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MONACO Royalty Prince Albert is moulding the state according to his beliefs FINANCIAL TIMES SPECIAL REPORT | Wednesday September 29 2010 Page 5 www.ft.com/monaco2010 | twitter.com/ftreports Building up the waterfront: ‘Every 10 years, Monaco needs another three to five hectares. By 2020 we will have used up practically all our land,’ says Franck Biancheri, Monaco’s economic development minister Dreamstime Statelet seeks to stimulate growth Peggy Hollinger explains ronmental awareness and plans to tre- Mr Roger, it represents a slippery not mean that Monaco is throwing our estimates and by 2020 we will will decide – as Monaco has no other ble overseas development aid to €30m slope that threatens the very factors open its doors to every start-up. have used up practically all our land.” option if it wants to preserve its how the principality is by 2015. that have made Monaco a success in “It will not be Bill Gates when he Monaco has two options to find the cachet. Already the world’s most now seeking to attract The principality, which had for so the past: the cultural life that brings was starting up in his garage who will space it needs: either it builds up – as densely populated state, new tower long fiercely defended the secrecy of some of the world’s most famous art- be encouraged to come,” says Pierre is being done with the landmark blocks would just increase the “feel- entrepreneurs rather its banking system, has signed 24 tax ists to its venues, high healthcare André Chiappori, economics professor Odeon Tower project. Or it reclaims ing of suffocation” says one official. than tax exiles agreements that have helped to get it standards, and the security so impor- at Columbia University in the US, land from the sea, as Prince Albert’s But, this being Monaco, no one is off the OECD’s blacklist. An Interna- tant to Monaco’s wealthy residents. whose views on Monaco’s future have father did with an extension that willing publicly to second-guess the tional Monetary Fund report in 2008 With one police officer for every 62 contributed to the government plan. increased the size of Monaco by 23 per prince, whose power is undeniable, W hen Prince Albert II praised “important steps” taken by inhabitants Monaco claims to be one “It is the creators, the innovators cent in the 1960s. despite the democratic trappings of an announced his engage- Monaco to reinforce the supervision of of the safest places in the world, and such as Kenzo [the fashion designer] Prince Albert had his own project to elected National Council. ment to South African its financial sector, though it warned that counts, says one billionaire who who they should look for.” extend Monaco by 20 hectares. But Monaco’s ruler will take his time, former swimmer Char- there was still more to be done. has chosen to take up residence in the Yet the big challenge will be to pro- the €10bn extension was suspended in say his advisers and he will not be lene Wittstock, the small principality Yet, the gradual demise of its tax principality. “I can walk anywhere,” vide the services this new population 2008, because of both the economic rushed. Environmental concerns are of Monaco let out a collective sigh of haven status has presented Monaco he says. will need, housing and schooling for crisis and Prince Albert’s concerns important, yet much will also depend relief. with new domestic challenges. These “If we don’t reduce the deficit, the example. Already the statelet is run- over the environmental consequences. on whether the deficit is dealt with. Residents could hope for a continua- are made even harder as the global risk is decline,” Mr Roger says. “We ning up against the limits imposed by Close advisers say he will take a Yet, just like its prince, Monaco tion of the fairy tale that began in economic crisis takes its toll on a will no longer have the money to pay its size. “Every 10 years, Monaco decision in 2013 on a smaller less seems ready to settle down and start a 1956, when Albert’s father, Rainier III state of just 33,000 people, some 24,000 for the social system, we will have to needs another three to five hectares,” expensive extension project. Many new life. All it needs to show now is a wed Grace Kelly, the American of whom are foreign residents. cut back on our cultural spending. says Mr Biancheri. “We have made believe they already know what he little commitment. actress. After years of hesitation, the Between 2008 and 2009, the princi- What I absolutely want to do is to couple’s 52 year old playboy son is pality’s turnover tumbled from avoid a descending spiral.” finally ready to settle down. €16.5bn to €13.2bn. Government The government was this week pre- The implications for the tiny coun- receipts have fallen from €897m to paring to unveil measures to reinvig- try of just 2 sq kms, squeezed between €744m and, for the first time in years, orate growth and to provide the foun- the hills of France and the Mediterra- Monaco is in deficit. dation for a new-look principality, nean Sea, could be significant. The principality, which derives based on a road map set out by Prince “We are hoping the marriage will some 50 per cent of its revenues from Albert this year. restore a bit of glamour to Monaco,” value added tax (VAT), 13 per cent The hope is that Monaco will be says Jean-Yves Lorenzi, the Moné- from property transactions and 3 per able to attract a new type of resident, gasque proprietor of the Roc estate cent from financial services, has seen one that plans to do more than retire agents just a few steps from the business in all three areas tumble, as on the proceeds of past success. “We Prince’s Palace. “And we hope it the downturn hit even Monaco’s believe that younger families are com- might give the economy a boost.” wealthy residents. Last year the state ing to set up in Monaco,” says Franck Like many countries struggling to suffered a €61m shortfall in its Biancheri, Monaco’s economic devel- find a way out of the current eco- budget, and this will rise to €80m in opment minister. “These are people nomic gloom, Monaco is in the dol- 2010, with a deficit on the cards again who want to come to exercise a pro- drums and desperately needs the next year. fession.” boost of confidence that a royal wed- For some countries, an €80m short- The initiative is the principality’s ding can bring. fall would be insignificant, and for latest attempt to be taken seriously as “Clearly, it will contribute to tour- many Monaco residents it would a state, and to be seen as more than ism and strengthen interest in hardly count as pocket money. But for just a casino with a town and castle Monaco,” says Michel Roger, the attached. “We are not a tax paradise,” French civil servant appointed by says Mr Roger. “We are a real country Prince Albert in March to lead his with a real state of law.” government as minister of state, in Nonetheless, even Mr Roger admits effect the prime minister. that Monaco will not abandon the Yet years before the global eco- easy tax regime that has drawn many nomic crisis cast its shadow over the of the world’s richest to apply for resi- world’s second smallest state, the dency. “Our model is not condemned glamour had already begun to fade. to death, even if it has to evolve,” he Decades of high-rise building had says. It remains one of the chief taken their toll on the once elegant attractions of Monaco, even with the seaside resort and Monaco was sus- Inside this issue global drive towards transparency. pected by its neighbours of harbour- Tax A lack of agreement with its “The world is open and we are in ing tax evaders, drawn by the absence neighbours leaves the state competition,” he says. of income tax and the highly confiden- vulnerable to criticism even though it The government’s plan is to encour- tial nature of its banking system. is no longer on the OECD blacklist of age a younger population – but only Monaco’s transformation from play- uncooperative tax havens, writes those who promise to create wealth ground for the rich and famous to a Vanessa Houlder Page 2 through innovation or services. “We shady haven for tax evaders and want to favour entrepreneurs,” says wealth of dubious origins was sealed Sporting events They might Mr Roger. “We want people who don’t bring in the crowds and give the in 2004, when the OECD branded the come here to escape the taxman, but state an international profile, writes principality uncooperative in the fight who want to set up businesses. To do Roger Blitz but sporting events such against fraud and money laundering. as the Grand Prix are a drain on that, we will have to improve the way In the five years since Prince Albert resources Page 4 we welcome new residents. We will II came to the throne, he has worked have to simplify the procedures for hard to change that image. Lifestyle Former resident creating companies and we will have In his accession speech, the prince Paul Betts bemoans the constant to modernise the legal framework for promised his subjects their country construction and cramped living businesses.” would become a model of ethics and space but says life in Monaco still The principality has always been global citizenship. He has pledged to has much to recommend it Page 5 choosy over who it allows to claim cut emissions in the principality by 80 residency and new simplified meas- per cent by 2050, campaigned for envi- ures for certain types of resident do Land of the rich faces tough financial choices John Maynard Keynes, the includes a redevelopment of Economy economist who advocated the port, works on the old spending one’s way out of rail station, a new Yacht Keynesian policies recession. Club, tunnels to ease con- Monaco train station have led to a According to preliminary figures, tax receipts fell 17 gestion, a new secondary school and state housing. on our public works”. deficit, writes per cent in 2009, leaving a The public works in part There are no income or Scheherazade budget deficit of €61m – albeit small change for compensate for an indus- trial sector that has suf- inheritance taxes and busi- ness taxes are low. Most Daneshkhu some wealthier residents. fered in the recession, lead- government receipts from Sophie Thevenoux, the ing to job losses – although the services-oriented econ- finance minister, says that the country does not pub- omy derive from value For a country labelled a tax 30 per cent of last year’s lish unemployment figures. added tax, set at the French haven and a magnet for budget was spent on grands Ms Thevenoux expects rate of 19.6 per cent, and millionaires, it may come as travaux – large infrastruc- the budget to be in deficit from stamp duty on prop- a surprise that Monaco’s ture projects which she con- again this year because erty sales. government has taken its siders an investment rather the economic recovery These taxes account for inspiration from economic than a cost. is hesitant and “we have policies propounded by The schedule of activities not wanted to slow down Continued on Page 2 2 ★ FINANCIAL TIMES WEDNESDAY SEPTEMBER 29 2010 Monaco Exclusive address is still in demand most of the better blocks having occupied by two banks. And Property full access to concierge services, security is important to the sort swimming pools and the all- of reclusive wealthy buyer that An apartment in important parking spaces for is active in the principality. Monte Carlo retains the fleets of luxury cars. Owners of the more luxurious properties There have been rumours cir- culating as to the identity of the its attractions, writes will probably have boats moored buyer, with many believing it to Daniel Thomas within walking distance. The prices partly reflect the be a member of one of the rul- ing families in the Middle East. tight supply of properties, with If so, the buyer would not be T he world’s most expen- residence in the area seen typical of the main buyers for sive sale of a private almost as membership to an properties in Monaco at the residence in September exclusive club among the moment. reinforced Monaco’s world’s wealthy. Agents report that the strong- position as the top market for Nick Candy, chief executive of est demand originates from luxury homes. Candy & Candy and a Monaco Europe, including the UK, as Beating recent record deals in resident, says the property mar- well as the billionaires of Russia London and Hong Kong, the ket has never been stronger. He and former Soviet states such as sale for €240m of a vast apart- declined to comment on the sale Kazakhstan at the top end. How- ment occupied by British prop- of his brother’s flat, but did add: ever, there is demand from all erty entrepreneurs Nick and “It’s hard not to love Monaco. It parts of the world because of Christian Candy – and owned by has everything from good res- Monaco’s tax haven status. Christian – showed the allure of taurants, shops, beautiful scen- It became the most expensive the stamping ground for the ery and an abundance of style residential property market in world’s playboys in the Mediter- and character. Not to mention 2009, according to the Citi Pri- ranean remains untarnished. that its geographical position vate Bank and Knight Frank’s La Belle Epoque: the Candy brothers spent more than £26m refurbishing the €240m appartment Monaco, and specifically makes it the ideal base from Wealth Report, overtaking Lon- Monte Carlo, the harbour area, which to conduct business don with an average price for Kensington Palace Gardens in Land reclamation remains an man, the property company, is slow during the crisis and ven- remain unique among the across Europe. homes of more than £1m or London. option, although it has proved building a block of flats at 23 dors have not dropped prices, so world’s property markets, with “You can be sure that most about €50,000 per sq m. However, the Candy sale is difficult. An extension was Boulevard de Belgique. there has not been much move- the vast casino at its heart sur- business men and women will Prices for properties did drop just the froth on the recovering planned in front of the Fairmont Markus Meijer, chief execu- ment. A pick-up is expected in rounded by blocks of flats, be passing through. There is a during the global slowdown in market. Demand has emerged as but was cancelled because of tive of Meijer Bergman, says 2011 following increased demand grand hotels and topped by the shortage of supply of good qual- house prices, however, and the particularly strong for the cost and environmental con- this will be the only new supply and a lack of supply.” palace on the skyline. ity properties coming on to the level of transactions fell even smaller – and more affordable – cerns. when it is finished in 2011 until While the Candy sale is La Belle Époque, the Candys’ market. Vendors can charge a more sharply, as more turned to properties, with studio and one- The Tour Odeon is one of the the Tour Odeon is completed. unlikely to be replicated, the former residence, is in a sense premium and purchasers are renting. bedroom apartments trading few new developments, with Sales of units will start in the constrained supply and strong typical of the sort of high-end willing to pay a premium.” Some properties on Avenue between €1m and €3m. most building work focused on next few months, with most demand from the European properties that trade in Monaco, Although the penthouse has Princesse Grace, a key marina- The shortage of supply has refurbishing or updating exist- between 250 and 500 sq m. wealthy and Middle Eastern and with a history of the halcyon just three bedrooms over two front address, saw prices fall by been exacerbated by a lack of ing buildings. However, this Mr Meijer says the sales mar- Asian states is likely to con- days of swinging Monte Carlo floor, the buyer’s €240m secured more than a quarter. new development, with tight huge double skyscraper on the ket is mainly “secondary stock tinue to underpin a buoyant but more recently better known 17,500 sq ft of prime Monte Carlo This saw the road overtaken restrictions on both where and eastern side of Monaco will not of an older generation and low- market. The sunny principality as the last home of Edmond space with unsurpassed views. in the global property agent’s what to build, following worries be finished for several years. quality”, but that can still com- with its tax advantages and Safra, the financier. Just as crucial, says another league tables by other addresses over the architectural merits of Most other developments are for mand €20,000 a sq m without a stunning views remains firmly Size is rarely as important as source, the flat is secure – the for prime property such as Sev- the previous generations of high rental units, such as Tour sea view against €75,000 for the on the tick box of accessories location along the harbour, with bottom levels of the building are ern Road in Hong Kong and rise apartments. Simona, although Meijer Berg- best units: “Demand has been for the world’s rich. Move to more transparency Taxman peers into expat life brings new set of problems Expatriates Vanessa Houlder says resident in France, particularly if their spouse lives there or their children go to school there. its guidance on residency rules. In April 2008 it was made clear that individuals had to make a clean break when they left under scrutiny. The OECD, the its good intentions can be meas- new rules mean After the renegotiation of the Anglo-French tax treaty, Britain and it was not enough to rely on “day-counting” to Tax author of the “uncooperative ured by its deal with the US. residents are looking Britons living in Monaco with stay outside the UK tax net. A lack of agreement tax haven” tag, is about to pub- lish a peer review of Monaco’s Now that it has signed about two dozen tax information over their shoulders second homes in France need to worry about this issue for That has already changed peoples’ attitudes according to with neighbours leaves legal and regulatory frame- works, in the first tranche of exchange agreements, it reckons it has done enough. But the Angel Gurría, OECD the first time. French property taxes, which are calculated as Stella Mitchell-Voisin, a director of Close Summit Trust the state vulnerable to reviews into transparency and omission of Italy – a country When Sir Philip Green, a retail a multiple of the property’s Company who lives in Monaco: criticism, writes information exchange. The report, by an interna- with important links to Monaco – is likely to raise eyebrows. fidential information by bank employees in Switzerland and magnate, became an adviser to the British government in rental value, can be substantial. Expat Britons, like “The residency rules are the hot issue for a lot of UK Vanessa Houlder tional team chaired by France, The decision to spurn a poten- Liechtenstein has undermined August, it sparked a political other EU citizens, are pinning people. They can’t be as free will be scrutinised during an tial deal with Italy partly confidence in offshore banks. storm. Monaco, the home of his their hopes on an anti- and easy with popping in and Monaco has long been branded OECD meeting in Singapore. stemmed from a concern that Another impetus for more wife, was at the centre of a discrimination clause in the out of the UK as they used to an “uncooperative tax haven” Similar reports will be produced Italy would not remove Monag- transparency is Prince Albert’s stream of criticism about the Treaty of Rome. Its efficacy is be.” by its bigger neighbours. But for Bermuda, Botswana, the esque companies from its black- desire to shed the image as a couple’s tax status. “My wife’s being tested in a series of court The Italian community in the unflattering title was for- Cayman Islands, India, Jamaica, list. It was also eager not to secretive tax haven. At his not a tax exile,” he said in cases, which could reach the Monaco has also been affected mally withdrawn 18 months ago Panama and Qatar. begin negotiations while the accession in 2005, he promised their defence. Supreme Court next year. by domestic tax developments. after it bowed to pressure by The review could be an Italian government was offering to put morality and probity at The incident highlighted the Another court case being Italians rushed to take declaring it was “ready to uncomfortable experience for its citizens an amnesty for unde- the heart of Monaco’s policies. incipient tensions in Monaco’s closely followed by the British advantage of the generous increase its co-operation in the Monaco, if it questions the thor- clared money. It feared it would Monaco has long argued that relationships with its contingent in Monaco concerns terms of last year’s tax fight against tax fraud”. oughness with which it com- create an uneven playing field the tax haven tag is unfair. neighbours. Robert Gaines-Cooper, a amnesty – known as the scudo Monaco, like other paradis fis- plied with OECD norms. by striking a deal, while its Even though it charges no Higher-tax countries that Seychelles-based entrepreneur fiscale, or fiscal shield. caux, was under attack from It managed to vault on to the rivals Switzerland and Luxem- income tax – except for French have seen some of their richest who fled high taxes in Britain Overall, the amnesty was France, Germany and other big OECD’s “whitelist” of jurisdic- bourg held out. citizens who took up residence citizens decamp to Monaco are in 1976. He was recently more successful than many countries. Responding to bal- tions that have substantially Ensuring a level playing field after 1957 – the territory is not anxious; as a result, Monaco granted leave to appeal to the expected, generating €95bn looning budget deficits, finan- implemented the international with Switzerland and Luxem- tax-free. It charges 19.6 per cent residents must be vigilant to Supreme Court after a ($129bn) of newly declared cial crises and a string of high- tax standard by quickly signing bourg will also influence its value added tax, stamp duty and ensure they do not fall foul of landmark defeat at the Court assets. But Monaco only saw profile evasion scandals, G20 a dozen “tax information willingness to make concessions other taxes. Companies face a 33 tax rules. of Appeal, which judged that about €3.5bn out of the €75bn leaders declared “the era of exchange agreements”. These to the European Union over per cent tax on profits – unless Take, for example, the issue his social and domestic ties to on deposit repatriated to Italy. banking secrecy is over”. were with small countries such efforts to make the savings they can demonstrate that of second homes. Many people the UK meant that he had Karl von Bezing, a director of Welcoming Monaco’s as the Faroes, Liechtenstein and directive a more effective tool in three-quarters of company turn- put up with cramped never shed his status as a UK Scorpio Partnership, a announcement, Angel Gurría, Andorra, as well as Sweden, fighting tax evasion. over is generated within the accommodation in Monaco for resident. consultancy, says Monaco, a secretary-general of the Paris- Australia and the US. Monaco’s long-standing reluc- principality. its tax benefits but keep a One Monaco lawyer says that relatively small force in based Organisation for Eco- Monaco was acutely aware tance to move faster than its Monaco wants to promote larger second home in France even though well-advised offshore banking, has had less nomic Co-operation and Devel- that it would face criticism for rivals in abandoning banking itself as a country where people where they spend weekends. Britons in Monaco have of an impact from the Italian opment, said meeting interna- signing deals with other small secrecy reflects the value placed go to live, drawn by its benign Cecile Acolas, from advisory nothing to fear from the case, amnesty than centres such as tional standards was no longer states that were accused of on privacy by many of the seri- climate, tight security, good firm Moore Stephens, says tax they are following it closely: Lugano in Switzerland. optional. “Governments require being tax havens. But its choice ously wealthy. This may not pri- transport and cosmopolitan issues surrounding second “For most people, nothing new “We have seen an exodus of it, customers require it, and of partners was determined by marily be because they want to atmosphere. But while the leni- homes in France are important has come out of the case. But Italian people as a result of the competitors require it.” its desire to move quickly to dodge tax so much as a fear that ent tax regime is at the heart of for Monaco residents. Those people are asking: am I sure I amnesty,” says Ms Mitchell- Monaco says it has done what reach a dozen deals, the bench- information could fall into its offering, its image as a tax lacking the protection of a tax am doing the right things?” Voisin. “But Monaco is still it was asked to do. But its atti- mark used by the OECD for the unfriendly hands. haven is likely to be well nigh treaty need to be vigilant to Even before the Appeal Court attracting a lot of people. It is tude to tax evasion is again whitelist. Monaco also argues But the spate of leaks of con- impossible to shift. ensure they do not become tax- ruling, Britain had tightened still booming.” Contributors Peggy Hollinger Tom Griggs Land of the wealthy faced with difficult financial choices Paris Bureau Chief Commissioning Editor Continued from Page 1 have a very special prop- 38,792 French and Italian 57 per cent in 2008-09. “We favour entrepreneurs ness and run their company Paul Betts Steven Bird erty market in Monaco,” daily commuters. However, the biggest fall and their families. They can from here,” says Ms European Business Designer 75 per cent of receipts, of says Ms Thevenoux. Monaco began measuring in Monaco’s business turn- have a certain way of life Thevenoux. Correspondent which the bulk is VAT. “Last year, people did not output based on GDP only over was in banking and here, security, an interna- “Monaco does not wel- Andy Mears Few properties changed want to sell because offers in 2007, but still produces financial services which tional education for their come as residents people Vanessa Houlder Picture Editor Tax Correspondent hands last year, hitting were too low.” figures for total business tumbled by 50 per cent to children and at the same who defraud their tax the government’s tax take. The recent sale of an unu- turnover – €13.2bn in 2009, €2.1bn. time, they bring their busi- authorities,” she adds. For advertising details: Roger Blitz Only 231 apartments were sually large apartment for a 20 per cent drop from This industry mainly Prakash Megha on: Leisure Industries +33 1 53 76 82 51; sold, of which two were €240m by Christian Candy, 2008. Trading – wholesale manages wealth and the fall Correspondent new-builds. This represents the British property devel- and retail – and hotels gen- in revenues in part reflects fax: +33 1 53 76 82 53; a sharp fall from the 417 oper, may signal a revival erate 46 per cent of annual low interest rates. Scheherazade Daneshkhu email@example.com properties that changed of the market. business. Ms Thevenoux denies Paris Correspondent hands in 2008. Surrounded on three Last year, these sectors that Monaco has suffered All FT Reports are available Daniel Thomas In general, someone who sides by France and barely fell 12 per cent compared any negative fallout from on FT.com. Go to Property Correspondent owns a property in Monaco 7km from Italy, Monaco with 2008, reflecting falling having been declared an ft.com/reports does not need to sell: “We cannot be insulated from demand. “uncooperative” tax haven the economic forces sweep- by the Organisation of Eco- ing its neighbours, for all ‘Monaco does nomic Co-operation and its haven status. not welcome Development between 2002 The French economy con- people who and 2009. tracted by 2.5 per cent last defraud The state was finally year and Italy’s by 5 per their tax removed from the blacklist cent. authorities’ of tax havens last year, Monaco has not yet pub- after agreeing to increase lished 2009 national income international co-operation figures, though initial esti- The Société des Bains de in fighting tax fraud. mates indicate a fall in Mer, the state-controlled Ms Thevenoux points out gross domestic product last group that runs the princi- that the tax information year compared with 2008. pality’s casinos and several agreements signed with In 2008, GDP was €4.49bn of the leading hotels is a other countries do not tar- – virtually unchanged from traditional bellwether of the get Monaco residents, but the previous year. Per cap- impact of tourism on the those who deposit money in ita GDP rose 2 per cent to city-state. Monaco but are tax-resident €60,595, one of the highest Revenues fell 6.5 per cent elsewhere. in Europe. in the year to March 31, To that extent, the tax co- Revenues are divided hit by a fall in visitors operation agreements have between 74,144 people, made and fewer gamblers. The not put off prospective resi- up of 35,352 residents – average occupancy rate dents, she says, nor have including just under 8,000 at its four plush hotels was there been noticeable bank native Monégasques – and 50 per cent, down from account closures. 4 ★ FINANCIAL TIMES WEDNESDAY SEPTEMBER 29 2010 Monaco Grand Prix and other events are a drain on resources far removed from the deprived grappling to restore success to a ball’s governing body is Mr Keller, “we have to sell some “It’s normal for Mr Ecclestone known race event in the world,” Sport surrounds of West Ham’s Upton club, which in 2004 scaled the demanding that clubs live players.” to ask me for more money and Mr Boeri says. Park stadium as one could imag- heights of Europe’s top competi- within their means, a line Money worries are also a run- it’s normal that I’m crying,” he At the Monte Carlo Country Roger Blitz says ine, Mr Keller tries to instil the tion, the Uefa Champions Monaco FC has pursued of its ning sore for Michel Boeri, the says. Club, the ability to bring the bringing top class same spirit of commitment to the principality’s young profes- League, reaching the final. But he must do so against own accord for several years. It means that the club must president of Auto Club de Monaco. He has been responsi- He winces about the 30 per cent drop in advertising income, world’s top men’s tennis players gives organisers no qualms sporting events to the sional footballers. unusual financial restraints, regularly cash in on the revered ble for organising Monaco’s and the 15 per cent loss in about staging and retaining the principality is an Nowhere offers a backdrop for top-class sport quite like considering Monaco’s wealth. With a small population to crop of young players it nur- showpiece sports event, the Monte Carlo Grand Prix, since grandstand receipts last year, but says that he feels things are Monte Carlo Open. Rolex and Banque Nationale expensive business Monaco. work with, Monaco attracts on ‘It’s normal for 1972. starting to tick up again. de Paris are long-term sponsors, The football club’s stadium is average just 10,000 fans to its Mr Ecclestone “The problem is the Grand But this is not a man who while ticket sales and TV view- Marc Keller was coming to the on the coast, Monte Carlo’s For- 18,500 seat stadium at the to ask me for Prix is a terrible waste of likes to focus on money, prefer- ing figures are positive, says end of his professional football mula One Grand Prix is raced Fontvieille seaside district of more money money,” he says, as he sits in an ring to talk about the profile the Eric Seigle, director. career when in 1998 he was through the winding streets of the principality, and so gener- and it’s normal ACM office cataloguing event event gives the principality. With 2,000 members, it is transferred to West Ham United the principality, and the Medi- ates far lower revenue than top- that I’m crying’ costs. “It is a choice, he says. “You among the top five tennis clubs in the rough, tough East End of terranean twinkles while Fed- flight French clubs. “In Monte Carlo, with all the can’t do a Grand Prix cheaply. in France. London, a signing by Harry Red- erer and Nadal thrash tennis Moreover, there is no largesse work you have to do to build the You have a lot of problems you The only question for its not- knapp, the English club man- balls in the Monte Carlo Open. from the ruling Grimaldi family tures out of its academy system. track and the grandstands, don’t have in other sports, such for-profit association is whether ager. “It is a top area to live. You to call upon. Winning France’s La Liga – when you take the balance of as security. You always have to it can expand without upsetting “Harry is from the East End, have the security, the climate, Prince Albert may love foot- something it has achieved seven receipts and costs, you have a be thinking how to protect peo- the membership. he taught me you have to be you are in the centre of ball, but the club is run by a times – and qualifying for the very heavy loss in the millions ple. This has a cost.” There is no professional committed to the club you’re Europe,” says Mr Keller. “It’s board headed by Étienne Franzi, lucrative Champions League are of euros.” As is the case for other Grand women’s tournament, nor a playing for,” says Mr Keller. difficult to leave. You have to director-general of Compagnie distant dreams. Mr Boeri smiles ruefully when Prix host cities, Monaco’s gov- seniors event. “West Ham is a special club, a explain to players that Monaco Monégasque de Banque, an Ital- Last season, Monaco finished asked about the staging rights ernment compensates it for the “We are careful to make sure historic club.” is built for the top. You have to ian-owned bank based in the a relatively lowly eighth in the fees that Bernie Ecclestone, losses. our members are comfortable On the hills of Monaco Foot- have results.” principality. league. the Formula One supremo, “To lose the Grand Prix would and have access to all facilities ball Club’s training ground, as Mr Keller is general manager, In any case, European foot- “We have to face reality,” says demands. be a big blow, it is the best easily,” says Mr Siegle. Principality seeks fresh sources of paying guests rious September afternoon, At the Grimaldi Forum, is better, up 28 per cent on kets. That means challeng- Tourism Michel Bouquier, president Monaco’s convention-cum- business tourism and con- ing the perception that it is of Monaco’s tourism and cultural centre, Sylvie ventions, says Mr Bouquier too expensive, something Conferences and convention authority, Biancheri, its president, is – though 80 per cent of that puts off convention emerging markets reveals a conversation he has had that morning with not short of funds to invest. The Grimaldi Forum has hotel activity comes from leisure visitors. organisers in particular. “That’s the impression are target areas, an influential Indian citi- €50m for redesigning the The Monaco Yacht Show, that we’re fighting against,” writes Roger Blitz zen. “A friend of his is plan- hall and public access. But she says: If she could the Monte Carlo Interna- tional Television Festival, Mr Bouquier says. “They think they know Monaco, ning an Indian wedding in ask Prince Albert for one and leading conventions on but actually they don’t O ne big society Monaco,” says Mr Bouquier. wish, it would be for an anti-ageing, insurance and know Monaco.” wedding in “That will be the first of its extra hotel. luxury packaging are main- He reels off a story of how Monaco is defi- kind.” The guest list will “If you want to target the stays, some of them regu- he persuaded one sceptical nitely on next number 1,000. “We’re talk- very big conventions, you lars for more than 50 years, conference organiser to year’s social calendar – but ing high, high, high end. need to be sure the availa- even if some have cut back make Monaco her first there may be another. We’re talking the highest bility of all the hotels is on their duration. choice. The world knows about quality possible.” good,” she says. But Monaco is in competi- Under the slogan Prince Albert’s nuptials. In Mr Bouquier’s problem – The forum makes the tion with other destinations “Enchante-moi Monaco”, July, the ruler of the princi- how to accommodate them most of space – two-thirds – with Singapore, Dubai the tourism authority has pality is marrying Charlene – is a familiar one in of its 7,500 sq m is under- and Abu Dhabi in the lux- since the downturn sought Wittstock, a South African Monaco, which has 11 ground – but its convention ury resort market, Barce- to woo leisure visitors with swimmer. hotels providing 2,600 four capacity is limited to 3,000. lona, Berlin and several price-conscious packages – Less well known is a cere- and five-star rooms, and no Monaco has taken its other European cities for spas, helicopter tours, cook- mony pencilled in for land for more. The Indian share of recession pain. business tourism – and the ing demos, wine tasting, March. wedding will fill up three Hotel revenues fell 11 per recession has the principal- and the like. As he sips coffee on a glo- hotels on its own. cent last year, but this year ity looking for new mar- Attracting more price- conscious tourists is one of Historic waterfront: Monaco retains its allure for tourists Alamy the targets Monaco hopes to have achieved by 2013. It It is also small enough to quier. “We cannot focus what Monaco is all about. also wants to set standards offer convention organisers only on one segment; that “Our job in China as well in eco-tourism, make more banner promotions on pub- could be for nostalgic-only as in India is to position out of big cultural and lic lamp posts. “We’ve got deluxe tourism for a few Monaco as the deluxe desti- sporting events and centres, many taglines,” says Mr people,” he says. nation, the most sophisti- such as its spring arts festi- Bouquier: “Need a venue? That is why the Oceano- cated destination they can val and Oceanographic We offer you a country.” graphic Museum has staged dream of,” says Mr Bou- Museum, and to improve Ms Biancheri says an exhibition of the contem- quier. the quality of its welcome. because all the key individ- porary British artist Dam- “So we’re not talking One tourism strength is uals involved in hospitality ien Hirst, while the Nou- about packages and rates, the geographical spread of and conventions are in such veau Museum de Monaco we’re talking about experi- visitors. For example, its close contact, arranging a has just opened. ence, high quality experi- hotels pull in twice as many convention programme is Day visitors number up to ence, about sophistication. Japanese and Australians easy, a factor becoming 5m a year, but the big “We’re talking about as does the average four- or more important now that growth is in cruise passen- really the highest you could five-star hotel on the the lead time for confer- ger numbers, expected to find.” French Riviera. ences has come down so rise this year by 40 per cent If Monaco does get to host It has 11 offices abroad, sharply. “It is more and to about 400,000. that prospective Indian including in Sydney, Tokyo, more last minute,” she At the same time, tapping wedding party, those Moscow, New Delhi and says. the emerging travel mar- wedding guests should be in New York. A São Paulo Tourism in Monaco is a kets such as China and for the full deluxe treat- office opens in January. fine balance, says Mr Bou- India involves extolling ment. MONACO 400 m BEAUSOLEIL ROQUEBRUNE Country information Tenao Area 1.95 sq km Moneghetti St-Roman Languages French, (official) Station English, Italian, Monegasque MONACO Sporting Club Larvotto Currency Euro (€) La Condamine Exchange rate: CAP Palace D’AIL 2009 average 1€ =$1.39 Stadium Port Monte Latest 2010 figure 1€ =$1.31 Carlo 200 km Monaco Population: 32,543 (2006) Fontvieille Town By age (%) Male Female Both FRANCE ITALY MEDITERRANEAN MONACO Up to 29 27.1 24.7 25.8 Heliport SEA 30-59 41.3 39.7 40.5 N Above 60 31.6 35.7 33.7 8 km L’Escarène Population density Constitution ITALY Population per sq. km (’000) Official name Contes 25 The Principality of Monaco Carros FRANCE Menton Major political parties Roquebrune 20 Union for Monaco (L’Union pour E80 Cap Martin Monaco (UPM)), Rally and Issues Vence Eze M O N ACO 15 for Monaco (Rassemblement et Beaulieu-sur-Mer Enjeux pour Monaco (REM)) Nice ur Cagnes- Villefranche-sur-Mer Az 10 d' Government sur-Mer t e- Cap Ferrat Cô 5 Monaco has been a Constitutional Monarchy since 1911. The 0 executive branch of government is MEDITERRANEAN SEA 1950 60 70 80 90 2000 10 under the supreme authority of the Crown Prince and enforced by a Top 10 eurozone countries GDP growth Minister of State. The Minister of Annual % change State (Prime Minister equivalent) by GDP per capita 2008 ($’000) presides over a Council of 15 Government. The five Government Monaco Counsellors are each responsible Monaco for an area of government policy, Luxembourg respectively Finances and the Economy, the Interior, Public Ireland 10 Works, Social Affairs and External Netherlands Relations. The Minister of State and the Government Councillors Finland are appointed by and accountable 5 to the Prince Austria Head of State His Serene Highness, Belgium Prince Albert II of Monaco France 0 Prime Minister equivalent SEM Jean-Paul Proust, Germany Ministre d’Etat since June 2005 Europe Foreign Minister equivalent Italy S.E. Mr Jean Pastorelli, Conseiller -5 de Gouvernement pour les 0 50 100 150 200 1980 85 90 95 2000 05 08 Relations Extérieurs Sources: UN; US Census Bureau; Foreign & Commonwealth Office FINANCIAL TIMES WEDNESDAY SEPTEMBER 29 2010 ★ 5 Monaco Balmy and safe but also noisy, expensive and cramped is also a series of contradictions. I have known it, certain things such an affluent population put in the principality can lunch at Indeed, many residents feel it street markets that nonetheless Lifestyle On the one hand there is the have not. up with the perpetual noise of the beach and return to their is one of the rare places in the have to struggle against the glamour and glitz of its million- It used to be very pretty. But drilling and building, huge traf- offices after a swim. Tax exiles world where they feel safe competition of Carrefour and Former resident aire residents – tax exiles for the the building boom has trans- fic jams at rush hours, not to can update their portfolios sit- enough to walk around with other supermarkets. Paul Betts looks at the most part – with their yachts crammed into the two harbours. formed it into a mini Manhattan on the Mediterranean, destroy- mention the high cost of buying or renting a flat? ting on their balconies or yachts and tapping on their computers. their jewels and Rolex watches. And then, many residents also But for all its advantages, Monaco still needs to make a pros and cons of living There are also the grand hotels, ing many of the old villas and The answer is that they get Monaco has always had good tend, as they have always done, big effort to ensure a viable bal- in the Principality the casino, the summer Sporting festival with its gala nights and replacing them with a jungle of ugly skyscrapers. A paradise for used to it and that they proba- bly think the advantages of liv- leisure and sporting facilities. The tennis country club is a to use Monaco as a base. They can escape from the ance between its ongoing prop- erty development – this is, after fireworks that set Monaco’s construction companies and haven. The golf club high above noise and dust of the incessant all, one of its prime sources of It is easy to caricature the Prin- large population of well- property developers, the princi- Those with sits in a spectacular setting. building works in the hills income these days – and main- cipality of Monaco. Where else groomed dogs howling. pality was expanded seawards yachts or boats The beach club has sadly been behind – the so-called arrière taining a good quality of life. do you ring for a cab and a And then, on the other hand, via large landfill developments. simply go to expanded too much, but it pays – which in parts is still The Prince and his govern- black Bentley with a taxi sign there is a perfectly normal and The old railway and the station sea for the day seems people are still prepared quite wild and beautiful. ment need to tread carefully. In on the roof rolls up? Where else on the whole happy population are now buried underground to to avoid the to pay an extravagant entrance Other residents also own vil- an age when tax havens are do you have such a concentra- of local Monégasques and some make way for new roads and crowds and the fee to be squeezed like sardines las along the coast they use as increasingly under siege, tion of wealth in a country no 30,000 people who commute more building land. incessant noise around the big swimming pool. second residences to take refuge Monaco will have to show it bigger than Hyde Park in Lon- every day to work in the banks, A huge new jetty built in In any case, those with yachts from the din of the principality. continues to have more to offer don? Where else do you have a the shops, the hotels and cafés. Spain and brought by sea has ing there outweigh the disad- or boats simply go out at sea for Even when you live in than its friendly fiscal system. daily changing of the guard cer- I have always had a soft spot made it easy for giant cruise vantages. the day to avoid the crowds. Monaco, you often hear in the And that does not only imply emony outside the sovereign for the place. I first came to live ships to dock in Monaco. The There is, of course, no income The other advantage is that morning, apart from the traffic, efficient services and leisure prince’s palace involving a tiny in the principality with my par- recent downturn and financial tax. But the high price of prop- Monaco has all the facilities of a a cock crowing in the back yard facilities, smart hotels and good handful of soldiers? ents in 1956 after we had to crisis does not seem to have erty is in a sense the equivalent big country and in many cases of a small house in the neigh- restaurants, but a careful moni- Ruritania, perhaps? leave Egypt as a result of the stopped the permanent con- of a tax, although you do not far better – hospital and special- bouring French town of Beau- toring of its own environment. Indeed, if Monaco did not Suez crisis. My aged mother still struction activity with all its have to bother with filling bor- ised medical centres, schools soleil. There is an obvious limit to exist, you would probably have lives there. And although this noise and traffic congestion. ing tax returns. Then there is and so on. It is also a pretty safe There are still one or two cor- how much construction noise to invent it. Yet for all its opu- minuscule country has greatly This is the other big paradox the Riviera weather. The bank- place with extremely tight ners that have retained a Prov- and disruption residents can lent quirkiness, the principality changed during the half century of Monaco. Why and how does ers and businessmen who reside police security. ençal atmosphere, especially the take. Modern monarch is sticking to principles his father’s death, he made clear right He has taken part in two Paris-Dakar Profile from the start that he intended to desert rally races. And he strongly continue to rule in the tradition of his believes that sport is part and parcel Paul Betts examines how father and his ancestors. of his country’s economic model. Prince Albert is moulding At the same time, he has also stamped his own vision and personal- After all, Monaco is famous for its car rally, its Formula One Grand Prix, the principality according ity with a very relaxed and plain its international tennis tournament, to his interests and beliefs speaking attitude for a sovereign head of state. its sailing competitions, the profes- sional soccer team that plays in the Prince Albert is a modern-day cos- French premier league, and so on. I was once asked to introduce mopolitan monarch. He is part Ameri- Prince Albert even persuaded the Prince Albert of Monaco who can and part Irish. He went to school Tour de France to start in the princi- had kindly agreed to be the guest in Monaco and then to Amherst Col- pality two years ago. speaker at a Parisian lunch lege in Massachusetts where he grad- Like his great-great grandfather organised by the Financial Times and uated in political sciences. Prince Albert 1, he is a committed Moët Hennessy. His entourage told He did a stint on Wall Street at explorer and protector of the environ- me I could say practically anything, Morgan Guarantee Trust to get a han- ment, especially marine life. One of but – please, please – avoid the one dle on international finance and then the first things he did soon after issue that irritates the Prince more at Moët & Chandon, the champagne becoming monarch was to travel to than anything else, his private and house, to learn how to manage a the Norwegian island of Spitsbergen sentimental life and especially when brand. For Monaco, his late father in the Arctic Ocean in the footsteps of and if he intended finally to get mar- also believed, was a particularly his great-great grandfather. ried. The following year he took part in A year later, the subject is no longer an Artic expedition, becoming the taboo. Prince Albert this summer for- A fairy tale wedding will first head of state to reach the North mally announced his engagement to be a glamorous way of Pole on Easter Day 2006. Last year, he the South African former swimmer spent a month in the Antarctic, visit- Charlene Wittstock. The marriage will reviving international ing scientific research centres to learn take place early next July and the principality is already gearing itself attention on his tiny and more about climate change and its impact. up for a glamorous international intriguing country One of his pet ventures is his foun- event that is expected to give the tiny dation to finance Monaco’s efforts in Mediterranean state a huge boost in supporting sustainable and ethical difficult times. strong brand that nonetheless needed projects around the world. Not only does the royal wedding to be developed continually. But the past few years have been remove all the old worries about the Since taking over, Prince Albert has particularly challenging. The global eventual succession if the 52-year-old sought to do just that, in his own financial crisis has hit its core eco- prince had remained a happy go lucky way. In one of his first speeches after nomic sectors, including tourism, the bachelor. But many hope it will have succeeding his father, he acknowl- property market and banking. Worse, the same effect in putting the spot- edged Monaco was a tiny state. But the principality has found itself light once again on Monaco, its attrac- that did not prevent it from having caught in the campaign by its much tions and its potential, as spectacu- international ambitions and bigger neighbours and members of the larly did Prince Rainier’s marriage to “dreams”. Prince Albert has sought to G20 group of leading countries to Royal wedding: Prince Albert and Charlene Wittstock are to marry in 2011 Getty the actress Grace Kelly in 1956. enlarge his country’s voice and stand- clamp down on tax evasion and bank- Taking over from his father was ing in two areas he is passionately ing secrecy. stamp state more seriously. In so and disappointed. However, the much needed fresh boost to consoli- never going to be easy. Prince Rainier engaged in – sport and protection of The Prince has made it clear he is doing, he has also shown he can take Prince felt that the project did not date its economic future in complex in his extremely long reign trans- the environment. committed to financial transparency difficult and unpopular decisions. meet his strict environmental stand- and changing times. formed and modernised the principal- He has always been a keen all- and adapting the country and its In particular, he decided to suspend ards and that in any case it was not By announcing instead his forth- ity and extended its territory by 20 round sportsman. He has been a mem- financial system to international indefinitely a plan to expand his terri- the moment to embark on such a coming fairy tale wedding, the Prince per cent by landfills into the sea. ber of the International Olympic Com- rules. And just like his late father, he tory even further with a new penin- risky and expensive project. may have opted for a simpler and far True, Prince Albert had long been mittee for more than two decades. He is keen to shed the principality’s tra- sula that would have jutted into the Promoters of the now aborted land- more glamorous way of reviving inter- carefully groomed for the role. And has competed in several Olympics ditionally frivolous image and per- sea near the old harbour’s entrance. fill design still argue that the project national attention on his tiny and when he was enthroned in 2005 after leading his country’s bobsleigh team. suade the world to take his postage Property developers were put out would have given the principality a intriguing country. A tough run of luck at the casino for just over half of group through its partnership months to June 30. more attractive,” counters Profile turnover: “The fall in with Mangas: “You can However, gambling Mr Biamonti, before saying gaming activities is a play for profitability or you revenues continued to fall, that the group’s Société des direct consequence of a can play for market share. dropping 26 per cent performance is “more Bains de Mer deterioration in the Our strategy is to generate compared with the conjunctural than economic environment. cash flow to reinvest in previous year. Group structural”. Profits are down at People gamble more when acquisitions and market revenues fell 11 per cent to “It’s up to us to improve the money is easy.” share gains. So we are not €88m in the first quarter. the offer,” he adds. the gaming group, The group’s opulent but looking for immediate Mr Biamonti dismisses To that end, the says Scheherazade only half-full hotels also profit but rather for long- suggestions that Monaco’s company is keeping a close acted as a drag on term value.” glamorous heyday is over, eye on introducing new Daneshkhu profitability, with an Mr Biamonti says the with a knock-on effect on card games, since Asian operating loss of €4.7m in company also suffered last its main businesses. players – still only a tiny 2009-10, against a €7.4m year from Monaco’s late A recent report on the part of the clientele but Société des Bains de Mer profit the year before. introduction of a ban on principality in L’Express, a expected to be important may have a monopoly on In part this was due to a smoking in public places. French weekly, echoed an in the future – prefer cards casinos in the playboys’ refurbishment programme Smoker gamblers had oft-repeated sentiment that to roulette. playground, but this including €48m spent on flocked to its casinos to Prince Albert lacks the It is also introducing advantage has not the stately Hotel escape the ban in France allure of his glamorous new versions of poker – a prevented revenues and Hermitage. and Italy but Monaco lost parents, Prince Rainer and game that 10 years ago net profits from plunging SBM also renovated its its competitive advantage Grace Kelly, and that could be played only in over the past two years. 1930s waterfront hotel, the once it too followed suit in sports and business private clubs – and In addition to its casinos, Monte Carlo Beach, and November 2008. personalities have replaced building an extension to the company runs most of opened the Buddha Bar, a The gaming business film stars and models. the terrace at its main the principality’s luxury restaurant and bar aimed made an operating profit of These days, it said, you are casino for gamblers who hotels and is one of its at attracting Asian visitors. €26.7m in 2009-10, even if more likely to see Eddy want to smoke. biggest employers. Total investment rose to this was less than half that Merckx, the veteran The company believes As such, it is an €199.3m in 2009-10, against achieved in 2007-08. Belgian cyclist, than Monaco’s good weather important bellwether of the €35.4m the year before, but The group expects supermodel Claudia compared with Paris or city-state’s economic €140m of this represented this year to be “difficult” Schiffer on Monaco’s London should give its fortunes. Indeed the state its stake in Mangas too, although the hotel beaches. casino a further owns 70 per cent of its Gaming. SBM took a 50 per sector appears to have “I honestly think Monaco competitive advantage. shares, which are quoted cent stake in the online bounced back after the is becoming more and Finally, online gambling on the NYSE Euronext gaming group in 2009 group reported a is “in its infancy”, says Mr stock exchange. alongside entrepreneur 10 per cent rise The place to Biamonti but will grow Revenues fell by 6.5 per Stéphane Courbit, its in revenues in gamble away quickly. He points out that cent in the year to March founder. Mangas made a the three your money in return for its gambling 31 2010 to €374.1m. Net €8.6m loss in 2009-10, in style monopoly, SBM pays profit nosedived from linked to charges for a royalties and sponsors €40.6m in 2008-09 to €1.1m series of acquisitions, sports and cultural events. and €93.5m the previous including Betclick, Expekt He hopes the state will year. and Everest Poker, and renew the monopoly Jean-Luc Biamonti, asset depreciations. conceded in 1863, as it has chairman, says the Online gambling was done up to now. But as company has been hit by legalised in France this the renewal date is a still- the economic crisis, year and Mr Biamonti distant 2027, SBM has particularly in its gambling says SBM wants to grow much to occupy it until activities, which account quickly in this area then.
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