Monaco’s annual yacht show attracted over ninety of the world’s finest yachts and five hundred of the world’s best yachting companies.

The show has grown in popularity over the fifteen years since it began, and this year attracted over twenty thousand visitors to the Principality.

The luxury yachting market has tripled in the last eight years, and helped along by orders from Russia’s ‘nouveau riche’, the industry has seen an increase in orders of over a quarter in the last year alone.

But while luxury and Monaco are often associated, poor sales and a possible drop in property prices haven’t been seen in the Prinicpality’s real estate sector for over a decade.

Monaco Real Estate

In contrast to the highly successful Yacht Show, property sales in Monaco have been unusually slow in 2005. Although only a square mile in size there are over a hundred estate agencies battling for buyers to choose their services, and at times it seems that every third or fourth retail unit has been commandeered by a property company in Monte Carlo, the best known and most sought after area of Monaco.

According to Monte Carlo property specialist Henri Boulanger some estate agents are being squeezed, and viewed the yacht show as the last opportunity to turn a dismal year into a good one.

The yacht show attracts a wealthy clientele in considerable numbers, and the type of person who might be buying a luxury yacht might well be thinking about buying a property in Monaco as well.

While it wouldn’t have been etiquette to actively pursue buyers, many estate agents in Monaco were desperately hoping to see their doors open and for one or two potential buyers to call into their offices.

With good two bedroom apartments starting at over a million Euros, and penthouses with Mediterranean views often over five million and some of them over ten million, it can take just one sale to turn a bad year into a good one.’

Monaco’s property price inflation has often risen by over ten per cent a year in the last decade, but a combination of events have conspired this year with a possible stagnation in prices for 2005, and potentially even a fall.

The passing earlier this year of the popular Prince Rainier, Europe’s longest reigning monarch, cast a cloud over the area which it is just emerging from, but economic factors have also played a significant role in the downturn of the real estate market.

The strength of the Euro against the American dollar has led many of our potential buyers from the US to delay their viewing visit from this year to next, and earlier this year another source of important buyers from the UK held back until after the election to see what the outcome would be’, explains Henri, adding ‘and now with the uncertainty of the economy after the recent US hurricanes it is quite possible that some US buyers will delay their visit even more, or possibly to cancel buying in Monaco altogether’.

Monaco Grand Prix

No surprise then that while the tourists were in Monaco in increased numbers than last year, the prospect of several dozen potential property buyers descending upon Monaco and staying in her best hotels over a few days was seen as an opportunity not to be missed by the realtors.

But what is surprising perhaps is that the Yacht Show is viewed as a better opportunity than the Monaco Grand Prix for her realtors.

The Grand Prix attracts tens of thousands of people to Monaco every May’, explains Henri, ‘And every April we get a lot of new enquiries for property in Monaco, with the buyers asking to view apartments in Monte Carlo with views of the race circuit during the Monaco Grand Prix weekend. But what they don’t realise is that many of the apartments for sale have been rented out for the weekend, and viewing is impossible.

Even if an apartment hasn’t been rented out for corporate hospitality it would take all day to get from one apartment to another. The Grand Prix is a great tourist event for Monaco, and some of the estate agents go away for a few days. They weren’t doing that during the Yacht Show!’

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Population growth

A recent population surge is fueling a demand for real estate in Sydney. In 2007, NSW saw a population increase of 72,000 people. Of those people, more than 60% moved to Sydney. Sydney is a very desirable place to live, making the population influx unsurprising. It holds the honor of repeatedly being voted the world's best city. Its natural beauty, high quality of life and strong economy continues to attract people from all over the world.

Although Australia is coping with the same economic obstacles as most Western nations, Sydney's new residents will need a place to live, and some will need a place to set up their business. A growing population will aid Sydney in overcoming the constraint that a poor economy would otherwise place on the real estate market.

Slowdown in retail

Retail, a large sector of the commercial real estate market, has felt the effects of soaring petrol prices, a worldwide credit crunch and the overall weak global economy. The early part of 2008 saw a decline in retail turnover. It seems that people just aren't spending as much on consumer goods these days.

For retailers looking to expand or redevelop their operations, the bigger obstacle is rising interest rates, which have gone up three times in the past year. With loans being financially unfeasible for many of Australia's retailers, they plan to grow through expanding their range of products and/or services. The spending slump coupled with surging lending rates indicates that most retailers won't be buying or leasing new commercial property in the near future.

Economic outlook

Despite a slowed economy and increased costs of living, Australia has a strong economic core. As mentioned above, Sydney is a part of Australia's robust economy. In recent years, Australia was voted the most resilient economy in the world. It was also listed among the world's top ten most appealing investment sites. Sydney in particular is notable as being home to 65% of Australia's Asia Pacific regional headquarters. When ranked according to revenue, Sydney can lay claim to 45% of Australia's largest companies.

Unemployment rates are low, hovering at around 4%. Tellingly, the majority of retailers do not indicate that a reduction in staff will be necessary to combat their current financial challenges. In addition, commercial property landlords are seeing few vacancies in their buildings. As long as vacancy rates remain tight, landlords are in a position to charge a profitable rent.

Investment opportunities

Australia's real estate market, like those of many other countries, has taken a recent hit. The United States' struggling economy has had an effect on Australia, too. Also, the global credit crunch has forced some of Sydney's companies and investors to put their commercial property up on the auction blocks. For these owners, simply getting out from under the property and avoiding foreclosure is the goal.

While this state of events is troubling for those looking to sell commercial property, it does offer a unique opportunity for the right investor. Some of Sydney's most sought-after pieces of commercial property are on the market for the first time in decades. Banks make selling prestigious properties a priority because they know these properties present the best chance of recouping their debt. Investors in a position to wait out the economic downturn can purchase high-end properties at attractive prices.

Conclusion

Businesses are tightening their belts to weather the storm, but Australia's economy rests on a sturdy foundation. Short term, Sydney's commercial real estate market is on a downswing. Long-term, however, the prospects are anything but bleak. It seems the entire world has a love affair with Sydney, and the recent population increase is a harbinger of much more growth to come.