News / Investment

Like many popular second home destinations Montenegro's real estate market has been hit significantly since the start of the financial crisis in 2008. More than that Montenegro's Real estate market has been relying heavily on the Russian market. Reports show a stabilization of the market, which would suggest buyers are coming back, but in fact the property market is basically down to zero.

The period between 2003 and 2008

This period in the Montenegrin real estate market can be characterised as a golden time for anybody who had anything to sell. Russians were the first to enter the market in 2003 with others - mainly Europeans - entering at a moment that prices where already skyrocketing in 2006 just after it's independence. The price development rose with more than 500% especially for properties in the more popular beach areas. For a while it seemed that everyone had become a real estate agent. There were hardly any rules concerning money transactions and a lot of properties were sold to Russians bringing in hard cash.

Visa-free travel and flights to Montenegro

Since Montenegro belonged to Serbia, Russians were and still are free to travel to Montenegro without any visa. The same applies for Europeans since the new treaty was signed. Yet from Moscow, Russia, one can find many daily direct flights to Montenegro, whereas from any European country it remains quit difficult to fight direct flights. The Montenegrin Government has been halting the development of direct flights from such countries as the UK, Ireland with lowcost carries because first of all they try to salvage the ailing domestic carries "Montenegro Airlines" and second because the government prefers to develop the Podgorica airport in stead of the much friendlier Tivat Airport.

Other developments killing local real estate agencies

It is true; for a while it seemed everybody had something to do with Real estate and Montenegrins where braging and rumoring among each other what was sold by whom for how much. Many cowboys appeared on the market and subsequently a lot of ill transactions took place where the price for the property was paid but transfer of ownership was "forgotten", leaving foreign buyers with empties hands and empty pockets.

Russian agents in Russia sprung up to work directly with Russian potential buyers leaving the Montenegrin Real Estate companies in the cold. Most of the real estate companies did't survive and many projects under development have been halted or facing difficulties selling the newly build structures.

Cash payments and current average prices

Cash payments and the influx of cash has now been restricted to amounts not exceeding EUR 150.000, whereas in recent years Russians would come in with a couple of millions and buy property without a blink of the eye. The price of a new ready-made real estate in Montenegro dropped since 2008 to an average cost of EUR 1.500 - 2.500 per square meters on the coast. Decline in property prices can be estimated at 40-50%. In the Southern towns like Bar, Sutomore and Ulcinj prices dropped a lot more, since this has been the main area from average Russian buyers with budgets of EUR 50.000 to EUR 150.000

According to data released by the Central Bank of Montenegro in June 2010, the cost of apartments in Podgorica dropped to an average of EUR 1.191 per square meter, which shows a decline of less than 4% over the same period of 2009.

Financing a property

If you want to buy a property in Montenegro nowadays you have to bring your own money. In the past there were a couple of UK based banks granting mortgages to Montenegrin property but these have all ceased to finance Montenegrin property.

Montenegrins main banks haven't been able to pass the latest European stress tests and are very short on cash, so you can't count of any financing here. Asking around the maximum loan given to a foreigner would be around EUR 10.000 - EUR 15.000.

The good part of the current market

Since the demand changed dramatically a buyer can now make a good informed choice and take months for the final decision. Buyers have more opportunities for bargaining, although one might be surprised that many sellers still stick to their original price. Many Montenegrins who didn't sell in the past are all waiting for the return of the main buying group: Russians.

Best buys are definately from Europeans who bought properties in the top of the market between 2006-2008 and with financing based on second morgages at home. Since the property markets at "home" also dropped significantly and the bubble is out of the real estate market in Europe, second mortgages are hardly payable for most Europeans.