In Monaco, real estate transactions are reaching price peaks and attracting a growing number of intermediates looking for a good deal, even if it means destabilizing the local market.
In Monaco, the real estate sector is particularly competitive. It is even the most expensive real estate luxury market in the world, with an estimated meter square price reaching 50 000 €, far ahead of Hong-Kong (which occupies the 2nd place with it’s 13 000 €/m²).
This is the reason why the median selling price of a real estate property is estimated to 5 million euros and that the total sum of the transactions in the principality is evaluated at more than 2 billion euros, for the year 2021 only.
Because of this real estate manna, the monegasque territory has a tremendous amount of real estate agencies and intermediates. In 2021, there was 150 real estate agencies and 317 property sellers (against only about ten a few years ago) for only 428 sales total.
For those intermediates, there is a great deal of competition and any transaction can allow to make or break a large part of the annual turnover. Under those circumstances, they are not equals : some agencies can close multiple sales in a year whereas some do none !
Thus, in order to lower the total sum of a sale, some are ready to drastically lower their commissions.
In the principality, anyone who wishes to acquire a real estate property will need to pay a 5% commission (for the seller) and a 3% commission (for the buyer) in addition to the notary fees. These amounts were set by the « Chambre immobilière monégasque ».
In reality, it is not always the case and the principality is beginning to see a speculative bubble. Some voices have been raising for years to regulate the market even more, lower the number of real estate licences and limit the transactions that are eligible.
That is why the Monegasque national council have passed a law to limit the property seller’s activity and fight against real estate speculation. This is producing a permanent lowering of the commissions and shortfall evaluated at 20 million euros in 2021 for the Monegasque state.
The text passed on the 8th of January 2020 only allows this profession to the Monegasque citizens. They enjoy a specific regimen in order to make their activity worthwhile.
The evolution ofthe real estate market leads companies to operate mutations in order to adapt to the clients’s needs. It is even more the case in Monaco, where a prestigious is looking for high value services.
These last few years, we have seen a multiplication of the business introducers, the concierges and other multi family offices destined to handle fortunate families assets. Authorized by law n°1.429 of the 2nd of December 2016, the multi family offices are companies that centralise the managing of the assets, affairs and interests of a number of fortunate families bye offering them a variety of high en services.
Monaco is perceived as a real estate eldorado for those numerous intermediates. Some make simple transactions and others handle their client’s assets and have to maintain a trusting relationship.
Renovating the properties is one of the considered approaches to control the access of the many intermediates to the monegasque real estate market.
A new law should soon see the day in order to make the professionals restructure the properties to at least 5% of their initial value before reselling. In that case, they will only be paying 2,25% of the registration fees, in comparaison they will be paying 4,5 % for those who do not add any value.
Using monegasque companies to renovate buildings will also be encouraged since it will allow them to be exempt from the work taxes on their next real estate acquisition in the principality.
We shall now wait and see if this law proposition will be passed. If it is, it could be applicable in April/May 2023.
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