Real estate along this Balkan nation’s Adriatic coastline has rebounded to 2019 transaction and pricing levels. Demand for housing is outstripping both supply and construction.
19th Century Villas Sprinkled Along Montenegro’s Bay of Kotor
The Bay of Kotor is considered to be one of Europe’s most beautiful coastline spots. Surrounded by mountains (also considered beautiful as well as very challenging) and spilling into the Adriatic Sea, towns such as Kotor, Lepetane and Tivit in southwest Montenegro are grabbing the attention of buyers from the US, Canada, Turkey, Serbia, Ukraine, Great Britain, Western Europe, China, Lebanon and other Middle Eastern countries. Even expats are returning and buying their old family homes.
After years of being underneath and outside of Yugoslavia’s umbrella, Montenegro declared its independence from the state of Serbia in 2006 and joined NATO in 2017. Those in the know expect the country to join the European Union by 2025.
Montenegrin Economy Damaged Badly by Pandemic
According to a report from the US State Department, Montenegro’s economy was damaged by the COVID pandemic “…more than any other country in the region (Serbia, Kosovo, Albania, etc.).” GDP fell -15% and unemployment fluctuated between 15.3% to 20%.
Real estate transactions essentially evaporated during pandemic travel restrictions and lockdowns. For example, the brokerage firm Dream Estates Montenegro, an affiliate of Savills, indicated that its transactions dropped -55% to -60% during 2020. Prices, however, fell “just” -10 to -15%.
The turn-around point was Q4 2020. Long-term rentals and purchases came back to life and haven’t stopped soaring since. Leila Calic, director of Resido Montenegro, said, “This summer (2021) is different. (Shoppers) come to purchase…I don’t remember a summer we were so busy with purchasing requests.”
Niko Lakovic, managing partner and sales manager of Montenegro Sotheby’s International Realty, agreed. Lakovic said, “(Business) is booming, and people are buying second homes.” Inquiries are up +500% and sales along Montenegro’s coastline are up “…60 to 70% comparing to last season, where we were almost completely closed for arrivals…(and) demand is increasing a lot.”
Prices “Quite Stable” and On Par with 2019
Foreigners represent 99% of “prime” (top 2% of the market) property buyers. Prices range from $825 to $1,100/square foot for seafront and new resort properties, according to Kieran Kelleher, managing director of Dream Estates Montenegro. At the high end, large, traditional Montenegrin stone houses by the sea, penthouses and villas at luxury marina developments can range up to $10M.
The “nonprime market” of condominiums away from the Adriatic Coast has a “resilient” range from $220 to $275/square foot. Kelleher said that the nonprime market with smaller condos is “more suitable to locals but foreigners also buy there.”
Residential Pricing Called “Uneven”‘
Mark Wilde, director of Montenegro Real Estate, cautions buyers that residential pricing is “uneven.” One house next door to another may be “…double the price of the other,” according to Wilde. “The hardest thing is to find the property at right prices.”
Buying Basics
Montenegro places no restrictions on foreign buyers. Purchases can be made directly without forming a Montenegrin corporation. There is no transfer tax on new properties purchased from developers; there is a 3% transfer tax on resales.
Come with your own financing/cash as mortgages are hard to obtain by foreign buyers. Notaries handle closings. Kelleher advises all foreign buyers to use local attorneys to ensure “…everything is done properly.”
Thanks to The New York Times.
