Lifestyles of the rich

For a third economics-related post this morning, how about this analysis of Monte Carlo from the Daily Mail?

Monaco is officially the world’s most densely populated sovereign country, and almost every one of the 33,000 people resident there is seriously rich.

It is estimated that Monaco houses 2,000 millionaires and 50 billionaires, many of them living within the ward of Monte Carlo, making it the wealthiest place, per head and per square foot, on Earth.

. . .

Monaco is a tax-free haven. And the simplest way of understanding what this means is to talk to one of the 2,000 or so British expats who live there, such as chemicals tycoon Mike Peagram.

He sold his business eight years ago for £44 million, and by immediately moving to Monte Carlo for the next five years (the minimum time you have to live there to qualify for tax exemption), he saved himself £13million in capital gains tax.

These tax rules are simple, but vigorously enforced. You can spend a maximum of 90 days a year in Britain during the qualifying period. If you keep to the rules, then your tax bill is zero. Nought pence. Not a sausage.

It’s the ultimate Don’t Pay As You Earn society.

. . .

‘Anything money can buy is available,’ he told me, with a self-satisfied chortle. ‘Whether that’s great hotels, food, music, theatre, cars. Anything.’

But to afford all this, Mike reckoned you’d need £10million in the bank just to ‘get by’, and he wasn’t joking.

Dining in the Alain Ducasse restaurant in the Hotel de Paris could set you back at least £1,000 with a nice bottle of wine. Even a Diet Coke in one of the cafés by the Monte Carlo Casino set me back nearly a tenner. I passed a watch shop, and saw one in the window for sale at £1million!

The glorious weather, lavish lifestyle, guaranteed privacy and proximity to many great European cities make Monaco an attractive option for celebrities. But even they are unashamed about what the big draw really is.

I spent an amusing morning with Formula 1 racing star David Coulthard, who fled to Monaco 15 years ago and now owns a hotel there called the Columbus. When I asked him what made him move there in the first place, he laughed and said simply: ‘Tax!’

He explained: ‘I remember getting my first big cheque from racing, for about £350,000, and just by being a Monaco resident I was able to keep all of it. That was very appealing!

‘I’ve probably saved tens of millions of pounds by living here, and my quality of life has been fantastic.’

. . .

But paradise doesn’t come cheap. Property is absurdly expensive. The world’s most expensive street for homes lies at its heart, in Avenue Princess Grace.

I was shown around one duplex apartment which overlooked the harbour by a charming French estate agent, Michel Dotta. It was a very nice four-bedroom, four-bathroom pad, spread out over two spacious but not vast floors.

As I admired the view, I casually asked Michel how much it cost, and the answer nearly sent me flying over the balcony. ‘£60 million [US $86.7 million].’

‘My God,’ I replied, when I could breathe again. ‘Is that the most expensive in Monaco?’

‘No, no,’ he smiled. ‘That one is £80 million [US $115.6 million] . . . ‘

I turned to where he was pointing, and saw a slightly bigger duplex in the same block. ‘But then, the view is the best in Monaco.’

‘I see, so how much of the £60 million is the view?’

‘At least half,’ he said.

Monaco’s astonishing property boom – prices rose by 25 per cent in 2007 – will be affected by the credit crunch, but Michel is confident that it won’t make much difference.

‘The problem is not a lack of buyers, because demand far exceeds supply,’ he said. ‘Good places are hard to come by, and there is a long list of potential bidders for anything that comes on the market.’

As further evidence of this, I accompanied a smart young marketing guru called Myles Mordaunt in his white Lamborghini to a studio flat he was selling on the outskirts of town.

It was 47 square yards, very tatty, and had a dreadful view of someone’s dirty washing and a building site.

‘How much?’ I asked. ‘£1.5 million [US $2.17 million],’ Myles replied, admittedly with a slightly self-conscious smirk. He expected to sell it quickly, and did so.

. . .

Sex in Monte Carlo is predominantly of the commercial variety. True love is thin on the ground. Or as one lady who has lived in Monaco for many years told me: ‘In St Tropez, the jewels are fake and the orgasms are real. In Monaco, the jewels are real and the orgasms are fake.’

. . .

But wonderful though it is in many ways, Monaco is a bit … well, boring. Yes, it’s clean, safe and sunny. But after a week there, I’d seen all there is to see. I like my cities imperfect.

If you take the tax-free deal, I suspect you’re going to be spending a lot more time here than you probably want to. It’s hard to argue with Jack Nicholson’s withering assessment: ‘Monaco is Alcatraz for the rich.’

Lots more at the link.

Never having been (and never likely to be) in that level of income or personal wealth, I can’t say what it would be like to live there . . . but I think I’ll take the rather more genuine people who inhabit my life at present, thank you very much.

Peter