Real Estate

The Trump Card

In Monaco, everything is exceptional. Prestige real estate is even more so than elsewhere: more luxurious, the values are more stable... and more expensive. After the "bull run" of the eighties, today's clients are harder to come by and are certainly in less of a hurry to buy. But Monaco's advantages will no doubt bring it back into fashion before too long. Where else in the world can you walk out your door with a million in cash, to go to the Casino on foot?

According to the commercial director of Cabinet Monteferrario, of the FRADIM group, "...on the Côte D'Azur, the "grand luxe" only exists in Monaco and on the Croisette in Cannes". But it's only in Monaco where one can find the ultimate in luxury.

But how does one define "grand luxe" in Monaco? The rule of thumb of the agents is that it's not so much the location that counts... For Claude Mimet, Commercial Director of Dumez Real Estate, "it's the height that guarantees a view which can't be built-out."... and the view which decides the price. There is one quarter which is more prestigious than the rest. It's the "Carre D'Or" (Square of Gold) around the "Place du Casino", still simply called the "centre", by the "initiated". Prices drop by between ten and fifteen percent as one heads either East or West of this point. Fontvieille has a supplementary discount due to its less noble access, although the fact that the environment and the animation are constantly evolving assures a similar evolution in perceived values. The Seaside Plaza, the jewel of Fontvieille, well deserves to be qualified as "prestigious".

It goes without saying that the elementary part of "luxe" comes in the form of omnipresent marble and rare quality woodwork, each room must have a private individual bathroom, and pool and garden are also essential... not to forget the number one attribute: security with a capital "S". A well hidden safe, in an apartment with surveillance by video, relayed to a central control post, which is in turn directly relayed to the Monegasque police, no doubt the most efficient in the world. Voila, the ultimate in luxury, albeit seen by some as a little "paranoid".

As for the price, while some agencies are backward in coming forward, others are much more open on the subject: For a villa in the "Prince de Galles" complex, you can count 113-million francs. In the "Hotel de Rome", count 110,000 francs per square metre... and there's no shortage of buyers there. Around 12 apartments remain empty in the Metropole residence, situated in the South wing of the massive Metropole complex

THE RARITY UNDERPINS MARKET

The Real Estate sector, in state funding, has gone from 30 to 15 percent these past years (as opposed to VAT): proof of the crisis in the market. The capital gains seen in the heyday, between the 60's and 90's, in the order of 3500% are now but nostalgic memories.

Since the Gulf War in '91, the number of transactions has dropped, and their speed of completion has slowed to a stagger as well: three months compared to ten days. Monaco is hit by the crisis, albeit later than other places.

Chamber of Real Estate president Raoul Boni puts it moderately: "The market is very calm, not to mention morose."

Rental prices are down, and sales are negotiated to the limit when potential clients are available. Some agencies have seen a drop in business of 50%, and some are doubtless due to go under. To "look the other way" would be seen as hypocritical. The market is sick, at least in the short term. Claude Mimet is nevertheless optimistic: "The rarity of the products underpins the market when the transactions are weakened, then when they take-off again, the prices take a major hike. The rarity is an assurance of capital gains for the future."

THE PRESTIGE: UPS AND DOWNS

The Monaco Prestige Real Estate Exhibition disappeared in the early part of this decade. Gone are the glory days of the 80's, where eight-million franc apartments exchanged hands over the 'phone, sight unseen.

"In the early '80's", Jacques Petit nostalgically quips, "I did in one sole month, 27 sales in 25 working days. It was simple... we were at the Notary's every afternoon!" With the FRADIM group specialising in prestige real estate now for 15 years, he participated in the marketing of the "Parc St. Roman" and then the "Monte Carlo Palace": two luxury programmes which sold very quickly. The Monte Carlo Palace, situated in the "centre" of town, was put on the market (80,000 Frs. per square metre) in 1988 and old-out by the end of '92. There's still a waiting list today. It's not the same story though for the Villas Del Sole on the Boulevard d'Italie on the East side of Monaco, which were put on the market in March 1993. "Today", he confides, "200 potential clients are needed in order to obtain one sale, compared to ten, ten years ago."

With the Seaside Plaza in Fontvieille at 65,000 francs per square metre, Claude Mimet hasn't much to complain about: "We're the only ones still selling. Nothing else sells at the moment."

This being said, Blocks B and C, being marketed by Dumez, are only 75% full after 5 years. 20 apartments, as well as two rooftop villas are still looking for owners. "The two first years, in 1990 an 1991, we sold 50% of the totality. Since then the sales have stagnated. It's a reflection of the fact the crisis has even hit the upper end of the market."

Dumez Real Estate is a subsidiary of the massive "Lyonnaise des Eaux" (the Lyon Water Company): one of 90 subsidiaries with a total annual turnover of 100-billion francs. It has given itself two more years to complete the marketing project. If they run over time, the returns will be more than disappointing. A bright spot, and reassuring at that, is the sale of one of the rooftop villas, "Spirit of Riviera" to a company believed to have Russian capital. With 1,600 square metres of floor and terrace space, the exact sale price is unknown, but believed to be in the vicinity of 70 million francs.

Then there's the Metropole residence, which is atypical. On the market since 1990, there's been a constant flow of Italian buyers, up until the drop in the value of the lire. Then a Saudi snatched-up eight apartments in one lot. After a two year "quiet" period, recently a "deux pieces" (one bedroom + living) was sold for seven million francs... then, in June of this year, the deal of the century was clinched: After a year of discussions, a Dutch businessman bought the most expensive apartment in the Metropole ... if not the world, for 180-million francs (more than $36 million). At the same time, he bought 13 other apartments and 12 parking spaces.

After four years, 30 apartments have been sold out of a total of 50. "Around 60% of the apartments sold in the residence... for us that's a satisfying result" assures the Metropole's Marie-France Vidal.

MOTIVATION TO BUY: SECURITY

Clients in the luxury market don't bargain. "They're too distinguished for that", according to a connoisseur. So what are the main nationalities? Sometimes Arab, up until the Gulf War. Then there were the Italians, until the crash of the Lire. Today, it's the Northern Europeans. The clientele of the Seaside Plaza is a good indication: One third Italian, one third Arab- some of whom even bought entire floors of the complex, and one third Northern Europeans, with their strong currencies (Swiss, German and Dutch), and still 10% French.

Claude Mimet analyses: "Some buy to invest (25%), some to speculate (25%), but of course many buy to live here at least several months in the year (50%)." Often, people buy a "pied d'terre" here, while working elsewhere. Sometimes it's in view of retirement, with the attraction of the absence of estate duties for direct line heirs, and of course, for security reasons. According to Jacques Petit, the motivation is 20% fiscal and 80% for personal security and security for belongings.

Those looking for "Grand Luxe" are also here for "La Belle Vie". The fact that Madame may adorn herself with a river of diamonds (real ones) to go to Jimmy'z, and that Sir may stroll to the Casino with his pockets full of cash ... with nothing to fear, except perhaps the roulette wheel!

DESPERATELY SEEKING BUYERS!

The Principality is currently working on developing the French presence. The law of 1950 under which a French proprietor in Monaco pays Monegasque estate duty... negligible: between 0 and 16% (see article- Rules of the Game). This is why, recently, some of the Big French Fortunes have been looking at buying into the Principality. And while, in recent years, sales have stagnated, Jacques Petit prophesises... "The day there's a return to the old trends, everything will be sold in several months, because the stock of luxury apartments is limited."

THE LAP OF LUXURY

The sign of real luxury: se-cu-ri-ty. Safes in the closets, armoured front doors with 14-point anchorage at the Villas Del Sole; at the Seaside, one has individual video phones and personal keys for the lift; at the Metropole, you have personal anti-aggression alarms and remote personal "panic buttons" in case one is suddenly taken ill. No gadget has been forgotten. The presence of a guardian is indispensable, aided by video surveillance, and where possible, computer. In the Metropole residence, all apartments are connected to the guardian's office. The guardian follows, on his screens, all arrivals and departures. He knows who's where... and at what time.

Condition number two: The construction. Marble is indispensable, from Cararre or Portugal, of varied colours. Then there's granite from Sardinia and Elm woodwork... the "in" thing at the moment. Not to forget the latest in soundproofing and air conditioning. The finishing touches... sea view for all apartments, or... even more expensive, the Casino Gardens.

TO EACH HIS OWN STYLE AND EXCLUSIVITIES

The Seaside Plaza is straight out of Tuscany, with it's thousand columns in red marble from Verona; Neo-Belle Epoque for the Metropole and the Villas Des Sole.

The Seaside Plaza plays on space. Ceilings are 2,8 metres high (the norm is 2.7), the loggias are three metres deep, the single bedroom apartments (deux pieces) are of more than 100 square metres, with reception, office and service entrance. The wrought-iron window arches of the Seaside are original designs from the drawing board of the architect Claude Balick, also known for his work on the Parly II, The sculptures in the garden are the work of his father. Copies of masterpieces adorn the communal areas.

The Villas Del Sole are unique in having a rooftop bar which is available to all residents. There's also a "wave-free" pool and solarium. Its 24 "Master" apartments (only two per floor) have a minimum floor space of 230 m2. The marble in the bathrooms has golden highlights, with matching fittings. In the Metropole, there are Jacuzzis and hairdryers in all the bathrooms. Centralised air conditioning, free access to the heated sea water pool, room service... and an atomic fall-out shelter, built to Swiss norms.

THE CREME DE LA CREME

The "Super-Apartment" in the Metropole is still undergoing its final touches to meet the tastes of the new owner. This will cost around 20-30 million francs. On the roof, with an 800 square metre terrace and "overflowing" pool. The pool area has two "deux pieces" apartments in rotunda style featuring domes with glazed tiles: each one of the daughters of the owner will have one. On the tenth floor, 1000 m2, including an immense lounge, punctuated by three marble columns, the floor in white marble from Carrare. Marble of a purity rarely seen... faultless, without veins, and extremely rare. The ceilings are moulded, walls adorned with frescoes, and wardrobes in walnut: a subtle reminder of the dashboard in the Rolls.

Less expensive perhaps, but another "top" apartment- the "Riviera Star" villa on the roof of the Seaside Plaza. Here, the terrace is one of the main features: 1000 M2. The view is panoramic and 360 degrees, with (of course) a pool, and magnificent garden. On the level just underneath, 11 rooms on 630 M2 floor space, with staff cornices on the ceilings, and walls adorned in soft material.

AN IDEA OF THE PRICE

On a price scale, the Seaside Plaza asks 6,5 million francs for a single bedroom apartment (deux pieces), and 39-million for a "8 pieces", and 500,000 francs for a parking space. The Villas Del Sole propose a ground level two bedroom apartment for 15 million francs, and for 19.5 million francs, you have a four bedroom apartment on the top floor. In the Metropole residence, a studio on the fourth floor comes-in at five million. A "8 pieces" on the eighth floor: 55 million francs. Parking spaces are sold at 450,000 francs. Studios are rented at 10,000 francs per month, and six bedroom apartments are rented at 80,000 francs per month. Added to this are charges of 1400 and 10,000 francs respectively.

INVESTING IN MONACO REAL ESTATE

2 to 3% per annum. That's the average return on a real estate purchase in Monaco, compared to around 10% in France. The reason for this is that while rental prices are high, so are purchase prices. This being said, according to Claude Mimet, "You have to keep in mind the capital gains made in the resale..." Up 'till now, this was enormous. Today, according to Mr. Mimet, it remains nevertheless one of the reasons to buy to then rent-out. The quality of the sort of tenants who can afford 50,000 francs per month makes this more interesting. The deposit in this case would be 150,000 francs, leaving the possibility to give the apartment a facelift. Owners are better protected by the law than in many other places. They are much more easily able to expel non rent paying tenants. Add to this that there's no tax on property capital gains. Finally, there's little risk of seeing a drop in prices. If they don't rise, it's rare that they drop in the "grand luxe".

EVEN THE FRENCH...

We've already spoken about the 1963 Franco-Monegasque accord, meaning French residents in Monaco still pay taxes in France. There is one exception to this general rule. Estate Duties are dealt with by another, older treaty, signed the 1st of April 1950, stipulating that real estate property situated on Monegasque territory be exonerated from French Estate Duty. It this falls under the Monegasque system (see report: The Rules...)

This law applies to all French, wherever they may reside: in Monaco or elsewhere. In this respect, Monaco is leaps and bounds ahead of Luxembourg, where similar laws relating to Estate Duty only apply to residents of Luxembourg.


 

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