Monaco Has To Build Into Mediterranean Sea To House Super-Rich

The principality of Monaco is about the same size as New York’s Central Park and slightly bigger than London’s Regent’s Park. Besides hosting the Monaco Grand Prix it is home to thousands of multi-millionaires, including tennis player Novak Djokovic and F1 driver Lewis Hamilton, who enjoy the fact that Monaco does not levy income tax or capital gains tax. As the Financial Times notes.

Monaco’s enduring popularity for tax exiles also rests on its year-round climate, unrivalled security and its wealthy, multicultural society...


It has an opera house, a philharmonic orchestra and concerts throughout the year. It has good transport links: Nice International Airport is just six minutes away by helicopter.

The problem for Monaco is that more and more millionaires want to live there – even though property is the second most expensive in the world after Hong Kong - and there simply isn’t the space. Furthermore, the average Monegasque home only changes hands once every 37 years.

In another bizarre sign of the financial bubble, is will build 120 new luxury homes by reclaiming 6 hectares (15 acres) from the Mediterranean Sea. According to The Guardian.

Construction has begun on a $2bn (£1.5bn) scheme to reclaim land from the sea around Monaco so that more luxury apartments can be built for the thousands of extra millionaires expected to move to the principality in the next 10 years. Nearly 35 in every 100 Monaco residents are millionaires and more of the global super-rich want to join them. Around 2,700 more are expected to call Monaco home by 2026, according to research by estate agent Knight Frank, taking the total to 16,100 out of a total population of under 38,000.

But the sovereign city-state – which is only slightly bigger than Regent’s Park in London – has run out of space for those seeking the “fiscal advantages” that the tax haven offers. To attract the world’s wealthy, Prince Albert II, the reigning monarch, has approved the “offshore urban extension project”, which will add six hectares (15 acres) to Monaco’s 202 hectares. This will allow the creation of 120 luxury homes selling for more than $100,000 per sq metre – more expensive than One Hyde Park in London and 15 Central Park West in Manhattan.

The new Portier Cove ecological neighbourhood, near Casino de Monte-Carlo, is regarded as vital for the continued growth of the principality; according to state statistics body L’Institut monégasque de la statistique et des études économiques (IMSEE), not one new-build apartment went up for sale last year.

Monaco has been down this route before, when a larger reclamation was shelved due to the 2008 financial crisis and environmental concerns. While another financial crisis could still affect the current project, the environmental opposition has been placated this time.

Previous plans for a larger reclamation scheme were dropped after the financial crisis and environmental concerns. But Bouygues, the construction company behind the project, has promised there will be no detrimental effect on the environment. Important species on the seabed have been moved to a new reserve and the company said 3D-printed artificial coral reefs on the 18 trapezoid reinforced concrete caissons used to create the boundary of the new land would provide an artificial reef for wildlife.

True to form, a “global super prime” estate agent in the principality is expecting prices to continue rising into a new “stratosphere”. The Guardian continues.

Edward de Mallet Morgan, global super prime residential partner at Knight Frank, said huge demand and a severe lack of supply had sent Monaco prices “through the roof”. A cool $1m in Monaco will buy 17 sq m of prime residential property, less than a third of the space it would buy in Paris and just over half of the 30m of space it would command in prime central London.

Only 70 of the Portier Cove apartments – some of which are designed by The Shard architect Renzo Piano – will go on sale (the others being retained by the developer). Mallet Morgan said that by the time the development was finished “who knows what stratosphere Monaco’s prices will have reached”. “Such is the demand for new waterfront homes that price will be little deterrent to buyers – and their tax advisers - who are thinking ahead with wealth preservation in mind for future generations of their families,” he said.

Having crunched the numbers, Knight Frank estimates that 1,220 of Monaco’s 38,000 residents were worth more than $30 million in 2016, a 10% increase on the previous year. Using this definition of ultra-high net worth (UHNW), Monaco has 320 UHNW individuals per 10,000 citizens compared with 2 in every 10,000 citizens in the US. Speaking to the Guardian, Mallet Morgan discussed the tax issue…and how much “ready” cash you’d need to apply for residency.

“In their private lives and business lives, they naturally want to structure themselves so that they are only paying as much tax as they need to. You can’t avoid that Monaco is a tax haven, you can dress it up as a low-tax environment, but it is a tax haven with a lot of tax breaks for families, businesses and importantly inheritance tax.

“Inheritance tax is important for a lot of families who have developed wealth over generations, because here there is no tax at all on passing wealth over to children.” The inheritance tax break applies to assets held in Monaco or overseas.

There is no personal income tax in Monaco. In the UK, income above £150,000 is taxed at 45%. Companies incorporated in Monaco are exempt from taxes if most of their business is based in the principality. In order to apply for Monaco residency, applicants must open a Monaco bank account and deposit at least €500,000 (£440,000).

Security is another attraction, as is the "ease of commute".

Nick Edmiston, the founder and chairman of superyacht builder Edmiston & Co, said a high sense of personal security was a big draw for the super-rich. “You can walk around wearing expensive jewellery and feel safe,” said Edmiston, who has lived in Monaco since 1989. “Many wealthy people are used to always being surrounded by bodyguards but that’s not necessary in Monaco.”

However, Mallet Morgan warned rich prospective buyers that they were not likely to get much space for their money. “You can pay the best part of €500,000-€750,000 for a parking space,” he said, and a €6m two-bed apartment is going to be “quite pokey compared to London”. But a lot of people commute to London or Paris. “It is easy to go anywhere from Nice airport, which is a short helicopter ride away,” he said. “You can easily go and have a meeting with your trustees in Geneva, and then go to the Opera in Vienna that evening.”

We wonder what the reaction of the "established" Monaco residents will be to the "nouveau refugees" if, this time, the project can be finished before the next crisis.



shitshitshit gladitsover Thu, 11/23/2017 - 06:14 Permalink

this tiny little rock is such a ghetto. Whether you be rich or poor it will all end up the same when lights go out.Only an idiot would chose to live there.They others would just get mailboxes and pretend like they are spending 6 months + 1 day a year there not to pay taxes, while living on cap d'ail or wherever, and more importantly try to dodge the french tax authorities who got pretty expert in debunking the fraudsters.And of course no french people is immune to french taxes, even if he's living 100% of his time in this excuse of a country. That was a special deal between france and monaco back in the 60s, when de gaulle found out too many wealthy elites were leaving the sinking boat.Fraudsters of what, that remains the question in the end... 

In reply to by gladitsover

24Richie spag Thu, 11/23/2017 - 12:37 Permalink

Monaco is tiny - 0.78 sq. mi.  The San Francisco airport is 46.86 sq mi.  There is helicopter service from the Nice Côte d’Azur International Airport to Monaco.  One thing which amazed me abot Monaco was how many of the yachts in the harbor had helicopters.

In reply to by spag

24Richie spag Thu, 11/23/2017 - 12:39 Permalink

Monaco is tiny - 0.78 sq. mi.  The San Francisco airport is 46.86 sq mi.  There is helicopter service from the Nice Côte d’Azur International Airport to Monaco.  One thing which amazed me abot Monaco was how many of the yachts in the harbor had helicopters.

In reply to by spag

just the tip Thu, 11/23/2017 - 03:00 Permalink

why not re-claim some land from france?  they could go east or west.  they wouldn't have to go up in the hills where francie took john robie for a ride.

junction Thu, 11/23/2017 - 03:02 Permalink

The question is, what happens when Monaco is forced to change its tax haven status.  Then, the apartment values will crash and the rich will move their big yachts to docks elsewhere, such as in Ft. Lauderdale. 

Singelguy Thu, 11/23/2017 - 06:25 Permalink

If there are no income taxes, how does the government function? Either the property taxes must be high or sales taxes are high. Maybe a combination of the two.

Moe Howard Singelguy Thu, 11/23/2017 - 07:11 Permalink

I wondered too. So here it is from the country's webpage on taxes: suspect the real money comes from these two:The main principal of Monaco's fiscal system is the total absence of direct taxation. There are two exceptions to this principal :    Companies earning more than 25% of their turnover outside of the Principality and companies whose activities consist of earning revenus from patents and literary or artistic property rights, are subject to a tax of 33.33 % on profits.    French nationals who are unable to prove that they resided in the Principality for 5 years before October 31, 1962.andAssets located in Monaco are subject to the following inheritance tax rates :    in direct line of descendance : 0%    between brothers and sisters : 8%    between uncles and nephews : 10%    between relatives : 13%    between non-relatives : 16% Hope this helps.

In reply to by Singelguy

effendi Thu, 11/23/2017 - 07:15 Permalink

So every time Monaco or any other waterfront city expands into the water the people who used to have front row positions on the water and enjoy the views and sea breezes end up seeing the back end of another high rise. I worked on a similar waterfront development and the owners of the existing waterview apartments were doing many things to try and stop the development; when that failed they just did whatever they could to fuck with the development as payback (phone in bomb threats, put in endless complaints about any work outside the permitted hours, even saw one couple with a meter to record noises after the construction curfew hour). Rich people with deep pockets can really mess things up for others.

Endgame Napoleon effendi Thu, 11/23/2017 - 12:19 Permalink

Ugh, that is awful. It sounds like the cutthroat ways in lower quarters, from which rich people often hold themselves high above. But they are probably mad about paying [all of that money] for an investment that was supposed to have X features, like a view of the sea. For some of them, it might represent a large portion of their riches, not to excuse it.

In reply to by effendi

Last of the Mi… Thu, 11/23/2017 - 07:15 Permalink

Funny things happen when you relieve a country of it's 40% entitlement tax burden and it's wealth redistribution medical laws. We're taxed to death by liberal politicians who will run any scam anywhere the camera is rolling to make sure YOU get your piece of the entitlement pie. (pie, here has multiple meanings, by the way)

Snaffew Thu, 11/23/2017 - 08:49 Permalink

the proposed 6 hectare site will also include a very large discharge waste pipe which is expected to feed algal blooms in this Mediterranenan Bay thus contributing to more "life" in the sea.

Dontblamethegoat Thu, 11/23/2017 - 09:49 Permalink

The Prince is missing the easy money bet: create a few more Monacos eslewhere ... hell, maybe even sell Monoco franchises ... Or buy Greek islands in the Agean, and rebrand them into Monaco II, III, whatever.