Newly built properties made up 7% of total sales by number in 2015 but 20% by value. Sales volumes reached record levels last year. Thirty-eight new build sales were registered, up from just 11 in 2014, with a total sales value of €454 million (Figure 6).
Newly built properties accounted for 7% of all sales by number in 2015, but 20% by value
FIGURE 6New build transactions: record number of sales in 2015
During the global economic downturn, developers in Monaco shifted their focus to the global ultra-prime segment. They built large, well-appointed units in schemes with extensive on-site amenities targeted at wealthy end-users.
Tour Odéon completed in early 2016 and La Petite Afrique is to be completed in late 2016 and exemplify these standards. Such schemes command a significant premium over the resales market, a trend most apparent in the largest units. Four bed (and larger) units accounted for 29% of all new build sales last year, with an average price of €28.7m. This represents a 231% premium over the same size properties in the resale market, where the average sale price was €8.7m (Figure 7).
FIGURE 7New build premium: average sale price and new build premium in 2015
Investors are also active in Monaco’s new build sector. More than half of new build sales (21 units) were one bed units with an average sale price of €3m apiece, mainly accounted for by Le Méridien. Monaco has a large rental sector which is, typically, institutionally owned and let to Monégasque nationals, but there is demand for rental property from international occupiers too. New developments such as Le Méridien have catered directly toward these markets.
With a population density of 18,700 per square kilometre and all its land developed, Monaco is taking innovative approaches to new urban development. The city state has, in common with many modern land-constrained cities, been reclaiming land from the sea since the late 19th century. The Fontvieille district, developed in the 1970s, extended Monaco’s land by 20%.
In July 2015 Monaco’s latest expansion project was agreed. The six-hectare Le Portier reclamation project will include six hectares of mainly residential space, an extension of Grimaldi Forum, a marina, park and seafront promenade. S.A.M. Anse du Portier/ Bouygues Travaux Publics Group have been awarded the contract and work is scheduled to begin in 2016, to complete by 2025.
Elsewhere, more new development is in the pipeline, much of it to be concentrated in the Larvotto district. This will include the 73-unit Les Giroflées tower, targeted squarely at the global super rich, and the 150-unit Testimonio II in Saint Roman, for Monégasque nationals.
While delivery is anticipated to increase (after 2017), we anticipate that it will still add no more than an average of 0.4% a year to stock and will be inadequate to subdue the market by saturating latent demand.
In response to strong demand for office space, meanwhile, many residential schemes will include an office component. Le Stella, a 99 residential unit scheme, also incorporates four floors of office space.
Sporting D’Hiver in Golden Square is a Richard Rogers designed, mixed-use redevelopment that will deliver six residential pavilions (for the rental market), along with commercial and cultural space. Prominent sites are being repurposed to make them fit for modern occupier demands.
As an international centre of business, Monaco attracts a range of occupiers in the professional services sector as well as relocating family firms. Office space is in short supply and high demand, pushing rents to new heights. Grade A office rents stand at €1,140 per metre per annum, well above neighbouring Nice, for example, and not far off prime rents in London’s West End.
The majority of Monaco’s office space is concentrated in Fontvieille, while financial services firms and private banks are dotted around Monte Carlo, La Rousse and La Condamine. New delivery has been limited in recent years. The small amount of new supply set to come forward as part of mixed-use schemes will do little to ease the shortage in the near term.
FIGURE 8Grade A office rent comparison
Source: Savills World Research