Overseas Property: View to a killing

Bad news for wannabe billionaire tax exiles: Monte Carlo's full. But there is a solution on the horizon (literally). Laura Latham reports on plans to extend Monaco on to a new island

One Formula One driver allegedly uses the chat-up line: "I'm going to Monaco to look at flats, want to come?" Any girl falling for that one has got her eye on the main chance, because few things are worth more than an apartment in this tax haven.

There are prettier places in the world with far nicer property but with the tiny principality's casinos, Grand Prix, and beautiful people in designer threads and fast cars, nowhere on earth is more glamorous. This jet-set hangout's tax-free status also means activity in the property market is unprecedented. Monaco has run out of room to build but that hasn't stopped the rush to own there.

As demand has escalated, costs per square metre now outstrips everywhere but Knightsbridge. And now that Monte Carlo can no longer build upwards it's heading out. Having seen the success of off-shore projects in Dubai, Prince Albert plans to build an extension to his domain in the form of an island.

The new platform will be on reclaimed land in front of the public beach of Larvotto. Foster and Partners architects have been linked to the project, which will comprise 275,000sqm of apartments, hotel, retail and leisure facilities and a marina. The island is also expected to include low-cost homes for key workers and is intended to be environmentally sensitive.

There's a murmur that the extra residences are meant to lower prices, but agents such as Roger Munns of Tribune feel this simply won't happen because of demand. "Most of the property will be bought as soon as the plans are released," he says. Mike Brunholtz of Prestige Property agrees, "I think it's a great idea; there's just not enough property available. All the good apartments are gone and you're paying high prices for what is really average accommodation."

He's not kidding. The cheapest property is likely to be a studio in an old block with no view for £620,000. Buyers typically spend £2m-£3.5m for a standard two-bedroom apartment. Monaco has always attracted the rich but, according to Braunholtz, there's a new breed of super-wealthy looking to squirrel their income away.

"Everyone wants residency," he says. "Monaco has no income tax, capital gains or personal wealth tax." He adds that it's also a "lovely location, next to some of the most beautiful areas of Europe". But all that waxing lyrical's fooling no one. People come here because they tire of paying taxes. Property is expensive but it's a drop in the ocean compared to the amount the rich can hang onto by living here.

Local agents act more like fixers, often pooling resources to ensure buyers don't waste time on unsuitable properties. They can organise the financial and legal aspects and will find extra parking spaces and moorings for yachts.

Buying costs are high, according to Munns. "Allow 11 per cent of the property price to cover legal fees and stamp duty," he says, "plus there's an average agency fee of 5 per cent usually included in the price."

Prestige's properties range from small apartments near the centre for £680,000 up to an elegant duplex with impressive views. The price is on application - so it will probably be in excess of £15m. For between £2m and £4m you can get a two-bedroom apartment near the harbour with decent sea views.

Munns also has a wide range of apartments at silly prices, such as a studio measuring a tiny 36sqm with terrace, parking and sea view for £670,000. There is also a five-bedroom, four-bathroom waterfront pad in Fonteville for £6.7m (reduced by £68,500) and a £17m triplex with terraces measuring 100sqm that he calls "pretty exceptional".

If you want to join the likes of Pavarotti or Jenson Button, but can't afford Monte Carlo, head to Monaco-Ville, which sits like a grande dame looking down on its brasher sibling. Though prettier and more historic (the royal palace is here), this is the "cheap" end of town, partly because it's seen as touristy. It still costs a "bargain" £800,000-plus to own round here but you'll be paying more than locals. "There are properties set aside for them," says Munns, "otherwise we wouldn't have a local population at all."

www.prestigeproperty.co.uk; 01935 817 188

Tribune: www.yourmonaco.com

Where to buy - and what it costs

FONTVIELLE
The newest area, reclaimed from the sea and handy for the heliport. Property here is the most expensive, with trendy high-rise apartment buildings right on the waterfront offering easy access to the swish restaurants, bars and Hotel Columbus, co-owned by F1 driver David Coulthard. Average price: £2m-£3.35m

MONTE CARLO
The area around the casino also known as the "golden square". Buildings tend to be older, and have more character. They're in a prime spot for everything but generally have restricted views. Handy for staggering home after blowing 50k on a spin of the roulette wheel. Average price: £1.7m-£3m

MONACO-VILLE
Historic area overlooking the concrete playground of Monte Carlo. Property is older and cheaper, ironically because it's considered the "poor area" and fit only for those who don't mind all the tourists. Average price: £1m-£1.67m

CONDAMINE
The old industrial harbour isn't seen as exclusive. Locals and key workers tend to live there, so prices are generally lower - by Monaco standards, anyway. Average price: £1m-£1.67m

JARDIN EXOTIQUE
The furthest from Monte Carlo, and high up, with good views. Not many buyers opt for this area despite the older character buildings. Average price: £800,000 to £1m