Montenegro » Market Report

The main real estate purchasers in Montenegro come from Russia, UK and Ireland. There is an increasing trend of interest in Germany and France as well. In the past two years property prices have risen on average by 20% per year, and in some specific locations by more than 100% per year, and the trend are for the growth to become sharper. The finance ministry data of Montenegro shows that the revenues from real estate sector increased four times in 2004/06, striking 750 million Euros for 2006 and exceeding 780 million Euros in the first 11 months of 2007 alone.

In only three years, the prices have almost tripled and numerous real estate buyers have bought their holiday villa, stone house, flat, land with plot to build their own house or commercial property. Prices of Montenegrin real estate rose abruptly after the country declared its independence on May 21 2006, which corresponded with the growing investor’s interests.

The maximum attention exists for the areas around Lake Skadar, the old Royal Capital of Cetinje, and the recognized winter holiday resorts in the North: Bjelasica, near Kolasin and Durmitor, at Zabljak. These first two places are of interest because of the low values - up to 200% lesser than along the coast, while they are in outstanding locality, not far from the sea, near the mountains and near the capital Podgorica.

Montenegro investment property is anticipated to cultivate in value by 15-20% per year, and possibly reach growth of even 30% per year as Montenegro progresses towards full accession into the EU, which is expected to be sometime in the next two years. The real estate in Montenegro realises rental yields of between 6 and 10% depending on place, property type, and property size.

There is a hearty demand for genuine stone houses, plots along the coast and newly-built apartments and the interest in agricultural farms in the vicinity of seaside towns is growing.

Residential prices in prime locations hover in the 2,500-2,800 euro a sq m price range. The coastal property, can ask for prices between €1,000/m² to €3,000/m² reliant upon the condition and location, with properties inland providing a cheaper substitute. Due to the current rush in demand, prices of coastal properties in Sveti, Stefan and Budva are about €2,300 to €3,300 per sq. m. The price of a 120 sq. m. luxurious villa is around €396,000.

The price ranges for residential space in coastal hotspots like Kotor, Budva and Herzeg Novi in general remain far under this level, from 2,000 to 4000 Euros per square meter, in accordance with the local agents. Before the preceding years roar, a typical entry price was 1,000 Euros. Even as coastal prices go up hastily, land in villages on the slopes of mountains like Rumija and Lisinja begins at just five Euros per square metre. Domestic cost pressure from the coast has been more rapid to spill over into Podgorica, the capital, where a square metre of residential property now strikes the market at between 1,700 and 3,000 Euros.

International Property Brokers forecast that property prices have not reached its peak yet and will see an additional 30 per cent growth in 2008-2009.