Monaco: A Market Frozen by Its Own Success

Land scarcity remains the cornerstone of Monaco’s property market. It preserves value, ensures stability, and gives the Principality its singularity. Yet that same scarcity, by preventing any natural adjustment, may now be weighing on market vitality.

While most major European cities have seen a moderate price correction due to rising interest rates, Monaco appears to stand apart. According to IMSEE, 466 residential transactions were recorded in 2024, including 101 new-build salesand 365 resales. Resales fell by roughly 6% compared to 2023, a year that had already declined by 10.1% versus 2022.

The market remains stable in valuation but operates at a slower pace: price resilience now comes with reduced liquidity.


Stability Concealing Structural Obsolescence

A significant share of Monaco’s housing stock dates to the 1970s–1990s. Well located but technically outdated, many buildings show their age: poor insulation, rigid layouts, limited energy performance.

Added to this is a growing functional mismatch - a lack of storage, no walk-in closets, small rooms, and inefficient circulation. Such configurations increasingly fall short of the expectations of a discerning international clientele accustomed to modern standards of comfort and design.

The absence of any price adjustment prevents a natural revaluation of this segment. Older apartments often remain priced beyond their real quality, slowing transactions and discouraging renovation.


Signals from the Rental Market

In this context, it may be the rental segment that first reflects change. Savills reports that rents in Monaco rose by 6% in 2024, reaching €114.50 per sqm per month - a genuine market increase, independent of contractual indexation.

Even more striking, three-bedroom apartments saw rental growth of 56%, to €142 per sqm per month. While in most major cities larger units tend to rent for less per square metre, Monaco appears to show the opposite trend: size itself has become a new form of scarcity.

This could be explained by the arrival of high-net-worth individuals from European countries where non-dom regimes are being phased out. These new residents are seeking spacious, long-term homes - places to settle, not just to invest.


A Market in Transition?

If sustained, this shift could mark a transition toward a market increasingly driven by rental income rather than pure capital appreciation.

- Investors may rediscover the appeal of renovated assets yielding 2.5–3% net.
- Older properties may regain relevance through their income potential rather than speculative upside.
- Developers may benefit from rethinking their products around larger, flexible floorplans.
- Financial institutions might adapt their approach, focusing more on cash-flow-based lending than on asset value alone.

In this scenario, combining adjacent apartments to create larger units could prove a rational strategy, should demand continue to favour family-sized layouts and exceptional properties.


Rethinking Scarcity

Whether this evolution endures or merely reflects temporary market pressure remains to be seen. Land scarcity will continue to define Monaco’s identity, but typological scarcity - the shortage of large, contemporary living spaces - could increasingly determine performance.

If rents keep rising while prices remain stable, yield may once again become a genuine driver of value. That would mark a subtle but significant shift: a market that, without abandoning its role as a safe haven, learns once more to generate income.