Market trend and outlook for 2018 - Average value of transactions in Monaco real estate market [2000 – 2017]
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Looking back at the year 2017, the average value of transactions in the real estate market of Monaco decreased from 6% in comparison with the year 2016. This decrease is the consequence of the rise of the nominal interest rates in the US and the reduction of the quantitative easing program in Europe, which were both followed by the rise of government bond yields. Investors have thus to support higher interest rates on their investments.
This being said, there have never been two consecutive years of decrease in the average value of transactions in the real estate market of Monaco. All the previous crisis (see graphic above), no matter the importance of the impact on the average value of transactions during the first year, were all followed by a quick recovery with investors taking advantage of the opportunities created by the prices decrease. The average value of transactions has thus continuously increased since 2000 and there are currently no reasons that could change this long term trend.
Looking into more details at the year 2017 with the table above, we observe that the price per m² of large apartments have been in fact the main segment impacted by the interest rate hike with a decrease of respectively 14,6% and 14,0% of the price per m² of 4 rooms and 5+ rooms apartments. On the other hand, prices of smaller apartments have increased with respectively +10,7%, +10,5% and +2,2% for the 3 rooms, 2 rooms and studio apartments in Monaco. The reason behind is that smaller apartments benefit from a larger market, with more investors able to afford them and offer on average a higher profitability than larger apartments when rented.
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