Changes in legislation: new challenges for the Montenegrin construction market

Montenegro is a young state.

Montenegro is a country that has recently formed a state, but its legislative system is still in the process of improvement. Bureaucratic obstacles make life difficult for both ordinary citizens and construction companies.

In the past, many issues could be resolved directly, bypassing official channels, which ultimately led to violations of laws and regulations, but the authorities turned a blind eye to such actions. Recent changes in legislation introduced by the Montenegrin government aim to tighten the procedures for obtaining construction permits, which has caused significant problems for companies that do not meet the new requirements.

Developers hope that these changes will help reduce bureaucracy and corruption in the construction market and make it more transparent for potential investors and buyers.

Difficulties of developers

Borisлав Roganovich, head of the Sagio Residence consortium, which is leading the construction of several projects in Montenegro, including the prestigious Belvedere Residence complex in Bečići, highlights two main challenges:

• New lawsThey are good, but so far they are not supported by the relevant regulations and instructions governing the activities of developers. This period of uncertainty may drag on.
• CrisisIn the global economy, this will lead to a reassessment of construction plans, and compact projects with apartments of up to 120 square meters will emerge from reality.

Real estate appraisal

Real estate prices in Montenegro have been steadily rising for a long time; however, the level of comfort at the resorts and the quality of the offerings have not always matched this growth, leading to the overvaluation of many properties on the market.

Vyacheslav Leibman, managing partner of Mirax Balkan, which is building the Astra Montenegro complex in Budva, points out the main problem for developers in Montenegro: "The lack of infrastructure, poor road quality, and issues with electricity and water supply are hindering development. Land prices are often inflated by owners in Montenegro."

Prospects

Despite some challenges, Montenegro remains an attractive destination for real estate investments. The implementation of strict standards and support for infrastructure will help address current issues and ensure sustainable market growth.

Stricter requirements and controls

However, recently the requirements for documentation and new projects have started to tighten. The unclear situation raises questions for many: "We are fighting against illegal construction." That is why, as early as September, work on 20% of construction sites in Montenegro was suspended. But what kind of construction is considered illegal?

Legislation and requirements

Is the legislation in the real estate sector really being organized, and how will this affect foreign buyers? The answer to this question is simple: documents are required! Any company, whether local or foreign, must obtain a construction permit to start work. The set of required permits depends on the location of the site and the area.

• Required documents:
• - Extract from the detailed urban planning document
• - Documents confirming ownership of the plot
• - Architectural and technical projects
• - Agreements with local self-government bodies for connection to utilities
• - Fire safety approval
• - Confirmation of payment for the improvement of the construction site
• - Results of geodetic and seismological studies and others.

The investor must also notify the competent local authority about the start of work at least eight days in advance. The process of obtaining permits and completing documentation can take up to six months, complicated by bureaucracy and corruption. In the early stages of market development, some landowners bypassed the requirements and built houses on the coast without permission. In turn, the government is tightening control over illegal construction to curb such cases.

Prospects

Thus, in Montenegro, the transition to the implementation of legal construction projects means stricter control from the authorities, which may affect the demand for real estate.

New rules have come into effect in Montenegro.

Regarding illegal construction, this can lead to serious fines for companies of up to 200,000 euros or even imprisonment for five years. Ivan Tregubenko, the head of the company "Isk Reality," notes that the main problem is not the reluctance of investors and landowners to pay taxes, but the complexities of the construction permit process.

Concerns and suggestions

The Director of Operations at Sodra, Dragan Zharkovich, expresses concerns about potential dissatisfaction and abuses by officials due to new laws.

The necessity of reforms in Montenegro

IndeedAccording to Dragan Jarković, the state is still not ready for radical changes. Reforms in various sectors of the country's economy are becoming increasingly necessary. Simplifying customs procedures and revising the tax system are gaining particular importance. The real estate agencies sector requires significant legal improvements.

Infrastructure modernization

The country needs to start modernizing its infrastructure, ensuring access to roads, clean water and electricity available to the country. It is critical to eliminate illegal construction that violates rules and regulations.

Changes in the real estate market

It is clear that implementing such significant changes will require time and effort; however, the crisis may serve as an impetus for the government to take urgent measures. Some innovations are already posing risks for both developers and potential buyers. "Large developers comply with the law, so the changes mainly affect 'self-built' projects and private developments," notes Ivan Tregubenko. Borislav Roganovich emphasizes that the real estate market in Montenegro will undergo changes, leaving only major players who offer quality projects amid limited access to credit.

Tips for Buyers

For buyers who do not wish to build their own homes, it is advisable to turn to companies with an impeccable reputation. They increasingly require verification of the property's documentation and assistance from legal specialists. Purchasing real estate in buildings where construction has been completed or is actively ongoing and will be finished in the coming months is a safer option.

Conclusion:

After studying the current situation in Montenegro, it can be stated that the construction market of this young state is facing serious challenges. Stricter legislation and the crackdown on illegal construction are creating new problems for developers, requiring stricter compliance with regulations and documentation.

The fight against corruption and bureaucratic obstacles in the construction permit system is an important step towards ensuring transparency and legitimacy in construction processes. However, it is necessary to continue working on adequate land assessment, improving resort infrastructure, and enhancing the quality of real estate offerings to meet the changing market demands.

The global financial crisis and reduced demand for real estate are also having a significant impact on the construction sector in Montenegro. Going forward, effective management of regulatory changes and high quality projects may contribute to the restoration of consumer confidence and stabilization of the real estate market in this region.

Important points:

• The construction market in Montenegro is facing serious problems due to stricter legislation and the fight against illegal construction.
• The fight against corruption and bureaucracy in the construction permit system is essential for ensuring transparency and legitimacy in construction processes.
• It is necessary to continue working on improving the infrastructure of resorts and enhancing the quality of real estate offerings to meet the changing demands of the market.
• The global financial crisis and the decrease in demand for real estate are also impacting the construction sector in Montenegro.