Renting a flat in the One Monte-Carlo residential development, in the heart of the Monegasque city, costs a scandalous figure of 120,000 euros every month. There are them for 180,000, that is, the tenant has to pay 45,000 euros a week. More than 2.1 million euros a year. The flats are duplex, about 600 square meters, four bedrooms, a 117-meter terrace and its tenants can enjoy the exclusive services of the five-star Hotel de Paris Monte-Carlo, which is connected to the promotion by a tunnel.
The One Monte-Carlo residential development, designed by British architect Richard Rogers, a Pritzker Prize winner, includes homes that are exclusively available for long-term rental. It is one of the very few examples that exist on the European continent of complete super luxury rental promotions, a very small market in which there is more demand than supply and where the price limit does not exist. Perhaps it is because the number of millionaires is on the rise: in 2020, in the midst of the pandemic, it grew by 5.2 million people, bringing the world total to more than 56.1 million, according to a Credit Suisse report.
London is one of those cities where there is more demand than supply, especially that of expatriates looking for an exclusive apartment in the city center. “It is estimated that there are 83,000 rental properties in the city and only 1% is dedicated to super prime,” says John Nery, CEO and chief investment officer of Squircle Capital, a European investment firm. private equity and real estate investment management. The price ranges from £ 5,000 to £ 40,000 per week for luxury properties (£ 20,000 to £ 160,000 per month).
In Spain the market is even smaller and is very far from the rents that are handled in Monaco or London. A development on Calle de Serrano, 53, in Madrid, is one of the few projects for luxury rentals. This building, owned by Twin Peaks Capital, is fully rented at this time and the average rent is 7,200 euros per month. The firm has another project in San Marcos, 21, located in Chueca (Madrid), but for a much lower price.
The offer widens — not too much — when it comes to single houses. They are flats that wealthy individuals have acquired as an investment, that is, to be put up for rent. “More than seeking maximum profitability, they buy with a patrimonial vision,” explains Belén Egusquiza, Director of Rentals at Engel & Völkers Madrid. The profitability is between 3% and 4% net per year.
Those who buy these apartments are looking for what in real estate jargon is called trophy assets, unique, which always appreciate. Those who rent them are businessmen, great executives and elite athletes. In Barcelona, for example, “80% are usually international clients who want very exclusive properties to accommodate their families while they continue to work from their countries of origin,” explains Albert González, Director of Rentals at Engel & Völkers Barcelona.
These are some of the footsteps hanging the ‘for rent’ sign.
At the Canalejas complex in Madrid, next to Puerta del Sol, at least one of the 22 apartments that were sold at an average price of 14,500 euros per square meter is currently being rented. The tenant will have the services of the five-star Four Seasons hotel: gym-spa, restaurants with renowned chefs, shops with the most exclusive brands … The apartment has 228 square meters, two bedrooms, two parking spaces and is on the Fifth floor. The owner asks for 10,900 euros per month and will furnish the house to suit the future tenant. This is what says the announcement of the luxury agency Barnes, which manages the lease. This same agency confirms that it just rented, last week, another apartment in the Canalejas building for 10,500 euros per month. It has 148 meters, two rooms and is on the sixth floor.
The Lagasca 99 promotion is another of the most exclusive in Madrid, due to price and characteristics. The complex developed by the Socimi Lar y Pimco, in the Salamanca district and signed by the architect Rafael de la Hoz, has sold the homes at an average price of 11,300 euros per square meter. One of them has been bought by a private investor who has put it up for rent at 16,000 euros per month. It has 344 meters built, five bedrooms, six bathrooms and is on the fifth floor. The tenant will have the right to a multitude of services, such as a garden terrace with an outdoor pool, gym, wellness center, indoor pool with sauna, Turkish bath and spa, british club…
In Barcelona, the Francesc Macià, 10 development, developed by Squircle Capital, houses seven 600-square-meter flats and an attic that has not gone on sale. It is one of the most expensive promotions in Spain: the average price is 16,500 euros per meter (10 million euros), having reached 20,000 for a decorated apartment. One of those flats was bought last year by an investor. It took a few weeks for him to find a tenant, of European origin, who is currently paying 29,000 euros per month. As the great luxury dictates, the tenant benefits from the services of a five-star hotel 24 hours a day, as well as a swimming pool, sauna, gym, private cellar and six parking spaces. Recently a Swiss investor has shown interest in two apartments in this development for investment purposes.
The purchase of luxury apartments as a safe haven has a promising future. “The real estate sector will be a key investment destination for people with net asset wealth equal to or greater than 50 million dollars in the coming months,” according to the report. The Wealth Reportby Knight Frank. 26% plan to buy a new home this year.
This consulting firm and Colliers have just released a new luxury development in Madrid, Teatro Gran Vía 30, owned by Thor Equities, in which they have noticed “a lot of interest in buying to rent”, states Carlos Zamora, director of residential de Knight Frank. Profitability will be around 3.5% annual net. The building, which was the Fontalba theater, will house 28 two- and three-bedroom homes from 780,000 euros to almost two million euros. The bulk of the reserves comes from national and European buyers, according to the consultants.
What is behind the scant interest of developers and funds in building luxury apartments for rent? “The numbers do not come out because the returns are very low and below 3% no institutional investor is going to get involved; they have other investment alternatives, ”says Zamora. John Nery, from Squircle Capital, agrees that “in the prime market it is very difficult to find good projects and good investment opportunities.” Even so, the firm does not rule out entering this market. “We have the advantage of being a fund with a very general focus, but we have to find the opportunity: a good location at a good price,” says Nery.
Albert González, from Engel & Völkers Barcelona, trusts the development of the market. Until now, building to rent “is focusing more on non-prime assets, but it is to be expected that luxury will enter this modality that seeks not only a good location, but above all a combination of high-end services. standing”.