RENTAL INVESTMENT IN MONACO

 

 

For many years, the Principality of Monaco has continued to strengthen its appeal, enhancing its international profile and attracting entrepreneurs, investors, talent and capital.

Its numerous advantages – political stability, controlled public spending, strong economic health, favourable tax regime, security, geographical location and Mediterranean climate, top-tier education and healthcare infrastructure, world-class cultural and sporting events, and a continuously modernised property market offering increasingly luxurious standards – make Monaco a highly sought-after destination for high-net-worth individuals.

These assets undeniably create an environment that is conducive to medium and long term investment. Despite extremely limited supply, demand remains high and constant, all within a stable and secure setting.

Monaco continues to demonstrate resilience, maintaining its status as a true “safe haven” despite persistently high property prices over the past three years (with an average of €51,967/m² in 2024 according to IMSEE, consistently above the symbolic €50,000 mark since 2021).

As a result, the capital required for a purchase is very substantial, prompting many residents to rent instead, or to retain liquidity for other investments. The rental market in Monaco has evolved significantly, with rising demand driven by the steady arrival of new residents. Many choose to rent initially, allowing them to better understand life in the Principality, refine their acquisition criteria, and plan their long-term future with confidence.

 

An ever-present demand (with very low vacancy rates)

 

The result is a saturated residential rental market, where demand far exceeds supply, leading to very low vacancy rates. Monaco therefore offers investors the rare advantage of being shielded from one of the main concerns in property ownership: the risk of vacancy, as long as the property is rented at market price.

Despite the Principality’s ongoing territorial expansion, both vertical through the construction of taller buildings and maritime through major developments such as Fontvieille and Mareterra, the growth in supply still does not keep pace with the rise in the (U)HNWI population, which increased by 7.9% in 2023 according to the Barnes Global Property Handbook.

This imbalance between supply and demand has contributed to a rise in rental yields over the past two years, with increases reaching 0.5% to 1% depending on the neighbourhood and property type.

 

However, rental yield has never been the primary factor highlighted by investors in Monaco’s residential property market. Real estate investment in Monaco is generally considered a long-term project, with a minimum holding period of five years. In this context, capital appreciation — the increase in the value of the asset — is the most decisive element. Property prices have increased by 44% over the past ten years, according to residential market data published by IMSEE, a performance that remains unmatched in Western countries.

 

Another reason why buy-to-let investment in Monaco fits into a long-term strategic vision lies in the Principality’s ongoing urban transformation. Numerous redevelopment and restructuring projects are currently underway or planned. Several districts are being renewed and upgraded to enhance their prestige and value, offering investors a unique opportunity to anticipate significant capital revaluation. In this context, renting out properties while waiting for a potential redevelopment initiative can be a highly relevant strategy. Furthermore, retaining properties over several years may generate substantial capital gains.

 

In this context, real estate investment becomes a powerful tool for consolidating wealth. This approach is often part of a broader estate planning strategy. Indeed, Monaco’s tax system is particularly favourable in terms of inheritance, as there are no inheritance or transfer taxes (taxes payable by heirs) on direct-line successions. For collateral heirs, duties are limited. This applies to properties located in the Principality, regardless of the deceased’s domicile, residency, or nationality.

Such provisions are rare in today’s global landscape.

Another major advantage is that there is no capital gains tax, no property tax, and no residence tax for property owners in Monaco. Only bilateral tax treaties signed with certain countries, such as France, may introduce specific tax obligations. This is particularly relevant for French tax residents, whose Monaco-based assets are subject to France’s real estate wealth tax (IFI). For foreign tax residents, it is important to consult the tax regulations applicable in their country of residence.

There is also no taxation on rental income received in Monaco, unless otherwise provided for in a tax treaty.

 

 

As a result, when it comes to residential real estate, gross rental yields in Monaco are often very close to net rental yields, since there are no local property taxes payable by landlords. The only deductions are typically unrecoverable charges or service fees, landlord insurance, property management fees (if applicable), and loan interest in the case of financed purchases.

Despite this, rental yields in Monaco are not particularly high. On average, annual yields range between 1.6% and 2.5%.

The highest returns are usually seen on smaller units, such as studios or one-bedroom apartments. Conversely, the larger and more luxurious the apartment, the lower the yield tends to be — a trend that contrasts with the French luxury market, where certain properties near Monaco can achieve yields of up to 10% for short-term rentals.

Neighbourhood differences also impact yield performance. Areas such as Les Moneghetti or Jardin Exotique, where the price per square metre is relatively more accessible, tend to offer higher rental returns. On the other hand, prestigious districts like Carré d’Or, Larvotto, or Mareterra are more sought after for primary residences. The entry price in these areas is so high that rental yields are typically lower.

However, in terms of capital appreciation, high-end properties tend to gain value more quickly, making them attractive from a long-term wealth-building perspective.

 

Guide price: €5,100,000 - Gross rental yield 2,3% (observed rent in 2025 of €10,000/month) - Discover the propery

 

 

As for the commercial rental market, it is even more limited in supply than the residential sector. It typically attracts a different investor profile, with investment often made as part of a broader asset diversification strategy.

The commercial rental market is regulated, and as in neighbouring countries, various types of lease agreements exist. One of the most common is the “3/6/9” lease, which grants the commercial tenancy to the occupant. The advantage of this structure is that, given the cost of leasehold rights, the landlord faces minimal risk of non-payment, as early termination would be financially prohibitive for the tenant. Additionally, there is typically no vacancy risk. However, such leases make it difficult to adjust rental values over time.

Other agreements, such as short-term leases or management contracts, allow for more flexibility in lease duration without conferring commercial tenancy rights.

In general, rental yields for commercial premises tend to be higher than for residential properties, typically ranging between 3% and 4%. However, capital appreciation may not increase at the same rate as in the residential market. It is also worth noting that there are significant price differences between commercial properties located in prestigious districts and those in less sought-after areas.

 

Guide Price: €5,830,000 - Gross rental yield expected 3,1% (estimated rent in 2025 of €15,000€/month) - Discover the property

 

 

Regarding office spaces, rental yields also tend to be higher than in the residential sector, reaching up to 3.5%. This applies both to mixed-use apartments converted into offices and to properties located in dedicated office buildings, such as the Est-Ouest building in Monte-Carlo.

The main reason is that acquisition prices are generally lower than those of residential apartments, while rental prices remain high. However, as with commercial premises, capital appreciation per square metre tends to be more variable than for residential properties.

For both commercial and office spaces, rental profitability depends on several factors, including location, surface area, the commercial appeal of the district, and the quality of the building.

 

 

Finally, short-term rentals are highly regulated in Monaco and are prohibited in many residential buildings. Very few apartments are available for very short stays — from a few weeks to a few months — as most residential leases are signed for a minimum of one year and are typically renewable on an annual basis.

Moreover, given the high annual rental income, short-term letting is not necessarily more profitable. This is especially true in a market where rental demand outweighs supply, driving prices upward and reducing vacancy.

A notable exception is the rental of apartment terraces during the Monaco Formula 1 Grand Prix, which can generate the equivalent of up to three months' rent in a single transaction, depending on their location along the circuit.

 

 

Investing in rental property in Monaco means securing a rare and highly sought-after asset within a fiscally attractive and economically stable environment. While rental yields may appear modest compared to other international markets, they are offset by strong and consistent demand, significant long-term capital appreciation potential, and virtually zero vacancy. Finding tenants in Monaco is rarely an issue, as the rental market is dynamic, driven by a constant flow of families and professionals seeking quality housing and commercial premises.

To make the most appropriate investment for your situation, it is essential to analyse potential yields based on the different property types available, anticipate market trends and urban development projects, and most importantly, review your personal circumstances with a tax advisor to determine the most suitable inheritance and estate planning tools.

It is important to keep in mind that a real estate investment in Monaco should be considered with a minimum five-year holding horizon. Unlike other countries, this type of investment is generally driven by long-term wealth preservation rather than short-term speculation. It is designed for investors who aim to diversify their portfolio, generate stable income, and transfer assets under favourable tax conditions.

By working with Barnes Valeri Agency, you benefit from the support of experienced consultants, a reliable local network, and a comprehensive rental management service provided by our dedicated team, including a property manager, works coordinator, and accountant.

 

👉 Discover our property management services