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.
With almost 35 in every 100 Monaco residents being millionaires, it is not surprising that the area continues to attract the rich and famous; around 2,700 more super-rich are expected to call Monaco home by 2026, but the sovereign city-state is running out of space for them.
To continue attracting the world’s wealthy, the reigning monarch Prince Albert II has approved the “offshore urban extension project”. The scheme will add six hectares (15 acres) to Monaco’s 202 hectares and will allow the creation of 120 luxury homes selling for more than $100,000 per square metre.
The new Portier Cove ecological neighbourhood, near Casino de Monte-Carlo, is regarded as vital for the continued growth of the principality, with not one new-build apartment going up for sale last year according to Monegasque statistics body L’Institut monégasque de la statistique et des études économiques (IMSEE).
Edward de Mallet Morgan, prime residential partner at Knight Frank, said huge demand and a severe lack of supply had sent Monaco prices “through the roof”. One-million dollars 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 net you in prime central London.
Commenting on the reasons clients wanted to buy in Monaco, Mallet Morgan explained, “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).
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.”