Finding a house in Montenegro: Villa with bay and mountain views

International real estate

On the Adriatic coast of the Balkan country, demand for real estate is rising and prices are back to 2019 levels, exceeding the pace of construction.

Villa in Lepetan

In southwestern Montenegro, in the coastal village of Lepetane, near the town of Tivat, is a four-bedroom semi-detached stone mansion. The villa has an area of 227 square meters, was built in 1820 and renovated five years ago. The mansion is located on the opposite side of the local road from Boko Kotor Bay, a mountain resort that flows into the Adriatic Sea. Boris Darmanovic, brokerage manager at Montenegro Sotheby's International Realty, notes that the villa's design combines traditional Montenegrin construction with modern architecture and contemporary interior solutions. The architect used metal bridges to connect the sliding glass doors of the second-floor bedrooms to the exterior walls. "It's unusual for houses like this," Mr. Darmanovich says.

The mansion is entered through an arched wooden double door into a stone wall that forms a stone courtyard with ground-level tile to the left of the house. A front door leading to the second floor opens to the living room with classic stone walls and tile flooring. Round floating leather sectional furniture faces the fireplace with a television above it. At one end is a dining table illuminated by two drum-style pendant chandeliers. The house is being sold furnished.

To the left of the front door is an archway leading into the kitchen with stone walls and barrel ceiling. The island features white marble countertops, sink and stove. Along the wall with a closet are a refrigerator, oven, and a camouflaged toilet. A rear door leads to a spacious terrace with a summer kitchen including a barbecue.

From the kitchen, a spiral staircase leads to the spa area on the first floor. The heated indoor pool is lined with ceramic tiles and marble. There is a sauna, Turkish steam room and a bathroom with shower on the tiled floor. Double doors at the front of the pool room open onto a walled outdoor terrace beside the road.

The first floor has a study that could be used as a bedroom, it opens onto a courtyard with an ancient stone fountain and firewood niche. A separate entrance has a studio apartment with bathroom for guests or staff.

A wide hallway on the second floor leads to a side terrace. Sliding louvers installed under the solar panels for hot water protect the veranda. Two bedrooms with oak flooring and sliding glass doors share a common bathroom. A four-foot bridge links the bedrooms from the glass doors to the front windows and decorative shutters (but no glass). The lack of a roof allows sunlight (and rain) to penetrate.

The attic houses the master bedroom with oak flooring and sloping walls with wooden beams. Sliding door opens to a balcony overlooking the bay.

Parking for two cars is across the street by the water. A stone wall and rolling gravel area serve as the beach, and there is a 30-foot yacht dock.

The house is just a mile from downtown Tivat and Porto Montenegro, a yacht harbor with luxury residences, high-end restaurants, name brand stores and a boutique hotel. The well-established UNESCO World Heritage town of Kotor, known for its coastal churches and labyrinth of cobbled streets, is a 25-minute drive away. Tivat International Airport is 20 minutes away.

Market Overview

The pandemic damaged the economy of Montenegro, a country of 660,000 people, "more than any other country in the region, causing a 15 percent drop in GDP" and an increase in unemployment from 15.3 percent to 20 percent, according to a U.S. State Department report.

Kieran Kelleher, chief executive of Dream Estates Montenegro, an affiliate of Savills, said the number of transactions at his firm fell 55 to 60 percent last year, although prices fell a less alarming 10 to 15 percent. "We predicted a bigger drop in prices because of the coronavirus," he said, "mainly because developers knew they would be better off waiting.

Kosomu, Lejla Čalić, director of Resido Montenegro, noticed "a significant increase in requests for permanent residence in Montenegro." Long-term rentals and purchases began accelerating in December and haven't stopped.

"I don't remember a summer like this when we were so busy with purchase inquiries," Ms. Chalich said, noting that buyers often look at properties during the vacations. "This summer is different. They are coming to buy. "

Nico Lakovic, partner and head of Montenegro sales at Sotheby's International Realty, says 2021 is "booming and people are buying second homes. "

In Mr. Lakovic's office, inquiries are up 500 percent and the number of sales on Montenegro's coast is up 60 to 70 percent compared to last season, when arrivals are almost completely closed," he says. Prices are now in line with 2019, but "demand has increased significantly".

Prices for villas are "fairly stable" at the moment, but new apartments have increased by at least 10-15 percent, mainly due to the higher cost of building materials. "Construction is really dynamic," Ms. Chalich says.

Foreigners make up 99 percent of buyers in the "premium," or two percent, segment of the market, says Mr. Kelleher, noting that prices for waterfront properties range from 7,500 to 10,000 euros per square meter ($825 to $1,100 per square foot) and in "fantastic new resorts".

Away from Montenegro's Adriatic coast, the "non-premium market" for smaller apartments is "quite stable" and "more suited to the local population, but foreigners are also buying there," Mr. Kelleher says. Prices for such properties range from 2,000 to 2,500 euros per square meter ($220 to $275 per square foot).

Penthouses, townhouses and villas in luxury marinas such as Porto Montenegro and Portonovi are being sold alongside traditional stone houses by the sea.

"People are buying good properties, buying larger properties and water houses," says Mr. Lakovic. In the upper segment, prices are as high as $10 million for a three-bedroom house on the first line.

But Mark Wild, director of MontenegroReal Estate, warns that house prices are not uniform. If two neighboring houses are for sale, "one is worth twice as much as the other. The hardest part is finding the right property at the right price.".

Who buys in Montenegro

Buyers are coming from the United States, Canada, Turkey, Serbia, Ukraine, the United Kingdom, Western Europe, China, Lebanon and other Middle Eastern countries, agents say.

"Russians are still coming, but not as often as they used to," Ms. Chalich said.

Some American buyers who left as children are returning, Mr. Wild says. "People who went to America and made a lot of money come back here and buy a second home," he says. "We even have people coming back and buying their old family homes. "

At the moment, about half of buyers from the United States, China and the Middle East are taking advantage of the Citizenship by Investment program, paying a minimum of 450,000 euros ($535,000) for properties on the coast or 250,000 euros ($297,000) for units in new hotels in the ski region to the north, plus a government fee of 100,000 euros ($119,000) for a golden passport. But the new coalition government that replaced the pro-Western Democratic Party of Socialists, which ruled the small Balkan country for 29 years, could undo that program, Mr. Kelleher says.

The personal and corporate tax rates of 9 percent are nonetheless an "incentive" for buyers, Mr. Lakovic says. Montenegro, which declared its independence from the State Union of Serbia and Montenegro in 2006 and joined NATO in 2017, plans to join the European Union by 2025.

Basic purchase details

There are no restrictions for foreign buyers. Acquisition of housing can be done directly, without the need to create a