Research article

Monaco at a Glance

Monaco's low taxes and appealing living environment have made it a centre of global wealth.

Monaco is the second smallest independent state in the world, and home to the world’s highest concentration of ultra wealthy individuals. A global hotspot with a distinctly Mediterranean character, Monaco offers its residents a cosmopolitan city environment in a low tax, business friendly jurisdiction. A busy annual calendar of high profile events ranging from the Monaco Grand Prix to the Tennis Masters keeps the global gaze firmly on the tiny Principality, and ensures it punches well above its weight on the global stage

Figure 1

FIGURE 1Monaco fact file

Source: Savills World Research


Monaco enjoys a buoyant and diversified local economy. GDP surpassed pre-crisis levels as early as 2012, and the economy has performed well since, driven by wage growth and expansion in the economy generally – notably real estate.

Finance remains the city-state’s major industry, accounting for 16.7% of GDP. Monaco ranks 6th in the Y/Zen European Global Financial Centres Index, having leapfrogged Vienna since last year’s poll. Other important sectors include sciences (including biometrics), tourism and public services and administration.

Monaco is an important centre of employment in the region, and a net importer of labour, with more than 50,000 jobs to its 36,950 inhabitants. Employment grew by 3.8% in 2014. Unsurprisingly, the unemployment rate is close to zero.

The Principality does not levy any income tax, wealth tax or capital gains tax. Instead, it uses social insurance, payable by both employers and employees, and VAT payable on goods and services, to raise income. Corporations are exempt from tax, except where more than 25% of turnover is generated outside Monaco, in which case a rate of 33.33% applies.

Centre of global wealth

Monaco’s low taxes and appealing living environment have made it a longstanding centre for the global superrich. One reason it bounced back so rapidly from the global financial crisis was due to a weight of international capital seeking safe-haven investment in the Principality’s real estate.

The number of global UHNWI individuals (those with assets of at least US$30m) exceeded 211,000 in 2014, with a combined wealth of $29.7 billion. Their numbers are forecast to pass 250,000 by 2019, with a combined wealth of $40bn, according to Wealth X. Asia, Africa and the Middle East are set to see the fastest growth in their wealthy populations.

This is important for Monaco as new wealth created in emerging economies seeks safe havens in the key world cities and centres of Europe and North America.

We have observed that real estate investment among the world’s superrich – particularly among emerging wealth – is overwhelmingly an urban phenomenon. Just under half of UHNWI investment has flowed into the major cities of the world. An important urban centre in its own right, Monaco benefited from this flow of capital the years immediately following the global financial crisis.

Figure 2

FIGURE 2Super commuters: the top city pairs where UHNWI hold homes

Source: Savills World Research, Wealth X

For the global super rich, Monaco operates as part of a network of city property holdings. Figure 2 above shows the top city pairs where UHNWI hold homes and divide the majority of their time. While London is at the nexus of these city hubs, it is one of a dozen globally important locations. Monaco, is one of these important centres, in league with major world centres for this group.

For homeowners the London-Monaco link is especially strong, the major world city complementing the low-tax Principality. New York and Moscow are also frequently paired with Monaco, in smaller volume. It is no surprise that the neighbouring Nice airport is one of the most important bases for private jet traffic.

Figure 3

FIGURE 3Ultra-prime prices: per square foot / metre

Source: Savills World Research

Monaco’s status as a must-have global address has pushed prices to global highs (Figure 3). The price of ultra-prime property in Monaco stands at €90,900 psm ($9,000 psft). While prices were static in 2014, a weak euro has seen it drop down the global league table and is now second to Hong Kong in US dollar terms, purely on currency movements. Monaco looks increasingly affordable to US dollar, British pound and Swiss Franc buyers (see The New Build Market).

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