Ivana Vukiviћ: Real estate in Montenegro - a safe investment .

The real estate market in Montenegro is constantly growing, and we can say that it is at its peak in the last 15 years. Interest in apartments, houses and plots of land on the coast, as well as in the interior of Montenegro, is shown by foreign citizens, as well as numerous buyers from Serbia.

We spoke to Ivana Vukicevic, one of the partners of Montenegro Prospects, a real estateagency that has been successfully operating for almost 20 years. Thanks to its professional and courteous approach, Montenegro Prospects is the highest rated real estateagency by clients on Google My Business.

Agency "Montenegro Prospects" specializes in working with international clients, so Ivana told us not only about the current trends and prices in the real estate market in Montenegro, but also spoke in more detail about how the purchase of real estate for foreign citizens, which cities are the most attractive for them, as well as why the program of economic citizenship is particularly interesting to foreign investors.

Where most customers come from:

From Montenegro, regional countries or other foreign countries? Our agency has been operating on the Montenegrin market for 18 years, and over the years we have had clients from all corners of the world. In the past, the British and Russians were the biggest buyers, but this trend is gradually changing in favor of clients from the EU, Turkey and even the USA. Today, our customers come mainly from the EU, especially Germany, but also from the USA, UK and Russia. As for the region, the number of buyers has been steadily increasing over the last 8 years, especially represented by clients from Serbia, which is traditionally a significant market for Montenegro. It is positive that the dependence on one dominant market has significantly decreased.

In which parts of the country do foreigners buyreal estate the most and which cities are the most relevant?

The coast is the most interesting part for our clients, real estate in Budva is still the most popular, and also the bay of Bokokotor (Kotor, Tivat and Herceg Novi) as well as the southern part of the coast - Bar and Ulcinj are becoming more and more relevant for our clients, especially for those who want to buy a house in Montenegro. We have offices in Budva, Kotor and Bar, which shows which locations are the most sought after. Trends change, for example, from 2004 to 2008 when the British were the most active buyers, the Bay of Bokokotor was the most popular, as well as traditional old stone houses and ruins. After that, when Russian clients became dominant, the Budva and Bar region was much more represented. Immediately after the COVID crisis, there was a noticeable increase in demand for rural areas. Now we are noticing a great interest in houses in the Bar region from European buyers, especially from Germany. Of course, luxury developments such as Porto Montenegro, Lustica Bay and Porto Novi have always been attractive to high-income buyers.

What do buyers most often look for when selecting property types and features?

Sea view is still one of the most important features of every property, as well as proximity to the beach, restaurants, stores and other infrastructure. In addition, buyers are becoming more and more demanding about the quality of construction, which is becoming a very important factor when deciding to buy. In addition, many buyers want the property to have rental potential, as most people buyreal estate as an investment. In terms of property type, apartments in Montenegro are the most represented and in demand. There is also an increasing demand for houses that offer privacy and peace. We offer more than 1000 apartments and houses on the coast, a large number of land plots, commercial properties and hotels for sale. We can say that apartments are most represented on the Budva Riviera and in the Bay of Boko Kotor, while the supply of houses is much greater on the south coast. However, by far the most beautiful villas are located in Boca. As for commercial real estate that foreigners are interested in, the Old Town in Kotor and Budva are leading, as well as attractive locations in Podgorica - mainly "Preko Morace".

What are the prices per square meter? Is there a difference between the coast and other parts of the country?

Property prices have increased significantly in the last year, so that on average apartments in Budva and Zalivu cost around 2,500 - 3,000 euros per square meter, in exclusive locations (such as Perast) prices reach 4,000 euros per square meter. Properties in Bar are cheaper, but even there apartment prices have risen to 2,000 euros per square meter for new construction. Apartment prices in the hinterland are much lower.

On the Montenegrin real estate market, more and more luxury projects are appearing. What are their prices and is there demand for them?

Real estate prices in luxury resorts reach 10,000 euros per square meter, depending on the location and size of the property. There is interest and sales are happening. Porto Montenegro, Lustica Bay, and Porto Novi are already established projects. In addition to the mentioned properties in Tivat and real estate in the city of Herceg Novi, several more new luxury projects are expected along the coast.

How do foreign buyers feel about the various locations where real estate is offered in Montenegro?

The Montenegrin coast is so small compared to the large countries from which most of our clients come, that they often view it as a whole, focusing more on the characteristics of the specific property they are considering for purchase, as well as the micro-location (neighborhood) where it is situated. We have already mentioned the importance of construction quality and sea views, so these remain crucial factors, aside from price. In general, it can be said that Boka Kotorska and properties in Kotor attract clients with their unique combination of sea, mountains, and beautiful stone houses and villas by the shore, while Budva is known for its fantastic beaches and vibrant nightlife, and the region around Bar is appealing for year-round living.

What is the situation in the interior parts of the country, is there interest in central and northern Montenegro?

Kolasin, after the opening of the highway and modern ski resorts, has become very sought after and popular. There are a large number of exclusive condo-hotels under construction, the purchase of which can provide citizenship. Zabljak is also very popular, as the tourist season here lasts almost all year round. Many foreigners also visit these regions of Montenegro, so the tourist season in the north was brilliant this year.

What is the procedure for purchasing real estate for foreign citizens compared to residents of Montenegro?

The procedure for purchasing real estate is the same for foreigners and citizens of Montenegro. The sales contract is signed at a notary's office either in person or through a notarized power of attorney. Payment for the property is usually made through a notary's account. Buyers are required to pay a 3% property transfer tax and notary fees. The buyer does NOT pay a commission to the agency. There are restrictions only when purchasing undeveloped land. We provide full support to our clients throughout the entire purchasing process, from selection to the registration of the property in the new owner's name. The introduction of the notary system significantly ensures the security of the procedure for both buyers and sellers. Foreign citizens can also rent out the acquired properties to tourists.

Can foreigners obtain a residence permit, and what are the conditions for this?

Foreign citizens do not need a residence permit to purchase real estate, but they can obtain one based on owning a residential property (house, apartment) or commercial space. Since the property is registered in the owner's name, it is necessary to submit the required documents to the Ministry of Internal Affairs, where an application for a residence permit is also filled out. The process of obtaining a residence permit takes up to 40 days.

Recently, the economic citizenship program has been attracting more and more attention from foreign investors. Could you tell us more about it?

The program allows foreign citizens to obtain Montenegrin citizenship by purchasing real estate in the north for at least 250,000 euros or in the central part and along the coast for at least 450,000 euros, plus an additional 200,000 euros for development in Montenegro, as well as meeting the conditions set by accredited foreign agencies (capital verification, no criminal record, etc.). The program promotes the development of high-class tourist facilities, provides significant funds to the budget, and creates new jobs, but it is not favored by the EU, which is trying to curb such programs in its member countries due to the potential risks they may pose.

How difficult is it to find such real estate?

Does your agency have government-approved real estate? Yes, there are 3 officially accredited agents of the economic citizenship program that we collaborate with. They offer a full range of projects that allow for citizenship by investment, although there are significant differences between the projects in terms of location appeal, completion timelines, property status, disposal options, and so on. We strive to focus on those projects that provide the greatest benefit and the least risk to our clients.

Since Montenegro will introduce progressive taxation this year, how has this changed the existing property taxes?

The essence of the law on progressive taxation lies in distinguishing between legal and illegal buildings, as well as buildings that address housing issues, from cottages, secondary apartments, etc. Compared to the previous period, the biggest difference is in the approach to owners of undeveloped land plots. On one hand, this is justified in the case of foreign investors who acquired attractive locations ten years ago or more and have done nothing with them. On the other hand, it poses a significant burden for the local population, which, for example, inherited land for construction. According to Article 9 of the Property Tax Law, the specific tax rate on the assessed market value of real estate is within the competence of local self-government and ranges from 0.25% to 1% of the market value for legal residential properties. The tax is higher if the property does not address housing issues (secondary housing) and ranges from 0.3% to 1.5%. In the case of illegally constructed buildings, this tax is 0.3%-1.5% if it addresses housing issues and 0.3%-2% if it does not. For undeveloped land plots, the tax ranges from 0.3% to 5%.

How difficult is it to obtain a construction permit and what is the procedure?

The procedure for obtaining a construction permit has been simplified. After receiving the urban and technical conditions, a conceptual project is developed, which must be approved by the city architect. Then, the main project is prepared and sent for review. The reviewers check the project and gather the remaining documentation for signing the land compensation agreement. After all this, the construction is registered. Our company can recommend several excellent architectural firms.

What is the situation with supply and demand in the real estate market in Montenegro over the past few years? Have you noticed an increase or decrease in interest?

In the last 18 months, interest in purchasing real estate in Montenegro has significantly increased; the market is very active, possibly the most active it has been in the last 15 years. The combination of low interest rates and fear of inflation has been the main driving force for buying in Montenegro over the past 12 months, as real estate is considered a safe investment. This surge in interest is accompanied by rising property prices, so it can be said that prices have increased by 15-25% over the past year. In addition to the growing interest, the rise in construction material prices has also contributed to the increase in real estate prices in Montenegro.

How is the current global situation affecting the real estate market, and what are your forecasts for the future?

The combination of rising interest rates, economic recession, and political instability will certainly affect the demand and prices for real estate. However, in the long term, investments in Montenegro are still worth it.