Real Estate Investment in Montenegro
Most people haven’t even heard of this little Adriatic country of 627,000 souls which got its independence from Serbia in 2006. It joined NATO in 2017 and is widely expected to be the next incomer into the EU; 2025 being the latest estimate.
Check out this CNN Travel link to see how picturesque Montenegro
GDP per capita is about half of EU average, and has seen Central European-like GDP growth rates in the last few years (2.9% in 2016, 4.7% in 2018, and 4.5% in 2019).
Tourism numbers have seen steady growth, but are still predominantly a Serbian and Russian affair even though these demographics are changing fast, with Westerners and Asians growing faster than the average.
The purpose of this article is to focus on the COASTAL areas of Montenegro. The Global Property Guide is a good reference point, but its numbers focus on the capital, Podgorica. There is nothing to be done there. It is a small capital of 200,000 people, with loose zoning laws and plenty of available land. The perspective for capital gains is almost none.
Kotor / Boka Bay
Why the Bay of Kotor, also called Boka Bay, is where you should target your real estate investment in Montenegro ?
When investing somewhere, I always ask myself, what is the growth story?And here, in the Bay of Kotor, the growth story is self evident all over.
First, the place is as gorgeous as Norwegian Fjords, and secondly people are starting to notice.
Not only the press, but investors as well. And not just small time investors, but rather massive projects, that have the full support of the government which is trying turn the Bay of Kotor, and Montenegro generally, into the main Adriatic destination for the super rich. Whilst Croatia got in the game too early, built too early, and is attracting mostly middle class Europeans, Montenegro has a global vision, and has kept prime land for massive developments that target the 1%. The top three developments are:
PortoNovi
Lustica Bay
Where exactly in the Bay of Kotor should I invest?
Kotor Old Town: We’re talking of a beautiful old town, similar to Dubrovnik, with apartments that can be found at €2000-3000 /m2, which is at a substantial discount to Dubrovnik. There is clearly a geo-arbitrage play to be done here. Cruise boats come in mass, and no guidebook or article on Montenegro will fail to mention Kotor old town. Being able to buy a piece of history, which will never go out of fashion is a great way to at least maintain asset value. The Savills graph mentioned a big drop in prices after the Great Recession, but what it does not mention is that the drop was much lower in the old town. Old stone apartments and houses keep their value as there is limited supply.
Tivat: Right where the country’s second international airport and Porto Montenegro are. Whilst Budva is packed and intense, Tivat is laid back, and has more of an all year round life. There are two plays here, one being Airbnb & the other one being long term lets as there is a high number of expats who choose to live here all year long, and a healthy local jobs market. It is worth mentioning that Tivat has not 1, but 2 English international schools. There is growth in Tivat, with infrastructure being developed & relatively strict zoning laws. The place has upside.
Not only is Tivat a good destination for real estate investment in Montenegro, but it is also one of the best places for retirement in the region. Properties of varying degrees of quality can be found between €1300 /m2 and €4000 /m2 outside of Porto Montenegro. It has an active expat scene, an international airport (flights to London, Moscow, Munich, Paris, Dubai, etc), good beaches, and no massive crowds in Summer. To top this, it even has ski slopes a 3 hour drive away in Winter.
What mistake to avoid when investing in Real Estate in Montenegro ?
-
Either go for new builds, or for old stone houses/apartments. This is what people are looking for. Nobody is interested anymore in houses from the 90s & 2000s, though these could be good for personal use as they often offer the best value
-
Don’t forget to negotiate as liquidity is low. Some sellers are hungry for a deal.
-
Some areas of the Kotor Bay have almost 0 sunshine all year round due to the angle of the mountains. Typically the sellers wouldn’t warn you
-
Get a good lawyer. A lot of houses and developments were built illegally, which can lead to substantial issues down the line
-
I repeat: Get a good lawyer. Title deeds oftentimes have oddities happening on them, like people owning strips of your garden, or lawsuits/claims by family members.
A lovely tax and regulatory environment by European standards
The tax system in Montenegro is lovely. 9% capital gains, 9% income tax, 9% corporate tax rate, and low property taxes, usually less than 0.5% of the actual value of the property, and much less if one resides there. Montenegro also offers residency to property owners, and there is a Citizenship by Investment programme as well.
Montenegro is beautiful, growing, and there is significant upside in certain pockets. It’s not a market where everything will go up in prices as in a booming city. It’s important to target the investment properly, and to be clear on one’s objective.