Luxury property booming as the rich pour into Monaco
Published 20/08/2014 | 02:30
Monaco, the tax haven on the French Riviera, is experiencing a luxury-housing boom that includes the world's most expensive penthouse as developers prepare for an influx of millionaires and billionaires escaping higher taxes or a loss of banking privacy.
A "flow" of new residents is emigrating from Switzerland, where financial-secrecy laws are crumbling, said Jean Claude Caputo, managing director of broker Savills' French Riviera unit. They're drawn by the principality's "security, sophistication and climate," he said - as well as for financial reasons. The Swiss government signed an accord in May to automatically share bank data across borders.
"High net-worth individuals want to be in this part of the world," Mr Caputo said as he drove to Monaco to brief Swiss private bankers on the property market there and help them advise clients considering a move.
New levies on luxury homes in London and a US-led global crackdown on hiding assets will also probably attract the affluent to Monaco, which already counts pop stars, Formula One drivers and Russian billionaires among its inhabitants. One in three of Monaco's 38,000 residents are millionaires, according to a study by Spear's magazine and WealthInsight. As that number increases, home values will rise by about a fifth by June 2015, according to London-based Savills. That would almost erase losses sustained since the market's 2007 peak.
The Tour Odeon, a double-skyscraper being built by Groupe Marzocco near Monaco's Mediterranean seafront, will contain a 35,500 square-foot penthouse with a water slide connecting a dance floor to a circular open-air swimming pool. The apartment may sell for more than €300m when it goes on the market next year, French magazine Challenges reported. That would make it the world's most expensive penthouse, according to broker Knight Frank.
"We think we can get a little bit more," Daniele Marzocco, a director at the company, said in June. So far, the developer has found buyers for 26 of the 36 luxury homes that have been offered for sale.
"What we sell is Monaco," commercial director Niccolo Marzocco said during a viewing of the skyscraper, which is costing more than €600m to build, excluding the land. He cited security, stability and the convenience of living in a city-state about two-thirds the size of New York's Central Park.
The most expensive part of Monaco, centered on the Golden Square and The Casino de Monte-Carlo made famous in James Bond films, is already the world's costliest property location ahead of Hong Kong.
The principality's residents, who include Russian billionaire Dmitry Rybolovlev and pop singer Shirley Bassey, don't pay taxes on income. The French have to pay taxes there, with certain exceptions dating back more than 50 years. Famous for its Grand Prix, Monaco is home to a host of Formula One drivers such as 2008 World Champion Lewis Hamilton, pictured, who moved there from Switzerland two years ago.
While Switzerland also has some of Europe's lowest tax rates, it's becoming less attractive to luxury homebuyers as the country's financial secrecy laws are eroded amid a move toward a global standard of information exchange between tax authorities.
Moving to Monaco is an "obvious" strategy for many of Switzerland's super-rich residents, according to Richard Murphy, co-author of Tax Havens: How Globalisation Really Works. "You've got to go somewhere where you can flash what you've got and still have secrecy about how you got it," he said.
Asking prices for luxury homes in Geneva have fallen by an average of about 30pc in the last 12 months and values have dropped by as much as 6pc, according to Alex Koch de Gooreynd, a partner at Knight Frank.
Monaco will have to further expand into the sea and build more residential skyscrapers like Tour Odeon to cater to the expected influx of wealthy buyers, according to a May report by Savills.
"People have looked at the next available place which has a similar type of secrecy environment" as Switzerland and provides a high quality of life, said Mr Murphy.
"Monaco is one place that fits that bill."