Is it worth investing in real estate in Montenegro in 2024?

Is it worth considering buying property in Montenegro in 2024?

How can one find advantageous offers for purchasing apartments in this country? What key points should be considered when buying real estate in this region? Valeria Ursul, the CEO of the real estateagency Crassula Estate, answered these and other questions, including forecasts for market changes, price fluctuations, and investment opportunities in Montenegro.

High real estate prices and new tax regulations

According to Valeria, property prices on the Montenegrin coast are currently at a fairly high level. Starting in 2024, a new progressive tax on real estate transactions will be introduced in the country. This innovation raises many questions, so it is important to understand what impact it will have on buyers and the market itself. A new law regarding the tax on secondary real estate will come into effect on January 1st:

• For real estate valued up to€150,000the previous tax rate is applied3%.
• For objects priced from€150,001to€500,000the buyer will need to pay a fixed amount of€4500plus5%from the amount exceeding€150,000.
• For real estate valued at over€500,001The tax will be fixed.€22,000and6%from the total cost of the property.

It is worth noting that previously, before the beginning of 2024, a single tax was in effect in3%Regardless of the price range of real estate. It is also interesting that investments in new buildings are not burdened by additional tax obligations, as the seller is a registered legal entity that is a VAT payer. Thus, changes in the tax system only affect real estate transactions conducted by individuals.

Preferences of local residents and investors

It should also be noted that when purchasing real estate, there are certain preferences among both local residents and foreign investors. Over the past two years, the real estate market in Montenegro has seen active changes, and the motives of buyers are quite diverse. Currently, the market is beginning to return to previous trends, where local residents and citizens of neighboring countries show interest in buying small apartments for subsequent rental. Meanwhile, foreign investors are more likely to acquire hotels, luxury villas, and new premium-class tourist complexes that promise high returns.

Activity in the real estate market

The highest activity in transactions can be observed in the famous "golden triangle," which includes Tivat, Kotor, and Budva. Over the past year, the market for the winter resort of Kolasin in the northern part of the country has noticeably intensified. Modern hotels with developed infrastructure, ski slopes, and lifts are being built in this area. This direction is of particular interest to investors, as it has great potential for price increases and profitability.

Conclusion

Therefore, before starting the purchase, it is essential to thoroughly study the market and tax aspects in order to make an informed decision and take advantage of all available opportunities for successful investment. Montenegro continues to be attractive for real estate investment due to its unique natural conditions and positive economic policies.

Introduction

In Montenegro, there is renewed active discussion about the plan to restore the airport located in the north of the country, which has been idle for over 50 years. If this project is implemented, it could lead to significant changes in the region, turning it into the country's third international airport.

State of the real estate market

The question of real estate in different parts of Montenegro remains relevant, as interest in housing continues to grow. What is the current situation in the market? How has pricing changed in recent years? Since 2019, the average cost of housing in the country has increased by approximately 40%.

• The prices per square meter vary from:
• Budva: from €1700 to €6000
• Tivat: from €2300 to €7000
• Kotor: from €1900 to €7000
• Bar: from €1400 to €4000

Availability of real estate

Analyzing the availability of real estate in Montenegro, it is worth noting that the greatest interest is observed in houses and apartments located in coastal areas, as tourism is the main economic driver of the country. As a result, real estate on the coast, especially in modern tourist areas such as Porto Montenegro, Lustica Bay, and Porto Novi, is characterized by high prices.

These locations are known for their developed infrastructure and the presence of their own marinas. However, new projects continue to emerge in the market that could become interesting opportunities for investors. The eastern regions, including the northern parts of the country, show potential for price increases, especially considering the construction of large ski resorts, like in Kolasin.

Affordable housing

On the other hand, the most affordable housing is located away from tourist routes, making it more accessible. For example, in the municipality of Bar, the prices per square meter are lower due to the smaller number of tourists visiting the area.

Acquisition of real estate by foreigners

When it comes to purchasing real estate for foreign citizens, it is important to consider that local banks typically do not issue loans to non-residents. However, the process of acquiring property is quite simple and transparent for foreigners.

• To make a purchase, you will need:
• Foreign passport
• The presence of funds in a bank account in any country

It is recommended before the deal:

• Ensure that there are no encumbrances on the property.
• Check the correctness of the ownership documents with the seller to avoid future problems.

Typically, the notary performs this verification within one to two days based on the documentation provided by the seller. Investing in real estate in Montenegro means discovering a wealth of opportunities for profitable investments and confident capital growth.

Information about real estate

The document contains key information about the property, such as its type, location, area, as well as details about the owner and the cadastral number. It also includes information about any encumbrances or restrictions related to the property. To verify the legality of the seller's ownership rights, the client has the option to visit the website of the cadastral authority independently.

Documents for signing the contract

When signing the deal, the potential buyer must have their foreign passport with them, and the seller is required to provide a number of necessary documents. These include:

• seller's passport;
• original documents confirming the right to property;
• spouse's consent for the sale if the seller is married;
• certificate of marital status, if the seller is single;
• an extract from the tax authority confirming the absence of debts on property taxes;
• receipts for utility payments.

Transaction formalization

The transaction is formalized through a contract, which can be preliminary (pre-contract) or main (sales contract), and is signed with the participation of a notary.

Who becomes the owner of real estate in Montenegro?

Which foreign investors most often become property owners in Montenegro? In this segment, citizens from several countries play an active role, among which Turks, Russians, Serbs, Germans, Ukrainians, Swiss, British, Americans, Croats, and residents of the United Arab Emirates stand out particularly.

Real estate investments

In the first half of 2023, the volume of foreign investments in Montenegro reached a record high of569.61 million euros, while being more296.81 million eurosOver half of this amount was invested specifically in the real estate sector. Analyzing earlier years, the following can be noted:

• The year 2022 - 435 million euros
• 2021 year - 278 million euros
• 2020 - 116 million euros
• 2019 - 178 million euros
• 2018 year - 182 million euros

Obtaining a residence permit through investment

Despite certain risks, foreign citizens can obtain residency in Montenegro by purchasing an apartment or house. An important question is how to properly choose real estate for further investment? How profitable are investments in this sector, and what strategies exist for successful investing?

Methods of earning money in real estate

One of the common methods of earning money is renting out real estate. To ensure that investments yield the desired income, it's worth paying attention to areas with active construction of new hotels and tourist complexes. The highest level of profitability...ROI) can be achieved in large complexes that effectively utilize marketing and promotion of their brand. Such complexes can guarantee income at the level of10% and more.

Selection of promising areas

When choosing real estate, it's also important to explore promising areas that may later become attractive to tourists. However, it's worth keeping in mind the potential risks, as predicting when new areas will become popular can be quite challenging.

An alternative approach to investments

An alternative approach to real estate investment involves purchasing apartments in regions intended for long-term rental. Currently, the rent for a one-bedroom apartment on the coast starts at a certain amount.500 euros per month.

The most attractive cities for investment

Among the most attractive cities for investment are Tivat, Kotor, and Budva — these towns are often referred togolden triangleEach of them has unique features and has long established itself as a tourist destination.

Additionally, small villages along the Bay of Kotor, such as Prčanj, Stoliv, Risan, Morinj, and Orahovac, attract visitors seeking a peaceful retreat and a connection with nature.

Moreover, large premium-class complexes such as Potro Montenegro, Lustica Bay, and Porto Novi are experiencing a high level of interest from investors.

It should not be forgotten that ski tourism in the Kolasin area is actively developing, offering a variety of opportunities for tourism. The municipality of Bar and the Ulcinj region, known for their wide sandy beaches, remain more accessible for investments compared to other coastal cities, making them attractive for those looking to invest.

Conclusion

In conclusion, it is worth noting that purchasing real estate in Montenegro in 2024 could be an attractive opportunity for both locals and foreign investors. With the introduction of a new tax on the acquisition of secondary properties, potential buyers should carefully consider their strategic steps and purchasing options.

In recent years, the real estate market in Montenegro has noticeably developed, and there is now the opportunity to purchase not only housing for personal use but also properties that can generate stable rental income.

What is important to consider when buying real estate?

• Tax changes:Considering the changes in taxation, I recommend researching the market in advance and determining which properties align with your financial capabilities and investment goals.
• Preferences of the locals:Local residents, as practice has shown, prefer small apartments for rent, while foreign investors are focused on more expensive properties in popular tourist areas.

Dynamics of real estate prices

The dynamics of real estate prices show that on the coast of Montenegro, they continue to remain high, especially in the sought-after areas of the "golden triangle." However, there are also more affordable options located away from tourist routes. This opens up additional opportunities for those looking for profitable investments.

The process of buying real estate

From the perspective of the purchasing process, it remains as simple and transparent as possible, which is important for foreign investors. Once you have ensured the legal purity of the property and the correctness of the documentation, you can effortlessly become the owner of real estate in this picturesque country.

In the near future, the opening of a new airport in northern Montenegro may lead to another wave of interest in investments in this region.

Results

Overall, despite the new tax conditions, Montenegro continues to be an attractive market for real estate investment. This is especially true for those looking for both vacation opportunities and options for long-term earnings. Making the right decisions in this context can open new horizons for you and ensure profitable investments for many years to come.