But 2007 saw a hiccup in this wealth creating enterprise, with prices rising by around 4 per cent instead of the more used to ten or fifteen per cent in recent years.



But a different kind of buyer became apparent in 2007, quite different from the traditional 2 and 3 bedroom ski apartments which have dominated the Andorra property scene in the recent past.

The new buyers are more likely to be buying a house at over a million Euros than an apartment at 300,000. And it is these buyers who have helped to sustain a property market that might otherwise have been seeing a dip in fortunes.

The real estate big spenders have come about in Andorra as a direct result of fellow tax haven Monaco's rising property prices.

Many looking for a tax haven initially look at Monaco, but soon come to realise that one to million Euros is going to buy a one or two bedroom apartment, while in Andorra - which has the same tax benefits as Monaco - offer good apartments for between 300,000 and 400,000 Euros, and houses starting for under a million. And many opt for Andorra because of that.

One UK company who specialises in tax haven properties agres that there is a direct link between the high prices of property in Monaco, and the high spenders moving into Andorra, commenting that Monaco property prices have risen in recent years to the extent where it challenges London for having the most expensive real estate in the world, adding that Andorra has consistently seen double digit property inflation, but is still considerably less expensive than Monaco.

The property buyers tend to head for different areas of Andorra, with the ski apartment buyers tending to purchase in the key ski resorts of Soldeu, El Tarter and Arinsal. Those looking for residency for tax reasons go more for the year round villages and towns which have a resident community. Outside of the capital (la Vella) these tend to be La Massana and the upcoming village of Anyos, Ordino and Arinsal, although Arinsal's nightlife during the ski season early December to late April tends to steer many newcomers to La Massana and Ordino.

As long as Monaco's real estate prices remain high, Andorra looks set to benefit as Europe's second most popular tax haven for 2008 and the years ahead.