Article first published in Forbes Monaco September/October 2020 issue.
It has been 15 years since Prince Albert succeeded to the throne. In an exclusive interviev with Forbes Monaco, Monaco's CEO discusses the state of business and "The direction I want my country to go."
Just before his death in 2004, German photographer Helmut Newton, a former Monaco resident, told the Associated Press, “I love Monaco because it’s not really part of the world... It’s a happy corner at the edge of everything.”
Newton would have relished BBC Two’s Inside Monaco: Playground Of The Rich series, a surreal glimpse at what extreme wealth and privilege can buy—€40,000 for a night at a Hôtel de Paris suite or an Alba truffle served at an invitation-only National Day dinner at the palace.
The sleek production is a Monegasque version of Crazy Rich Asians, promoting Monaco as the destination for UHNWMs (Ultra-High-New-Worth-Millenials) and their millions of social media followers, to party and spend their fortunes here instead of in rival Dubai or Singapore.
Monaco is, after all, a luxury brand, and Prince Albert II of Monaco is the CEO, taking over the exclusive family business from Prince Rainier on July 12, 2005. And while his father filled the depleted state coffers by attracting the nouveau riche, Albert is trying to manage the bottom line by pitching to the jeune riche, where dreams of paying no income tax, no capital gains tax and no inheritance tax can come true.
But as head of state (whose net worth is estimated at upwards of a billion dollars), Prince Albert must also manage the needs of the country’s 38,682 population, many of whom, with neither millions or billions in the bank, lamented in hushed tones over the BBC’s misrepresentation of their home town. Residents here are more concerned with life outside the playground— skyrocketing rents, never-ending construction, quality of life, a vanishing community—than with whose mega-yacht is docked in Port Hercules.
With Monaco recognized as one of the safest places in the world to live, Agnès Falco, CEO of USB Monaco told Forbes Monaco in May 2019 that “the Principality attracts 90 UHNWIs every year and counts 200 billionaires as residents”—a figure she sees doubling in the near future because “billionaires don’t want bodyguards around all the time and Monaco offers the freedom of a normal life where the safety is free.”
Yet freedom and income-tax free living does have a cost. In its 2020 Property Spotlight, Savills reports that Monaco remains the world’s most expensive location for buying residential property—the average price per square meter is over €48,000 (€53,000 in Monte Carlo)—and renting: an average of €126 per square meter per month, which is 60% higher than the second most expensive location, New York.
Rental units are becoming fewer and with Monegasque landlords hiking monthly rent to take advantage of the increase in demand for larger properties (needed to comply with residency requirements), long-time resident families of 20 and 25 years can no longer afford to live here and are leaving the country.
“This situation has been a main concern for many years,” Prince Albert says. “My government has been working on finding solutions to this issue which impacts the ‘middle class’ workers and ‘Enfants du pays’ category, who play an essential role within the life and the community of Monaco. That is one of the reasons why we have launched an ambitious housing plan for the national population over the next five years. It will ease the tensions in the rent-controlled sector. Other alternatives are being examined as these categories of the population are crucial for Monaco.”
Major works are a significant element of the economic activity and development of the Principality and numerous building sites include the 30-story Testimonio II as well as two major projects. First, the construction of the new Princess Grace Hospital Center. Since its inauguration in 1902, the Monaco hospital has been located on the same site, constantly evolving in order to maintain its level of excellence.
“However, this logic of permanent modernization has reached its limits, so in 2011, I decided to build a new hospital complex to replace the existing hospital,” explains the 32nd Grimaldi ruler. “This new hospital will meet the highest standards of care requirements for our population and its surroundings, approximately 125,000 people.”
The second major site in Monaco is the $2.3 billion (€2 billion) land extension that will house 1,000 in lavish apartments and villas, due to be complete in 2025. “Revenues for the private group through selling the apartments and houses will be more than $4.1 billion,” Jean-Luc Nguyen, director of the Urban Offshore Extension Mission, told CNN in 2018.
Over the last 150 years, Monaco has seen its 2-square-kilometer territory expanded by more than 40 hectares—20% of the territory—largely credited to Albert’s father, Rainier, “the builder Prince.” As did the 22-hectare Fontvieille district create strife within the community in 1971, so is the 6-hectare Portier Cove today, with residents beefing about its environmental impact, the strain on Larvotto's infrastructure, decreasing property values of apartments that will lose their sea views, the size of the project ("not big enough”) and whether more Russians will be moving into the neighbourhood.
Prince Albert is unwavering. “It is clear that a Principality without construction would mean a country at a standstill, without a forward looking vision, no longer able to renew itself, to develop and to innovate.
“I would not take that risk, that of a slow regression. In our approach, let us be innovative, let us imagine buildings that are more energy-efficient, more eco- responsible, that is the direction I want my country to go.”
Addressing environmental concerns, the Green Warrior affirms, “The extension of the territory into the sea immediately raised the question of minimizing its impact in terms of additional emissions. The district’s thermal and electrical needs will be 40% covered by renewable energies. A building in close proximity to the extension, the Grimaldi Forum, has been covered by 2,500-square-meters of solar panels since 2019, making it the largest solar power plant in Monaco.
“In addition, the district will be heated and air- conditioned thanks to the Larvotto thalasso-thermal loop, saving around 80% of GHG emissions compared to fossil fuels and conventional air conditioning.
“The challenge now is to build energy-efficient buildings. The extension can also be a hotbed for innovation thanks to the smart grid, which enables energy governance at the district level by combining comfort, energy optimization and the latest 67 technologies,” the 5-time Olympian emphasizes.
Photo: Eric Mathon/ Palais Princier
In terms of housing for Monegasques and private residential programs, Monaco's urban development strategy is based on three approaches: the exploitation of existing land reserves, the reconstruction of the city on existing city land, by demolishing older buildings, which have no particular heritage character and are therefore suitable to replace, and the extension of the territory on the sea.
“Naturally, where you have construction you have noise pollution. Reducing [construction sites] is a priority that I have set for my government. On construction sites, devices are being developed to reduce noise and the use of less noisy machinery and equipment is becoming more widespread. We must be vigilant about the respect of the quality of the living environment because it is one of the values that distinguishes our country.”
But it is not just the “around thirty public and private operations underway in the Principality,” according to the government, that are producing intolerable noise pollution. Road traffic, partly caused from the 53,454 employees (March 2020, according to IMSEE) who make up the country’s workforce and commute daily, along with over-revved supercars, produces disturbances and congestion.
“With regard to traffic, our small country has the problems related to its attractivity, mainly a strong economy and a popular tourist destination. In this context, our objective is to reduce the current car traffic by 20% by 2030,” explains the Prince.
In addition to improving rail service, the creation of park and ride facilities and border parking, the government is reinforcing sustainable mobility within the city limits, such as the expanding e-bike service and use of public transport, which is free of charge for the over-60s and for schoolchildren.
The Prince states that eco-mobility is “starting to catch on” and that road traffic at the entrances to the Principality that had been growing steadily since the end of the 1990s, has been falling slightly since 2015. And since early 2020, “ecological vehicles represented nearly 6% of the Monegasque fleet.” This is due partly to the National Green Fund, a budgetary instrument supporting low-carbon transition, and its concrete incentive policy in favor of clean vehicles, which, since 1994, consists of a purchase bonus, free recharging at electric service stations in public car parks and on the street, price advantages on a parking pass, and a free annual registration stamp.
Monaco is known to the world for its independence as a constitutional monarchy. While it is recognized as a European country through its geography, history and population and also through its membership of the European customs territory, Prince Albert is clear, “It is not a member of the European Union and does not have the ambition to become one.”
In March 2015, along with the Principality of Andorra and the Republic of San Marino, Monaco accepted the EU’s proposal to start negotiations with a view to concluding an Association Agreement that would give it a genuine status vis-à-vis the EU and all its Member States, as well as taking better account of its very specific elements.
But some Monegasques and residents fear a seismic shift in maintaining the country’s renowned level of security, as well as the freedom of establishment provided for by European law and the circulation of regulated professions—lawyers, accountants, doctors, dentists, bailiffs, notaries, pharmacists, physiotherapists, masseurs, and architects—creating a massive influx of competition from other countries. Some 1,000 employees in Monaco collectively came together to form the Comité monégasque des professions réglementées to defend their interests.
According to Prince Albert, “Monaco is engaged in discussions with the aim of obtaining a balanced agreement that would allow the widest possible participation in the EU’s internal market, while respecting the essential and vital interests of the Principality, taking into account its territorial, demographic and economic dimensions.
“The Monegasque team is currently continuing technical negotiations with the European group. The negotiations are therefore far from over and will only succeed if we can reach a balanced agreement that respects our national identity and the elements specific to us.”
He has credited his father for bringing Monaco “resolutely into the modern age” but only fifteen years into his reign and Prince Albert is catapulting the country into a digital age revolution. “Today, we live in a world where digital is everywhere and is impacting everything from business to education and from health to government,” insists Prince Albert.
“This reality has been emphasized even more by the recent Covid-19 crisis. Digital technology made it possible to stay close and make this crisis more human in order to avoid the psychological isolation of the most fragile. For solidarity and mutual aid, the resident population has been able to take advantage of these tools. Therefore, it is an absolute priority for me and my government that the Principality be on the front line of the digital world. This is even more true in a very difficult context where we need to support and diversify our economy.”
In November 2018, Prince Albert created the Monaco Digital Advisory Council, underlining his ambitious commitment to the country’s digital transition policy, which, beyond tackling the economy (a Security Token Law was passed in June, see p. 20), deals with platforms, telecoms, education, mobility and innovation.
Launching 5G in 2019, a worldwide first, was “the first step but we will need other key infrastructures like fiber networks and cloud platforms to succeed. It is also crucial that companies in Monaco have access to the leading digital platforms. This was the purpose of my visit to Google HQ in February 2020. It was also the main topic of our discussions with leaders at Amazon, Stanford University and the most innovative cleantech startups in Silicon Valley.”
As he steers Monaco—what CMB’s Francesco Grosoli (see p. 37) refers to as “Mayfair on the Mediterranean”— into its digital revolution, the Prince is adamant: “Health, education and government services quality are more and more determined by digital and the Principality intends to keep its level of excellence and attractivity in this new paradigm.”
This falls in line with the Eco-Prince’s carbon neutrality goal over the next 30 years. “The main approaches to achieve this relate to the development of renewable energies across the territory, the reduction of energy consumption in the building sector, the reduction at source and sorting of waste, the relinquishment of fossil fuels for vehicles and buildings and the mobilization of the Monegasque community in favor of a lifestyle and consumption that generates little CO2.”
The Prince created a dedicated team, the Mission for Energy Transition, who additionally focus on the implementation of renewable energies with a comprehensive system to promote their development such as solar cadastre, production subsidies, energy regulation, and the deployment of thalasso-thermal energy, a sustainable innovation developed here, as well as green hydrogen for the maritime sector.
“The aim is to capitalize on Monegasque know-how by developing two new networks to heat and cool Monegasque buildings using energy from the sea. In three years' time, thanks to these two networks, Monaco will reduce its greenhouse gas emissions by 7%,” the Prince, who cofounded CleanEquity Monaco, specifies. “In 2050, I see a carbon neutral Principality and an enhanced quality of life for its residents, where we have been able to give sustainable, non-motorized mobility its rightful place very early on. Given its size and the facilities that have been integrated into the development of the city since the last century— lifts, escalators, footbridges, among many initiatives—Monaco is above all a pedestrian city.
“We are eliminating the word ‘waste’ from our vocabulary, with an economy organized in a circular and eco-design logic: useless by-products from some have become resources for others. Single-use has been replaced by reusable, the incinerator by a unit for washing sustainable packaging.
“We maintain the same level of comfort without damaging the oceans. The buildings produce more energy than they consume and have perfectly integrated vegetation. Many city vegetable gardens deliver quality products. Biodiversity has developed in the country and is helping to reduce the high temperatures we are experiencing.”
The Monegasque identity— its traditions, culture, and language— is something unique to the 9,486 people who are nationals. Heir apparent Prince Jacques will learn this inside and out as the five-and-half-year-old twin of Princess Gabriella follows in his father’s footsteps to one day run the country.
“Watching our children grow up is in itself thrilling and fascinating,” enthuses Prince Albert, who married Charlene Wittstock in 2011. “And sending them off to school here in Monaco was for me very special indeed. Not only because it brought back some wonderful memories but also because I know they will receive quality education in any one of our schools here.”
The Monaco ruler adds, “I also think it is important for them to build friendships with other children from Monaco and the surrounding area that hopefully will last a lifetime.”
For now, Jacques and Gabriella can enjoy life inside the playground.
THE BATTLE OF COVID
On the evening of March 15, 2020, Prince Albert began to feel the first signs of coronavirus, he knew something was up, but there wasn’t time to react. His country was witnessing a phenomenon of exceptional scale and immediate impact, “undoubtedly the most severe since the Second World War.”
Within 48 hours, a televised address by His Serene Highness would announce a home confinement period “until further notice,” effective as of midnight March 17. “I called for responsibility on the part of everyone in the interest of all,” Prince Albert says.
The Palace confirmed on March 19 that Prince Albert had tested Covid positive although his symptoms remained mild. “Being in any position of responsibility and attending numerous public functions puts you inevitably at risk,” the Sovereign remarks. “I was very careful and cautious even back in late February when the virus was drawing near our shores.”
Within hours of the announcement, the Prince became headline news across the globe, as he was one of the first world leaders to become infected. The story gained further traction when Prince Charles also tested positive two weeks later; the two Highnesses had sat opposite at a WaterAid event in London in March. “I got infected during my short trip to the U.K. on March 10-11 and there is a very little chance in my mind that I was the one who passed the virus on to Prince Charles as the media suggested,” the commander- in-chief clarifies.
While most people spent quarantine binging on Netflix, Prince Albert says it allowed him to hide up in their private apartments and “to sort out old papers and such” although it was “a little strange and testing at first, being alone with minimal staff in the Palace.”
Recovering “fairly quickly” after 17 days, he was given the green light from his doctors to join his family at their property, Roc Agel, near Monaco.“I was a happy man. And that month and a half [of confinement] with my wife and our children was a blessing indeed. We did activities together that otherwise we would hardly ever done under normal circumstances,” the Prince recalls warmly.
A sense of tiredness and sluggishness did “linger on” for the 62-year-old, but he had a job to do. “The Covid-19 pandemic health crisis has been a learning accelerator and a revealing element in several areas in the management of this emergency. The most difficult has been to work without any certainty of result and to manage an efficient communication towards the population. This pandemic has been a revelation of the strengths of the Principality of Monaco.”
The head of state is precise in pointing out, “The Principality has benefited from the good conduct of the resident population, but also from individual responsibility, particularly with regard to consumption patterns and compliance with recommendations in a spirit of kindness and mutual assistance.
“Our financial independence and stability has been able to marshal, without any time constraints, significant funds for the reorganization of care structures and urgent measures to protect our economy, its actors and the labor force. In the absence of new extreme circumstances, the sustainability of public finances will be maintained, thanks to the potential for economic recovery that we are supporting.”
The government launched a series of social and financial measures “in particular for small and medium-size businesses which constitute the core of our corporate economy.” This included total temporary layoff coverage, which impacted 21,650 employees, about 40% of the country’s salaried employees. Monaco’s largest private employer, Société des Bains de Mer Group (SBM) furloughed nearly 90% of its 4,000 employees. (The State owns 64.21% of SBM.)
In May 2020, Monaco launched its free Covid-19 screening campaign available to the 90,000 people that make up country’s population and workforce. Of the nearly 35,000 who volunteered to be tested by rapid diagnostic orientation tests, 983—or 2.8%—were positive. Photo: Gaetan Luci/ Palais Princier
Government spending over three months to June totaled €350 million, producing a record deficit of nearly €500 million (exceeding that of the 2009–2011 global financial crisis). This represents nearly a third of Monaco’s total budget and a quarter of the available €5.5 billion (€2 billion in liquid assets) in the Constitutional Reserve Fund, which was created in the 1960s to assure the country’s financial independence and sovereignty.
A second-tier of financial assistance was recently introduced, offering special support to the hard-hit tourism and hospitality sectors, particularly impacted with the cancellation of events— including the Rolex Monte- Carlo Masters, the Yacht Show, and the Monaco Grand Prix, the latter of which the Prince says has an estimated revenue of 5% of the “country’s turnover, a figure close to €15 billion.”
According to Justin Highman, Director of Monaco Invest, 60% of tourism in Monaco comes from the EU while business tourism makes up a third of the sector. All hotels, restaurants and casinos have now reopened and the Prince informs that “first indications point to a steady increase in their activities, even in the current absence of some of its foreign visitors, but still far behind from the level of their activities compared to last year.”
However, Sass Café and Cipriani, two restaurants in the Larvotto district, had to temporarily close their doors in the third week of August due to staff testing positive for coronavirus.
“My government is monitoring the situation and its possible evolution until the end of the year in order to evaluate further measures to be put in place in support to the economy,” asserts Prince Albert, who, in a gesture of solidarity, cut his own salary this year by 40%—reducing his pay from €13.2 million to €8 million.