The Top 3 locations to invest in Montenegro
Author: Kieran Kelleher, Founder and Managing Director, Dream Estates Montenegro
Look No Further – Your Answers Are Here!
Dream Estates Montenegro (Savills Montenegro) have been in business in Montenegro for 15 years. Besides the traditional real estate agency, which has successfully completed over 500 sales, the company has provided development advisory services to most of the large investment projects such as Porto Montenegro, Portonovi, Luštica Bay and the newly announced Ritz Carlton Montenegro.
The advice covers ‘delivering what the market wants’, master planning, financial feasibility studies, hotel brand introduction, and all development delivery services.
In this unique blog, we present to you our renowned market knowledge and market insight titled ‘TOP 3 LOCATIONS TO INVEST IN MONTENEGRO’. Here we focus outside the glitzy new resorts but concentrate on the leverage that the impressive investment in the country will bring to investors.
Save yourself the time and effort and read on.
When our valued clients contact us or visit us in our beautiful office in Kotor, their first questions are ..
Where can I invest in Montenegro with:
a) security of ownership,
b) good capital gain over the coming years,
c) optimal yield (rental) and
d) A place where occasionally, I can enjoy myself, when I decide to visit?
We take out a map of coastal Montenegro and we draw 2 lines. One at Petrovac and the second near Budva.
From Petrovac south, we say - forget it! Too many illegal buildings, poor quality tourism, poor infrastructure (at times no sewage or water connections to mains), poor resale demand and this region simply does not fit our client’s requirement set above. Other than Soho City in Bar, (for a year-round living), the area does not tick any other boxes.
Then we move to Budva Riviera. Yes, it’s for some people - but not for everyone. Budva is overbuilt as you can see from the picture (and a lot more product yet to come), noisy, very packed in summer and attracting a younger budget traveller. This is a place to visit to witness the famous nightlife, a transit point, but not a location that matches our client’s requirements. Ironically, our client‘s that purchased property through us 10 years ago for instance in Budva, are now selling up and moving to our TOP 3 LOCATIONS TO INVEST – where our clients have changed their investment and lifestyle demands and want to move to tranquil, historical locations away from the boom boom! of Budva! There will be even more buildings expected and all green areas will disappear in Budva in future years according to the spatial plans. Traffic is challenging. Parking even more so and the number of new 3-star apartments that have come on the market in recent years is staggering, flooding the market and producing an oversupply which will affect capital appreciation over the years. Yields are poor as supply is pushing down average nightly rates. A project such as the new Mia Budva, if approved, will change the image of Budva, Ananti also set a new standard - but for now, we see poor capital gain due to oversupply and our typical client is not interesting in the noise, the overbuilding and the summer chaos.
Then, on our map, we move to the 5-Star Fjord (The Golden Triangle that links Herceg Novi, Tivat and Kotor) and the TOP 3 LOCATIONS TO INVEST IN MONTENEGRO TO TAKE ADVANTAGE OF THE ONGOING INVESTMENTS INTO HIGH-END RESORTS.
Over the next 5-7 years, €3.5 billion will have been invested into mixed-use resorts in the golden triangle (an example being Porto Montenegro which will continue to expand). A rising tide lifts all boats as they say, and this area will benefit substantially from the move away from mass tourism to integrated resorts for the wealthy. If you can afford it, of course, you can buy inside one of these majestic glitzy new projects. But we are looking at capitalizing on the resorts investment in the area and investing close to, but not in the project itself. Porto Montenegro & the Regent Hotel, Luštica Bay & The Chedi Hotel, Ritz Carlton Montenegro, Four Seasons Blue Horizon, Portonovi and One&Only Hotel- are just to name a few of the investments underway. So where and how can an investor satisfy the 4 key requirements of their investment strategy as listed above
1. Let’s talk Tivat!
When we first arrived in 2004, Tivat (in light green above), had the cheapest real estate prices on the entire Adriatic Coast. Today, Tivat is the most expensive real estate from Zadar in Croatia to the southernmost Montenegrin coast, other than Dubrovnik. Remember, we are excluding Porto Montenegro (PM). We are only covering non-prime projects in the vicinity of PM. PM will continue to expand and spend another €500m over the next ten years to complete the project and continue to become a playground for the mega-rich. As you can see from the chart above, the rise of non-prime Tivat property is solely attributable to what we call ‘The Porto Montenegro effect’. Clients that earlier bought in Budva are moving to Tivat. It has become a destination and a hotspot to thousands of new homeowners. We see further gains in capital growth in the area as PM expands. Demand is coming from key PM middle / top-level management employees for long term renting, first local homeowners (that see Tivat as the best town on the coast for year-round living) and foreign investors, who agree there is further growth possible, yields are good and also, the buyers love to be close to PM itself. There is still room for appreciation in Tivat with very good quality buildings and apartments currently selling for around €2500 / m2. These are new buildings so ownership title is clear. Rentals returns are a combination of long term lets outside of the season and short term lets in season and when combined, well marketed and managed properties are yielding up to 5% per annum. Put Tivat on your map as 1 of the top 3 locations to invest.
Here are a few examples of what you can get for your money.
Cozy apartment in Seljanovo, Tivat / 1 Bedrooms / 1 Bathroom / Total area: 40m2 / Parking space available / Price: €90,000 /
Stylish apartment in Kavač, Tivat / 2 Bedrooms / 2 Bathooms / 30 sqm of covered deck terrace / Total area 120m2 / Infinity swimming pool / Price €275,000 /
2. Count on Kotor!
Let’s cut to the chase. Kotor Old Town is about to boom in value. The town was stagnant for several years - as Russian buyers were not interested to invest generally in The Bay, but now the value is incredible, rental yields are the best possible in Montenegro (yes foreigners want to stay within the walls of the Old Town) and the town is being very managed at present with noise control and increasingly great restaurants and Western Europeans have identified the opportunity in increasing numbers. Kotor is 50 - 70% cheaper than the Old Town of Dubrovnik per m2! But this year, demand has returned from local’s and foreigners who recognise the fact that a) Kotor is unique and can never be replicated – like buying art. b) this is a UNESCO protected town and c) Average prices of €2000 to €2500 per m2 clearly represents incredible value. d) rental yields are improving each year as the season extends. Besides nearby Tivat airport (15 minutes from Kotor) and Dubrovnik airport, on a good border day, is less than 2 hours from Kotor. Dubrovnik airport is expanding annually with a planned capacity to cater for up to 4m arrivals. Equally impressive are the parking facilities for car rental companies with thousands of rental car spaces for each major rental company – a large amount of which end up turning left exiting the airport for Montenegro and avoiding Dubrovnik. We forecast Kotor prices will increase by more than 30% in the next 3-4 years. And yields are very favourable and improving annually. Current investors are buying for future appreciation and future yields. Also, worth noting are areas around Kotor – particularly ‘close to waterfront’ old stone buildings for renovation at the good prices, for example. Our sales in Kotor Old Town and the vicinity of the town are up 300% in 2019 versus 2018 – a good indication that investors have identified this unique opportunity. Ownership paperwork is transparent with the right professionals supporting you.
Here you can see some examples of what you can get for your money within the walls of Kotor.
Apartment in the Kotor Old Town / 3 Bedrooms / 1 Bathroom / Total area: 79m2 / Price:€140,000 /
Apartment with a spectacular sea view in Risan, Kotor Bay / 1 Bedroom / 1 Bathroom / Total area 53m2 / Price: €104,990 /
3. Kumbor Area (Herceg Novi) – The New Kid on the Block
If you look at Herceg Novi prices in the chart above, you will notice that this area today has the cheapest property prices in Montenegro (and Croatia!) You have seen what happened to Tivat prices with ‘The Porto Montenegro Effect’. Portonovi (PN), in Kumbor, close to Herceg Novi, has invested €500m to date and will complete the resort with a total spend of €1.1 billion towards the end of next year. €1.1 billion on 24HA of land. That is a top-end luxury. Prices in the resort range from €500,000 for a studio. One&Only villas start from €10m. A marina village, combining dining and retail options is available, marina and much more in this exciting new resort.
We predict the PM effect will also happen around PN. Can you believe at present you can buy an apartment within an easy walk of the PN resort for €60,000? With such low capital values, yields are possible of up to 5%. A stroll to the 1st One&Only hotel in Europe and a resort welcoming all neighbors. Prices start from €1500 per m2, close to PN. It’s not revolutionary that prices will increase substantially in the Kumbor area, it is evolutionary. Rental supply is a major headache for PN to house key staff so rental incomes are excellent for long-term blue-chip tenants. When PN is finished, short term lets will outperform expectations as PN is a fully open resort to the public. You can live outside for 10%-20% of the price of a property inside the gate. Yes, we are confident there will be a PN effect as just what happened in Tivat with PM.
Here is an example of what you can currently get for your money – simply amazing value.
Sunvalley Villas in Kumbor, Herceg Novi / 4 Bedrooms / 3 Bathrooms / Total area: 266m2 / View of the Boka Bay / Price: €320,000 .
So, there you go. Save yourself time, effort and a headache – Don’t bother looking elsewhere. These are the top 3 locations to invest in Montenegro, outside of the glitzy new resorts!
