Why are Monaco property prices so high?

Monaco is the destination of choice for the world’s wealthiest individuals and is known for having the most expensive real estate on the planet.

The latest Real Estate Observatory Report, published annually by the Monegasque Institute of Statistics and Economic Studies, states that the average Monaco property price per square metre in 2022 was 50,982 Euros.

Monaco offers a unique combination of favorable tax regimes, political and economic security, and international appeal, making it one of the most desirable locations in the world. High real estate demand, coupled with its diminutive size - Monaco is the smallest country in the world, second only to the Vatican - means that the city-state regularly tops the list as the most expensive property destination in the world.

Why are Monaco property prices so high?

Monaco property prices are so high because of the city state’s limited land mass coupled with soaring demand, driven by the principality’s economic security, favorable tax system, and luxury lifestyle.

Monaco is known for having some of the highest real estate prices in the world. As demand continues to soar, so does the average house price in Monaco.

According to the latest Real Estate Observatory report, the average price of property resales reached 5.4 million Euros in 2022, and one in two transactions is for a property valued at more than 3.3 million Euros.

The number of transactions over 10 million Euros also continues to rise, as does the number of transactions for properties priced at over 20 million Euros. New property sales are booming, fueled by a host of new luxury developments, with sales taking place both off-plan and post-construction, contributing to a dynamic and vibrant property market.

Limited Land Mass

One of the most significant contributing factors to the high average property price in Monaco is the principality's limited land mass.

With an area of just 2.02 km², Monaco is the second-smallest country in the world. As a result, the land is at a premium, and there is very little room for new construction. This scarcity of available land means that developers must pay a premium for any available plots, driving up the cost of construction and, ultimately, the price of the finished property.

A solution to the limited land mass is land reclamation projects, which involve filling the sea with sand or other materials to create new land.

Monaco has undertaken several ambitious land reclamation projects to expand its territory, including the Larvotto beach area and the district of Fontvieille in the mid-1960s and, more recently, Port Hercules, which was extended to welcome super yachts and cruise ships.

The most recent ambitious land reclamation project is Mareterra, which involves bringing a new dimension to waterfront luxury living and eco-design. Once complete, this new district will feature luxury apartments, penthouses, townhouses, and ultra-rare waterfront villas. It will also include a new marina, lush landscaping, commercial premises, and a waterfront promenade connecting it to Larvotto beach.

Economic Security

Another reason why Monaco property prices are so high is that the principality has economic security and robust financial services. The city-state is home to numerous international businesses and a diverse economy, all underpinned by an excellent infrastructure.

A primary reason individuals choose to settle in Monaco is the country’s mild tax regime. The city-state does not impose any income or wealth tax on its residents, making it an attractive destination for wealthy individuals looking to minimise their tax burden. This has led to an influx of foreign investors and entrepreneurs, who have helped to diversify the economy and create new job opportunities.

Luxury Lifestyle and Properties

One of the key drivers fuelling demand for luxury Monaco property for sale is the principality's reputation as a hub for the international elite. Monaco is home to numerous high-profile events, including the Monaco Grand Prix, The Monaco Yacht Show, and the Monte Carlo Rally, and it attracts a wealthy and cosmopolitan crowd. This international appeal means a constant stream of wealthy buyers looking to purchase property in the principality, further driving up the average property price in Monaco.

Many of the properties in Monaco are designed to cater to this lifestyle, with features like private pools, fitness and wellness centres, and dedicated concierge services.

In addition, Monaco is known for its high level of security, with a well-funded police force and a low crime rate. This makes it a popular choice for buyers looking for a safe and secure place to live.

Despite these high prices, demand for property in Monaco remains strong. Overall, the high property cost in Monaco reflects the city-state's unique combination of exclusivity, luxury, and tax benefits. If you are interested in real estate, contact a reputable agent today.