Montenegro’s housing market recovering, amidst booming tourism

November 20, 2017

Montenegro house pricesMontenegro’s house prices are poised to rise, amidst strong property demand and a booming tourism sector.

During the year to Q2 2017, the average price of new residential dwellings in Montenegro rose by 4.95% to €1,102 per square metre (sq. m), according to the Statistical Office of Montenegro. This is in sharp contrast with a y-o-y decline of 10.18% during the same period last year. However when adjusted for inflation, new residential dwelling prices were unchanged in Q2 2017 from a year earlier.

However on a quarterly basis, the average price of dwellings in the country dropped 5.97% (unchanged when adjusted for inflation) during the latest quarter.

Despite that, the signs are good.  Demand is robust. Residential property transactions were estimated to have increased by an average of 10% every year in the past two years, according to local real estate experts.

“For the last few years, we’ve seen a steady interest in properties, without the excitement of a bubble, and good value apartments and houses are selling well,” said Ivana Vukicevic of property firm Montenegro Prospects.

Foreign property demand is expected to continue rising, due to the launch of several new flights from across Europe (such as from Brussels, Milan, Barcelona, London, Oslo and Stockholm). In 2016, tourist arrivals rose by 10.2% y-o-y to 808,788 people, according to the Statistical Office of Montenegro. Then during the first three quarters of 2017, tourist arrivals surged 18% to 737,753 people from the same period last year.

“Montenegro property offers an excellent investment opportunity,” says Glenda Lazare of overseas investment specialist company, Key Universal. “The country has a burgeoning tourist industry, bolstered by the government’s Tourism Masterplan 2007-2020, which aims to develop high-end hotels, golf courses and other luxury facilities in order to attract affluent tourists.”

Says Ashwinder Raj Singh of Anarock Property Consultants: “Since there isn’t a lot of awareness about this country, property prices are still modest and attractive for early-mover investors.”

The economy is expected to expand by a healthy 3.9% this year and by another 3.3% in 2018, from an annual average growth of 2.8% in 2013 to 2016, according to the European Commission (EC), buoyed by surging tourism and large infrastructure projects such as the construction of the Bar-Coljare highway.

There are no restrictions on foreigners buying property, except for land, which can only purchased by foreigners through a company. After a building is constructed, ownership can be transferred to individuals through a simple procedure.

In 2015, the federal government passed a law allowing foreign homebuyers to obtain a residency permit in Montenegro upon purchase of a property, regardless of its value, according to Vukicevic.

Montenegro’s charm attracts foreign buyers

Montenegro isn´t a rich country. But foreign investors are drawn in droves to the Adriatic coastal areas, particularly the islet of Sveti Stefan and the coastal town of Budva, now key resorts for the Russian new rich to show off their money.  To some extent, Montenegro´s coastal property market fluctuates with the fortunes of Russia´s economy - i.e., with the price of oil!

It’s a scene of glitz and glam, not subtle, but in your face.

Budva is a charming coastal resort and Venetian port-city, with sandy beaches and a diverse nightlife, and is the centre of tourism, accepting well over half a million visitors annually. The larger Budva area had one of the most expensive housing in Montenegro, at an average price of €1,258 per sq. m. in Q2 2017, according to the Statistical Office of Montenegro.

The marvellously beautiful adjoining village of Stefi Stefan was a famous resort between the 1960s and 1980s, visited by celebrities like Orson Welles, Elizabeth Taylor, Sophia Loren, Princess Margaret, Carlo Ponti, Ingemar Stenmark and Kirk Douglas. Now after the war it is back, with an Aman resort.

The major foreign property buyers in Montenegro include Russians and British buyers.

“The rugged beauty of Montenegro continues to attract high-profile visitors, including Michael Douglas, Catherine Zeta Jones, Madonna and The Rolling Stones,” says Lazare. “It is being tipped as the next Monte Carlo.”

Local house price variations

Montenegro avg price dwellings

Residential property prices in Montenegro vary considerably, depending on location.

  • In Podgorica, Montenegro’s capital, the average dwelling price increased 4.1% to €1,116 per sq. m. during the year to Q2 2017, according to Statistical Office of Montenegro.
  • In the coastal town of Budva, dwelling prices dropped sharply by 16.4% y-o-y to an average of €1,258 per sq. m. in Q2 2017.
  • The seaport and coastal town of Bar has the most expensive housing in the country. The average dwelling price fell by 2.6% y-o-y to €1,461 per sq. m. in Q2 2017.
  • Niksic has the least expensive housing in Montenegro, with an average dwelling price of just €550 per sq. m. in Q2 2017, down 4.4% from a year earlier.

Residential construction increasing

Montenegro dwellings permits

During the first half of 2017, the number of dwelling permits rose by 7.8% to 1,649 units from the same period last year, an improvement from meagre annual increases of 0.4% in 2016, 1.6% in 2015, and y-o-y declines of 10.6% in 2014 and 7.9% in 2013.

In H1 2017:

  • Residential buildings with one dwelling: permits rose by 20.4% y-o-y to 112
  • Residential buildings with two dwellings: permits dropped 20.8% y-o-y to 84
  • Residential buildings with three or more dwellings: permits rose by 10.4% y-o-y to 1,410

What´s growing?  The coast!

Montenegro tourists

The coastal areas of Budva and Becici saw significant developments during the past five years with numerous apartment buildings and several large-scale projects, according to CBRE Montenegro.

They are very attractive to tourists because of their beautiful sandy beaches and nightlife.  That´s why there are a lot of new projects:

  • Porto Montenegro is a large-scale development complex located in the coastal town of Pivat, in the Bay of Kotor.
  • Dukley Gardens, a high-end project located in Zavala peninsula, has recently been completed and officially opened.  Developed by Stratex Group, Dukley Gardens consist of 36 villas and 202 houses.
  • DOMXXI is another high-end residential development in Budva, situated near the Budva Old Town.
  • In the Boka Bay, exclusive complexes and high-end residential units are also currently under construction. It is considered as a luxury tourist destination, with extensive list of amenities for high-end clientele.
  • Lustica Bay, developed by Orascom Development Holdings, is another large-scale complex situated in the northwestern Traste Bay in Tivat. The first 10 residential buildings with 70 apartments have been recently completed. Another 16 residential buildings with 90 units are currently under construction, and are set for completion next year. The entire development, when fully completed, will have more than 1,000 apartments, over 500 residential villas, 2 marinas, hotels, restaurants and shops, spa and wellness, and more.
  • Portonovi, a world-class luxury resort situated in Kumbor and being developed by Azmont, will consist of high-end residences, lavish One&One hotel, Henri Chenot’s wellness center and 2 marinas, among others. It is slated for completion in 2018.
  • Porto Skadar Lake is another mixed-use project under construction in Skadar Lake. It will consist of 30 private villas, restaurant, hotel, marina, tennis courts, and eco-spa, among others.

Montenegro dwellings sold

Several residential projects are also being built in Podgorica. The City Quarter, located in the immediate vicinity of Delta City shopping center, is the largest mixed-use complex in the capital, according to CBRE Montenegro.

  • New City Quarter, consists of 12 new residential buildings, is being built.
  • Ljubovic, a residential project being developed by Gradnja Promet consisting of around 170 apartments, has entered its final construction phase.
  • Local developer Celebic plans to build 6 residential buildings in the city.
  • Local developer Zetagradnja has already completed one residential building, out of six planned.
  • Old Airport, a settlement in the capital city, has two residential developments under construction.
  • A mixed-use development in Block X consisting of 142 residential units has also entered the final construction stage, developed by Normal Company.
  • Normal Company is also constructing a 420-unit residential building in Block VII. It is scheduled for completion this year.

Interest rates continue to fall

Montenegro interest rates

In September 2017, the average mortgage rate stood at 5.49%, down from 5.96% during the same period last year and the lowest mortgage rate ever recorded by the central bank.

  • Up to 1 year: 5.95%, slightly up from 5.92% a year earlier
  • Over 1 year: 5.49%, down from 5.96% a year earlier

Non-residents can get mortgages with a loan-to-value (LTV) ratio of 50% of the value of the real property, with maximum terms of up to 25 years, according to Dream Estates Montenegro.


  Erste Bank Montenegro Lovćen Bank First Bank Crnogorska Komercijalna Banka
Loan amount €10,000 - €400,000 €10,000 - €200,000 €5,000 - €100,000 €50,000 - €300,000
Payment period Up to 20 years Up to 10 years Up to 25 years Up to 25 years
Nominal interest rate From 3.99% +6M EURIBOR From 4.95% 7.99% to 11.49% 5.5% to 7%
Loan processing fees Up to 1% Up to 1.25% 1.5% to 2% Up to 1%
Payment method Monthly Monthly Monthly Montly
Source: Dream Estates Montenegro

Robust economic growth, fueled by strong tourism and construction

Montenegro gdp inflation

The economy´s major growth driver is tourism.  From 2011 to 2016, tourism grew by an average of 5.4% annually. In 2016, tourist arrivals rose by 10.2% y-o-y to 808,788 people, according to the Statistical Office of Montenegro.

Then during the first three quarters of 2017, tourist arrivals surged 18% to 737,753 people from the same period last year.

The economy grew by a modest 2.5% last year, after annual growth rates of 3.4% in 2015, 1.8% in 2014, and 3.5% in 2013, according to the IMF. The economy is expected to expand by a healthy 3.9% this year and by another 3.3% in 2018, according to the European Commission (EC).

However, large infrastructure projects are now putting pressure on Montenegro’s fiscal balance and public debt. The government budget deficit is expected to rise to 5.8% of GDP this year from 3.6% of GDP in 2016. Likewise, the government’s gross debt is also projected to increase to 71.1% of GDP this year, from 67.4% of GDP in 2016, according to the EC.

Montenegro will raise the value added tax (VAT) from 19% to 21% next year, in an effort to reduce public debt starting 2019. The government also plans to cut officials´ salaries, freeze public sector employment, and scrap benefits to many social categories.

The country’s overall inflation slowed to 2.3% in October 2017 from 2.8% in the previous two months. Nationwide inflation averaged 1.5% from 2010 to 2016, according to the IMF.

Unemployment fell to 15.1% in Q2 2017, from 17.4% in the previous quarter and 17.5% in the same period last year, according to the Statistical Office of Montenegro.

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