Long-term resident and co-founder of Savills Monaco, Irene Luke shares her views on the property market of the Principality of Monaco and the key differences she has seen since she relocated more than thirty years ago.
Born in Glasgow, Scotland, Irene Luke arrived in the Principality of Monaco more than three decades ago. She arrived as a real estate lawyer, however, she transformed her life to become one of the powerhouses of property search in the Principality.
After moving to the East Coast of Scotland as a child, Irene finished her studies in England, specializing ultimately in commercial property law.
In London, she worked for a law firm with entertainment law expertise and gained invaluable experience with amazing artists and brands including the Beatles, Sir Elton John, and companies such as Apple.
“I did a lot of litigation work for Sir Elton John,” – remembers Irene. – “He was the first person in the UK to win a million pounds libel action against the Sun newspaper. It was great fun to be part of the teams working on these high profile cases, altough, stressful at times.”
Later, Irene qualified as a commercial property lawyer: the 1980s was a good time to be in the field of real estate in London. She stayed in London until the early 1990s when the UK property market faltered and she left for Monaco. She admits that the move was led by personal rather than professional reasons as by then she had met her future husband who was already well-established in Monaco.
“He was living in Monaco and I was based in London. Though we met all over the place for a time, we knew that in order to make the relationship work, one of us had to move. Long distance relationships are exciting but at some point, I guess you have to get serious!”
Since Irene’s career was less advanced at that time, she decided to follow her to-be husband to Monaco in 1990.
The couple got married in 1991 and started to build their family.
Irene started work in Monaco with a London-based law firm with (at that time) a Monaco offshoot. She remained there for twenty years before moving away from law and established a property agency for the global Savills network, along with her business partner, Jean-Claude Caputo.
“At the law firm Lawrence Graham Monaco, I did estate planning, private international law, and residential property, basically nothing to do with what I had done in England,” – smiles Irene. – “Eventually, I knew that I wanted to do something else than law.”
Why real estate?
“Because I knew about it. I had worked as a lawyer with a lot of real estate agencies and was asked to work part-time for one. I loved it and decided to try the broker side of the business rather than doing the backroom legal work. I realised that I was better at meeting people and that is also what I enjoyed more. I needed to get out from behind a desk and that’s pretty much how Savills Monaco began.”
By that time, Irene had gathered two decades of local experience as a real estate lawyer. She had an incomparable knowledge of all the sides of a real estate transaction, whether commercial or residential. She noticed that clients trusted that.
Irene left her part-time agency position, taking a colleague with her and initially tried to set up her own agency.
Was it easy to obtain the authorisations?
“In 2010, when we started to look into obtaining a licence, it was extremely difficult. We were also considering purchasing a licence, but the problem was that most of the licences available were related to shell companies, without any business or value.”
How did you make the breakthrough and realise eventually your goals?
“As you know, Monaco is small and connection is everything,” – starts Irene. – “Luckily, I came across Jean-Claude Caputo who held a real estate licence (Monaco Real Estates) and had a very good relationship with Savills UK.”
Irene, who knew about Savills from the UK, immediately realised the potential to utilise this well-known brand name.
She and Jean-Claude agreed to work and activate his licence together. Moving away from the traditional franchise model, the team also convinced Savills to become an actual shareholder in their company.
Being the second smallest country in the world, the Principality of Monaco still has more than 150 real estate agencies within a two square metre territory.
How can you co-exist and even differentiate yourself from the other agencies? Is the market big enough?
“I am not sure that there is one clear answer to this question. In our case, we have a strong household brand Savills, yet, we still need to adapt to the local market and its specialities.”
It probably helps a lot to have a household name?
“At the beginning, almost a bit naively, I thought that all the established and wealthy British who wished to relocate to Monaco would look for a real estate partner with strong roots in the UK. However, I quickly realised that this was not always the case. It was a challenge, as the marketplace is crowded and we wanted to make an impact whilst remaining true to all the qualities for which Savills is known.”
Where do your strongest values lie?
“I can summarise it in one word: integrity. We also have a strong belief in research and investing in market analysis through our research department based in London; what they do is one of our greatest assets.
We take quite an analytical view when advising a buyer; where to invest, how the area may change in terms of landscape, prices and constructions, how the area has fared in the past and what we predict it will do. Basically trying to take into account every element that one needs to make a decision.”
As the world learns to live with Covid-19, business continues apace in Monaco. The Principality has managed the pandemic well, and at the time of writing, has begun to ease its health measures in concert with falling infection rates. This has contributed to a bumper year for the property market within the Principality, with the perceived stability boosting desirability and pushing prices to all-time highs.
For the first time the average property price in the Principality has crossed the €50,000 per square metre threshold, firmly cementing Monaco as the most expensive location to purchase residential property globally. This is a 9% increase from 2020 and a 74% increase over the decade.
The increase in prices across Monaco was buoyed by a 7% increase in transactions over 2021, with 440 properties sold. However, the number of transactions across the Principality remains 30% below 2019 volumes.
Why would you recommend Monaco as a real estate market?
“When you build up your real estate portfolio, Monaco stands out extremely well in terms of other large cities. In our market here in Monaco, we have had dips for sure and some levelling out, for example, during the first year of Covid lockdowns. But, generally, the Principality of Monaco offers good capital growth at best and great stability at worst in terms of real estate investment. The property market in the Monaco market never really plummets.”
Do people take loans?
“Yes, most of the time, typically up to 60% of market value. Money has (in recent times at least) been cheap to borrow and people prefer liquidity,” – continues Irene. – “Buying a property here involves a significant amount of investment, so most clients borrow as it just makes sense to do so.”
Do you know any other countries where the market is similar?
“Central London is very comparable to Monaco in many ways, especially in terms of rental yields. However, one of the key benefits of Monaco is that space is limited so there will only ever be a finite number of properties for sale in the marketplace. Nowhere else is quite like that. In Dubai, for instance, often compared with Monaco, they are continuously building. Monaco of course has important new builds going on at present but when you look at how many units are being built, the market is not going to be “flooded” by any means.”
What is the typical property size people are looking for?
“Our typical clients at Savills are looking for apartments with three bedrooms. That sounds quite big but in reality, there are a lot of families moving to Monaco.”
So would you say that the market is more for families?
“Difficult to generalize but I would say we are seeing either families or young single entrepreneurs around their 30s coming here. Young entrepreneurs typically start to rent. Later on, they look to buy as the entrepreneur gets older and starts a family.”
In the year 2021, while the majority (57%) of the transaction volumes were comprised of studios and one-bedroom apartments, properties with four or more bedrooms saw a 42% increase in transactions from 2020 to 2021. This increase reflects the global trend in buyers searching for more space, even in space-constrained locations like Monaco.
This trend can also be seen when examining residential transactions by price point across Monaco. Transactions for properties between €5m and €10m increased by 38% from 2020, while transactions below the €5m price point only grew by 2% year on year.
Properties in the €5m-€10m range tend to be larger sized. At the top of the market, transactions for properties priced above €10m fell by 14% from 2020; however, this fall is directly related to a lack of supply rather than a lack of demand.
Half of the districts across Monaco saw transaction volumes increase year on year.
Promisingly, each of the districts with positive transaction growth saw the number of transactions increase from 2020 volumes between 13% to 71%.
La Condamine saw the highest increase in transactions, up by 71% year on year, though total sales for the district accounted for only 12% of the total volumes for Monaco.
Monte Carlo and La Rousse saw transactions fall by 1% and 4%, respectively, though combined, these two districts account for 56% of the total transactions in Monaco for the year.
Such a high percentage of the total transactions is unsurprising given these two districts account for 43% of the total housing stock in the Principality.
Monte Carlo also saw the highest average price per square metre of all the districts at nearly €60,000 per square metre, closely followed by Larvotto and Fontvieille.
The least expensive district is the Jardin Exotique, where the average price is closer to €35,400 per square metre.
Based on your experience, what is the biggest challenge for new residents?
“Finding the right property is a massive challenge. For instance, in big cities such as London, you have a much wider choice of apartments: there is simply more to choose from. In Monaco, the choice is more limited, older stock is not always renovated and certain buildings do look “tired”. This is improving but we still have a way to go!”
Do people find this disappointing?
“Compromises have to be made! Monaco is safe, it offers great places to go to, excellent fine dining scenes, events, sports, and a complete and exceptional lifestyle in a place which is located right in the heart of Europe. One of the things we do is to spend time managing people’s expectations. Monaco is not for everybody; on the other hand, it is actually a very good place to live.”
Is it easy for people to change and shift their mindset about Monaco?
“People are stubborn so not always! Some people simply do not change. Monaco is not for everybody but then there isn’t room for everyone, so that is fine!
Monaco is small and there is no way it can provide everything that larger cities can and people need to be aware of that.”
In your experience, do people look for newly built or older apartments?
“Most of our inquiries are now for new builds. The new builds are fantastic and we do not have enough of them,” – muses Irene.
How about the new Mareterra?
“It is an amazing development – a lot of our clients would love to have a two-bedroom apartment in Mareterra. But there are just not any… Developers are making larger apartments with a correspondingly large price tag.”
Monaco is land-constrained, and this results in relatively few new developments coming online each year. Historically new builds have made up only a small fraction of the total sales, averaging 5% of the total since 2006.
The high point for new build sales occurred in 2018, where they accounted for 14% of the total sales. In 2021, new build sales accounted for 5% of total sales in the Principality, meeting the historic average.
There are five large projects in the pipeline: Mareterra, L’Exotique, Villa Palazzino, Bay House Monaco, and the second stage development of Villa Portofino. The most ambitious of these developments, Mareterra, will add 110 apartments, 10 villas, a new port, a public car park, and a public park, along with other infrastructure, all built on land reclaimed from the sea.
Each of these projects will bring much-needed stock to the Principality – a total of 260 apartments and 19 villas – but will do little to keep up with the consistently high demand across Monaco.
Do you think the new builds are overshadowing the re-sale market?
“I would say so. People definitely are looking for new builds; not just the actual apartment itself but a new building with good services and common parts. Properties from the 1970s are often a bit tired and understandably, people shift their attention to the new ones.”
The Principality of Monaco is a prime target for many property investors because the price of renovation is relatively low compared to the purchasing price. Many property developers buy properties, renovate them and put them back on the market at some hugely inflated figure.
“Property developers are often criticised a lot for this but, on the other hand, we are grateful for them because at least they produce properties that have (shall we say) sex appeal! My clients are happy to pay more if the property is in the right condition.”
Are there a lot of people who are speculating?
“Everyone wants to make a return on what they are buying. Smart people invest in Monaco and put a lot of energy and work into real estate that will increase in value.”
Irene explains that quite often residents have secondary homes outside Monaco and combine it with an apartment they own in Monaco: the combination provides an excellent lifestyle choice.
“Many residents own a secondary home outside Monaco because their space in Monaco is limited. We also help a lot of residents therefore, to buy secondary homes in the South of France.”
Consistent with the sales market, Monaco is the most expensive location in which to rent residential property, ahead of New York City, Hong Kong, and Tokyo. Following the trend seen globally of people returning to urban locations, rental prices in Monaco have rebounded from their 2020 lows to an average price of €91.08 per square metre per month.
Rental values across the Savills Prime Residential Index: World Cities increased by 3.0% in the six months to December 2021, and over 85% of cities saw positive rental growth over the period. Promisingly for the Principality, new build rental properties like Palais de la Plage in the Larvotto district continue to let up quickly as new build properties and their associated amenities remain appealing to tenants who are still looking to rent property.
How do you see it, do people shop around when it comes to property agents?
“Almost always. People feel that they should not put all their eggs in one basket. They also feel that they might get better and maybe off-market offers from others.”
Does Monaco have a lot of off-market offers?
“Usually off-market properties are those that are larger or penthouses we have a good selection at the higher-end of the market. I can truly say that clients trust us with off-market properties as well.”
What is the key to finding a good property in Monaco?
“I would recommend taking your time and making sure that your agent really understands what you like and are looking for.
It is expensive to buy, so give it enough time and test your agent as to whether they have really done their homework.
For instance, at Savills, we do a lot of property analysis for prospective clients, highlighting future constructions, what has really been sold in the area, potential rental value, etc.”
Do you think the war between Russia and Ukraine will have an influence on this year’s real estate market in Monaco?
“The beginning of 2022 started very well. However, I predict that this year may be a little quieter due to the ongoing war.
There is absolutely interest but I see many people waiting it out, hoping that prices will go down, which I do not really imagine will happen in Monaco. People will take time to realise this; Monaco will remain a safe haven and the market will be re-stimulated.”
Do real estate agencies work together? Do they collaborate?
“Some do! Internally though, some brokers work very individually and keep clients and knowledge to themselves. This was a difficult realisation for me as, when a lawyer, I worked constantly with a team. We have a very different mentality at Savills and pool knowledge and ideas.”
What do you do differently?
“We follow up always! Also, we tend to put everything in writing. So if we say something or agree on something verbally, we always put that down in writing as well which helps us to be very transparent with our clients.
We are also very discreet and anonymous. I think we have a good set of ethics which is our strength. We view ourselves as property advisers, with something of a global vision.”
What was your very first experience of Monaco?
“I visited Monaco first when I was only 18 years old. We were on a holiday as young teenagers, staying in Antibes; Monaco was somewhat outside our budget. We visited Monaco of course but back then, it struck me as a place filled with older people.
It was just so sleepy and everyone felt absolutely ancient; about my age now I guess,” – laughs Irene. – “I think Monaco now is more vibrant and dynamic than 30 years ago. It feels that there is more to do.”
What is your favourite place in Monaco?
“I love good food therefore, many of my favourite places are related to food. I love Les Perles de Monte-Carlo and their locally produced oysters. It is such an unusual place and I love what it has to offer. I also like Le Petit Bar on the Rock which is an atypical place for Monaco.
I also like the Place d’Armes market which has a great neighbourhood feel.”
And when it is not about food?
“Everything that the ballet does is spectacular. World class….
I am not religious but the small church on the Rock, the Chapel of Mercy, is absolutely amazing.
And looking with my real estate eyes, I love the new Larvotto beach as well. The whole area will be stupendous when Mareterra completes. It will feel like a completely different neighbourhood with real architectural coherence.”
Do you miss Scotland?
“Definitely not. I miss London, but I go there a lot.”
What would you say were your happiest moments here in the last 30 years?
“Difficult to pick just one when I have three children! The day each of my children was born.”
Irene is a mother of three girls. Two of them are semi-gone, but one of them, the middle one lives in Monaco still.
Would you recommend the real estate brokerage world for your children?
“I think it is an amazing job if you like people and if you like to communicate with others. I find it really exciting because you can meet very interesting people.
In the market space we work in and navigate through, personal relationships are very important. The people I deal with every day are endlessly fascinating. Sometimes difficult and demanding but definitely interesting.”
If money were no issue, where would you purchase a property?
“Probably one at Grosvenor Square in London because it is just so elegant and I love the fact that London is flat and you can easily walk around. I also love the proximity to real parks that resemble proper countryside.”
How could Monaco improve its real estate landscape?
“I would love to see a branded residence here. Also curbing the number of agencies which exist and introducing legislation on how one takes in a property for sale. Creating a creative hub for designers and innovators where rentals are attractive.”
“I would love to see branded residences in Monaco, but it is really difficult for developers to purchase a whole building. Savills advises on branded developments all around the world, but it is very challenging here in Monaco for a brand to come in and create something. I would love to be involved in this but due to local constraints, the chances are very slim.”
Do you see a challenge when it comes to commercial leases?
“Commercial property is not my main focus, as Savills Monaco is more residential-oriented. But as I see it, there are difficulties for businesses establishing their feet in Monaco. We often have a hard time explaining to established foreign businesses why it is so expensive to take on commercial premises here. In Monaco’s Golden Square you will be asked to pay millions to take on commercial space. Typically, only big brands can afford to test the Monaco market.”
What could be a good solution in your view?
“It would be good to see a creative hub for designers and innovators to work in and exchange ideas as I said. I would love also to see a retail space with subsidized rents where designers could show their wares; just because the retail scene in Monaco is not (in my view) vibrant. There are the usual huge brands at both ends of the market but nothing exciting in between. But again, space is so limited so maybe it is just not possible to have everything here.”
What do you mean by a creative hub?
“Probably a dream but what I think would be fantastic is to have in Monaco a creative hub; a building dedicated for creatives to evolve ideas – people with inventive and creative minds. They could pay a subsidised rent, but it would offer a very special environment. I am confident that it would create tremendous value for Monaco. Such a hub would allow Monaco to be renowned for ideas and not just for luxury, tax incentives, and F1.”
For Irene, Monaco is small but punches above its weight in terms of its appeal: it may not be a city of millions, but it has a lot to offer and she is happy to be based here as part of the global Savills network, offering top quality property advice to a discerning clientele.