Few know more about global real estate trends than Sophie Chick.
THE AVERAGE PRICE per square meter in Monaco, according to Savills, increased by 18% last year while the number of new build sales also reached a record high in 2018. With a reputation for in-depth knowledge across the global real estate market, Savills’ annual reports, especially the Spotlight: Monaco, are highly anticipated reading material for homeowners and potential purchasers alike.
Sophie Chick is the head of department for Savills World Research team and lead for the Monaco report. “Our research team comprises nearly 200 people around the world and we are regular commentators on the market, both in the press and at industry events,” says Chick, who began her career at Savills in 2010 in the U.K. residential research team.
Working across all property sectors, Chick delivers market-leading research on global real estate markets and the international forces that shape them. “I recently returned from two years in Sydney where I set up a residential research department for Savills. This role was followed by a period at Mirvac, an Australian owner and developer, where I worked closely with the capital transaction team to best understand risks and opportunities for potential purchases and sales.”
Although she remains tightlipped about how Savills accesses data, due to the commercially sensitive information, Chick shares, “We are seeing an increase in people renting in the Principality.”
Monaco is the most expensive prime residential market in the world. Average prime residential values in Monaco are 10% higher than Hong Kong, 176% higher than New York, 194% higher than London and 237% higher than Paris.
Three Monaco realtors dish on tax, mortgages and a market metamorphosis.
Why makes Monaco an attractive place to call home when it comes to inheritance and transfer tax?
The general principle of Monaco’s tax system is the total absence of direct taxation, dating from an order by Prince Charles III in 1869. There is no wealth tax and no property tax in the Principality of Monaco.
For individuals, Monegasque and Monaco residents are not subject to income tax or taxes on capital gains derived from real estate. Those who are tax residents outside of Monaco will need to check the tax liability in their home country. The only two exceptions concern American citizens and, governed by the Franco-Monegasque bilateral convention of 1963, French nationals.
Regarding succession, an important and welcomed step was made last year when Monaco introduced its Private International Law Code, a new law that allows individuals to choose which national law to apply to their future succession. The law of the deceased’s last domicile will apply to both movable and immovable assets. This is in line with the EU Succession Regulation and gives legal certainty to those who invest in Monaco.
Succession and gift duties apply in Monaco, but transfers between immediate family members are exempt. The level of taxation depends on the nature of the relationship between the deceased person and their heir: 8% between siblings, 10% between uncles and nephews and 13% between other relatives. A top rate of 16% applies on transfers between unrelated parties by gift or on death.
Miells & Partners
What percentage of property purchases involves a mortgage and how does this affect Monaco’s property market?
I have no hard statistics and am not sure if anyone can truly answer that question—except maybe if you gather Monaco’s three notaries around a table with their records! From experience, I’d say that bank rates are so low that approximately 70% of our clients today are buying with a mortgage. This truly encourages buyers to make offers as they feel “flexible” with the possibility to pull out of the negotiation, while sellers are more likely to accept the clause (if correctly submitted). In fact, what used to be considered a weak negotiation point, the mortgage factor has became a standard in transactions today. It even helps to close the sale as all the details about the purchase are clear to everyone beforehand.
Rosengart Luxury Real Estate
How is the property market changing in Monaco and what drives this change?
We can observe a new property trend in the resale market, with a sharp drop in studio resales (-18% compared to 2017) and a sharp increase in resale of bigger apartments (5 rooms and more, +59.3%). This trend is also present in the new property market initiated by the Odeon Tower, and the delivery of future projects such as 26 Carré d’Or or Palais de la Plage, featuring apartments all with big surfaces and an exceptional level of amenities.
Monaco’s real estate market made history in 2016 with record resales totaling €2.21 billion for 520 transactions. 2018 set a new record of 451 resales totalling €2.33 billion.
This trend can be explained by a clear increase from a more demanding clientele seeking spacious apartments, exclusive amenities with a high level of quality renovation, home automation, pool services and 24/7 concierge—a demand that meets the standards of international megacities.