Since 2023, the Monaco real estate market has experienced a significant decline in transaction numbers. The primary causes are the tense international context and rising interest rates. It remains to be seen whether Monaco’s recent placement on the gray list will further exacerbate this situation.
For years, the global real estate market was overheating, fueled by historically low interest rates and a post-COVID buying frenzy. However, since 2023, the business climate is no longer as favorable… This trend is also evident in Monaco, where the number of transactions significantly decreased throughout 2023 and in the first half of 2024 (see boxed text). “The market has indeed slowed down considerably,” notes Kate Dorfman, director of Caroli Real Estate. “All real estate agencies are complaining about it.”
High interest rates and profitable financial markets
So, what explains this decline in sales and resales in the Principality? According to industry professionals, there is no doubt: the maintenance of relatively high interest rates is one of the causes. But it’s not the only one. “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,” explains Florian Valeri, director of Valeri Agency. “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.”
A market disrupted by international tensions
This hesitancy around real estate acquisition is also explained by the particularly tense geopolitical context at present. An unstable environment is never conducive to investments: “Indeed, several global factors are likely influencing this slight slowdown in sales: elections, particularly the U.S. presidential election, the war in Ukraine, and tensions in the Middle East,” adds Christian Miceli, managing partner at CM Monaco Real Estate. However, according to this professional, this international context “affects Monaco less than other regions of the world.”
Association agreement with the EU : the impact of uncertainty
Another question arises: Has the prolonged debate between the Monegasque authorities and Brussels over a potential association agreement between Monaco and the European Union also disrupted the clientele and the Monegasque market? “This particular debate has not had a direct impact, but it has contributed to a general climate of uncertainty, in addition to other factors mentioned above. Investors were asking questions,” state Eric Cancemi and Nicolas Croesi, negotiators at Miells Christie’s. “In this debate, there were also many misunderstandings. Some believed it involved integrating the Principality into the European Union. When the princely government announced that the association agreement was abandoned, the clientele was quite pleased to hear that.”
Gray list : not yet enough time to assess
What about Monaco’s recent placement on the gray list? Will this event be an aggravating factor? Opinions on this matter are divided. “The news was officially announced at the end of June. Therefore, we do not yet have sufficient hindsight to truly measure the effects. At this stage, in any case, I see no impact,” asserts Florian Valeri, director of Valeri Agency. According to him, this placement will primarily affect financial flows, not real estate purchases, “because 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 gray list at this stage, not on the European Union’s list, and has not faced any sanctions.” However, Florian Valeri believes that certain profiles may be more sensitive to this situation. “I’m thinking specifically of institutional funds, but they are scarce in the Monegasque market due to low profitability and a very high entry ticket. Another sensitive profile could be a high-profile Western investor who, for reputational reasons, might hesitate to invest in the Principality. But these cases remain, once again, very minor.” Jean-Yves Le Graverend, director of John Taylor Monaco, shares this view, expressing confidence in the future of the Monegasque real estate market: “On the client side, many are not aware, and for those who are, it doesn’t change much. Which is good news,” he assures.
A “wait-and-see” approach related to Moneyval?
Nonetheless, many economic and political actors fear one scenario: decision-making delays. In short, people wishing to move to Monaco might wait for the Principality to exit the gray list before making their move or investing. According to Eric Cancemi and Nicolas Croesi, negotiators at Miells Christie’s, “the publication of the Moneyval report in January 2023 created a psychological impact on buyers.” “The uncertainty surrounding this gray list entry did create a general wait-and-see attitude, a kind of small psychosis, which has slowed down investors,” they assert. Legislative tightening regarding money laundering has also led to blockages in transactions. “Bankers have walked away from many cases, particularly for politically exposed persons and when the source of funds was unclear,” adds Kate Dorfman.
Gray list : A familiar situation for Monaco
Despite this climate of uncertainty, real estate agents remain generally optimistic. They do not view the decline in transactions as catastrophic. So far, they observe that the Principality has been relatively insulated from international crises (such as the subprime crisis, COVID, and the European inflation crisis). While neighboring countries have experienced significant declines in property prices, ranging from 10% to 20% depending on the crisis, in Monaco, although transaction volumes have dropped, prices have consistently remained at very high levels and even reached record highs. “Being on the gray list is certainly not pleasant, but Monaco will adapt. The Principality has been on the gray list in the past and has always continued to move forward. The country has overcome several crises and will overcome this one as well,” concludes Gilles Graille, head of Pacific Agency. “This is just another crisis that will push us to adjust our practices to meet new requirements.” Professionals hope for a market recovery starting in October.
Key figure : €51,418
This is the average price per square meter in the Principality in 2023, compared to €50,982 in 2022. It has increased by approximately 1% and is nearing its record from 2021 of nearly €52,000 per square meter. For comparison, in 2012, it was around €30,000 per square meter.
Real estate transactions : 2023 figures (IMSEE)
New Market:
28 new properties were sold in 2023 (compared to 88 in 2022).
The average price of a new property stands at 37.1 million euros in 2023 (up from 13.5 million in 2022).
The total amount of transactions in the new market reaches 1.04 billion euros in 2023 (down from approximately 1.2 billion in 2022).
Old Market:
388 apartments in the old market were sold in 2023 (compared to 433 in 2022).
The average price of a property in the old market in Monaco is 5.7 million euros in 2023 (up from 5.4 million in 2022).
The total amount of transactions in the old market stands at 2.19 billion euros in 2023 (down from 2.35 billion in 2022).
Source: Real Estate Observatory IMSEE, 2023
Real estate transactions : figures from January to June 2024 (IMSEE)
New Market:
7 transactions were concluded from January to June 2024, compared to 19 during the same period in 2023 (a decrease of 63%).
These properties were still sold at astronomical prices. The 7 sales total 323.2 million euros, averaging 46 million euros per property!
Old Market:
174 resales were recorded from January to June 2024, compared to 206 during the same period in 2023 (a decline of 15.5%).
In the first six months of 2024, the total amount for the 174 real estate transactions stands at 1.1 billion euros, averaging 6.3 million euros per property.
Economic Bulletin, Second Quarter 2024. Cumulative data since January 1, 2024.
