatistics.mc/
   5. Monaco in Figures 2024: https://www.monacostatistics.mc/
   6. Economy Bulletin: https://www.monacostatistics.mc/
4. Chambre Immobilière Monégasque (Monaco Real Estate Chamber)
   1. Listings by District in Monaco: https://www.chambre-immobiliere-monaco.mc/
5. European Commission
   1. Monaco: Negotiations for an Association Agreement Suspended by Mutual Agreement (FR): https://ec.europa.eu/
6. European Central Bank (ECB)
   1. US Dollar/Euro, Monthly: https://data.ecb.europa.eu/
7. Savills
   1. Spotlight - Monaco 2024: https://www.savills.com/
8. Ageprim
   1. Monaco Prices: 2023 Report & 2024 Forecast: https://ageprim.com/
9. L'Observateur de Monaco
   1. Renting an Apartment in Monaco: Prices, Profitability, and Key Insights: https://lobservateurdemonaco.com/
   2. A Shortage of Rental Properties in Monaco: https://lobservateurdemonaco.com/infos/a-shortage-of-rental-properties-in-monaco/
   3. Why are Real Estate Sales Down in Monaco? https://lobservateurdemonaco.com/
   4. Is the Monegasque Real Estate Stock Aging? (FR): https://lobservateurdemonaco.com/
10. Monaco Hebdo
    1. Christophe Barraud: "The Year 2025 Will Probably be a Year of Transition" (FR): https://monaco-hebdo.com/
    2. Rate Cuts - Sébastien Cavernes: "The Real Estate Sector Should Benefit" (FR): https://monaco-hebdo.com/
11. Politico
    1. EU Suspends Trade Talks With Monaco After Financial Watchdogs' Warning: https://www.politico.eu/
12. Petrini Exclusive Real Estate Monaco
    1. How to Navigate a Saturated Market? https://www.petrini.mc/
13. Monaco Properties
    1. Rental Yield in Monaco: https://www.monacoproperties.mc/
14. Livein
    1. L'Anse du Portier, a Future Eco-District with a Sustainable Concept: https://livein.mc/