The Top Reasons Why Monaco Based Real Estate Investors Invest in the UAE

If you are an investor from Monaco considering diversifying your portfolio, then the vibrant real estate market of the United Arab Emirates (UAE) could be one of the prime routes you may have already considered exploring. An influx of foreign investors, stable economic growth, and robust housing needs make it not just relevant but also lucrative. It's always assumed that Monaco investors are business savvy, but why exactly does investing in UAE real estate market make so much sense for a Monaco-based investor? We, a Monaco-based consultancy company have the answers following our partnership with Aldar Properties, Abu Dhabi's largest Real Estate Developer.

A real portfolio diversification 

As real estate investment gurus you are familiar with, promoting the concept of portfolio diversification isn't a revelation. Oftentimes, advice navigates you to focus on domestic markets, a familiar territory where your expertise shines. However, expanding your investment horizons by welcoming international opportunities is key to enriching and diversifying your portfolio. Speaking directly to you, the savvy investors nestled within the sovereign city-state Monaco, let's envisage the vista of the real estate market in the United Arab Emirates (UAE). 

Albeit there are intriguing similarities between these two global heavyweights, the differences between them are remarkable enough to reshape the landscape of your investment portfolio. Monaco, with its glowing reputation as a fortress for investment security, reported only a modest 1% growth in its real estate market in 2022. Not to mention the average returns on investments (ROI) for rental properties hovered around the 2% threshold. This is due to Monaco being already mature and steady, the UAE market still shows dynamism and prospect for development.

On the flip side, the dynamics within the UAE's real estate sector depict a rather riveting growth story. The statistics fluctuate across regions, but it's widely accepted that this vibrant country is witnessing a property boom. Guided properly, the perceived risks associated with UAE investment can be deftly sidestepped, transforming them into promising ventures.

Luxury tourism

There's an appealing similarity in both economies - their strong emphasis on luxury, from top-end properties to high-end amenities and quality services. Both countries are known to provide a luxurious lifestyle, making them especially appealing to high-net-worth individuals. This isn't just about comfort and personal enjoyment, but also about ensuring the value of an investment.  When you invest in real estate in the UAE, you're not just buying a property; you're buying into a lifestyle that's in high demand by wealthy tourists from around the world. Luxury tourism is a booming industry in the UAE, with visitors drawn to its lavish hotels, luxury shopping and world-class dining. As a real estate investor in Monaco, tapping into this market can bring significant returns. Furthermore, owning property in a tourism hot spot like the UAE adds a layer of stability to your portfolio. Even in economic downturns, the demand for luxury experiences remains high. Therefore, your UAE property investment is likely to be a reliable source of income, even when other investments might be struggling. 

And while there are compelling financial reasons to invest into the luxury market, there is also a "close to home" factor. Investors gravitate towards assets that they can understand. When investigating an opportunity in a foreign country, the investor will never take the risk of jumping into the abyss of the unknown. That said, Monaco residents are very well versed in the fluctuations of the luxury residential real estate market, allowing them to identify the risks and seize the opportunities faster than Dubai real estate agents (and they're very fast).

No taxes

Another major attraction is the significant tax advantages that a UAE-based investment can offer. The UAE has a well-established framework that encourages foreign direct investment, notably because there are no taxes on property purchases and sales, no capital gains tax, and no property tax. These conditions considerably reduce the financial burdens, increasing potential returns.  In contrast, although Monaco itself doesn’t impose capital gains tax, French residents in Monaco who sell properties are subject to French tax norms, which incorporate such taxes. This feature makes the UAE a compelling choice for those looking to diversify their investment portfolio beyond Monaco's borders and take advantage of tax-efficient jurisdictions, allowing French investors to finally feel like a Monaco resident.

Business friendliness 

A lot of Monaco residents have an entrepreneurial spirit, but often have trouble excelling in the small market of Monaco. In contrast, the Emirates scores high on the ease of doing business. The country has made huge strides to improve investor-friendly regulations and processes. This includes aspects like regulatory transparency, contract enforcement, and access to credit. In fact, the UAE ranks 16th globally in the ease of doing business rankings, quite a feat considering the competition.  Therefore, real estate investors in Monaco looking for a positive investment climate, tax advantages, and the potential for strong growth can find a thriving market in the UAE. The possibility to broaden their scope in a country that appreciates luxury living as much as Monaco does, but with fewer restrictions and a dynamic growth potential, is certainly worth exploring. 

Our involvement

A27 introduced its collaboration with Aldar Properties in 2023 as part of their market expansion strategy. The objective was to familiarize Aldar with the region through a localized approach. Leveraging our market expertise, we helped the developer attract investors who were previously hesitant to invest in the UAE, resulting in short-term gains. This involved a thorough analysis of client requirements, responses to the benefits offered, and experimentation with diverse client acquisition techniques, such as the organisation of events and bus advertisement during the Grand Prix of Monaco (pictured). This article summarizes the findings of this practical experience.

For more information, please contact us.