Crammed onto a narrow crescent of land beneath the sheer cliffs of Boka Kotorska, Europe’s southernmost fjord, Montenegro’s ornate city of Kotor hides behind a fortress wall six centuries old.
But, even as Montenegrins celebrate their recent vote to become the world’s newest independent nation, a foreign force is streaming across the border from Dubrovnik, Croatia, making a beeline for the fjord and marching in past the winged lion of Saint Mark, a sculpture in stone that stands by Kotor’s gate.
Following a flurry of rapturous reports in the media, property shoppers from Britain and Ireland are arriving in droves to scour the Boka Kotorska area for affordable coastal villas.
“Driving around the Boka bay after flying into Dubrovnik fairly takes the breath away, and many come with the hype given by media hell bent on selling Montenegro as a destination where property on the sea can be bought cheap,” said Robin Gellately-Smith, a property manager and architectural expert for Total Group, a Kotor-based real estate agency.
But if there ever was such a thing as a discount villa in Montenegro, there are none anymore.
Decrepit stone ruins on hillsides overlooking the Boka Kotorska still can be bought for as little as €20,000, or $25,760, but modernization is expensive and difficult.
And, while the country’s nascent property market is not yet indexed, most local real estate agents say prices have risen 50 to 60 percent or more in the past two years.
Prospective buyers are better off shedding unrealistic price expectations and searching instead for genuine quality around the fjord, Gellately-Smith said.
Montenegro’s planners have earmarked the land bordering the butterfly-shaped body of water for minimal development. In contrast, other sought-after destinations along the Adriatic, like Sveti Stefan and Budva, show the scars of illegal building that took place over the past 15 years. “Here on the Boka bay, I think, is where the high-value holiday homeowner will find refuge,” Gellately-Smith said.
Two properties now for sale in the fjord area are representative of the best in the local market.
One, a three-bedroom apartment inside Kotor’s city wall, was sold last year to a British buyer, David Rogers, a semi-retired luxury tour operator. He refurbished the 140-square- meter, or 1,507-square-foot, apartment to a luxury standard unusual for Montenegro and then put it back on the market at €360,000.
“That’s a fairly senior price, but of course the apartment is big and we have done it up – renovating, repainting, rewiring, everything. We haven’t seen anything else like it in Kotor. It’s got high ceilings and a lot of light,” Rogers said.
The second property, two renovated 18th century villas being sold as a single hillside complex, is priced at €1.9 million.
With a total of four bedrooms and 2,000 square meters of terraced gardens, the twin villas in Perast, near Kotor, occupy one of the fjord’s most coveted positions, with a clear view of two picturesque islands a short distance offshore.
“The Perast property is in perfect condition. It is by far the best thing on the market at the moment,” said Andrea Marston, general manager at Dream Property Croatia & Montenegro, a British real estate agency that entered the Croatian market four years ago and Montenegro two years later.
Echoing Gellately-Smith, Marston said the best properties in Montenegro would not sell cheaply, especially because traditional stone buildings in good condition – the kind most buyers want – are in short supply. “All the old stone properties are being snapped up rapidly,” she said.
Yet Marston said she expected prices to continue to rise in all segments of the Montenegrin housing market for the next several years, basing her analysis on the experience of neighboring Croatia, which is a similar market in many respects.
“Montenegro is not anywhere near the top of the curve yet. It is still behind Croatia, and prices in Croatia are still increasing, a little bit slower than they once did but not much slower,” she said. “Montenegro will catch up with most of Croatia, probably in five years, but it will not catch up with Dubrovnik in the same time.”
(The average price per square meter for properties on the Croatian coast is €1,500, although prices have gone as high as €5,000 to €6,000 in Dubrovnik.)
Conscious both of fast-rising prices and the extraordinary natural scenery that Montenegro offers, many buyers are choosing to develop one property with the goal of turning a quick profit and buying another for personal use, local agents say.
David Sergeant, a publisher from London, is one such recent buyer. “Simply stunned” by the natural beauty around the fjord, he said, he decided to purchase, as an investment, an apartment in Kotor for €290,000 and, for personal use, a villa in the nearby village of Muo for €358,000.
“The fast-improving economic and political situation makes Montenegro very attractive, not only as a destination to live in, but also it is a terrific investment opportunity,” Sergeant said.
What some potential buyers may not know is that this country of 630,000 people is far poorer than most of the rest of Europe and, Gellately-Smith said, weaknesses in its infrastructure continue to pose problems.
For example, water shortages, sometimes acute in July and August, may interfere with the plans of many buyers, like Sergeant, to install swimming pools. “There is plenty of water in Montenegro. It is a matter of getting it where it is needed,” Gellately-Smith said.
The hope, held both by locals and by foreign investors, is that independence from Serbia, leaving that country’s political isolation behind, will increase Montenegro’s access to foreign funds.
Already the U.S. Agency for International Development and European Agency for Reconstruction are major contributors of infrastructure-related aid.
A final wild card is the Montenegrins themselves, Gellately-Smith said.
“They will not easily give up their land and birthright to foreigners lightly. They have fought against all comers over the centuries to keep their land from foreign occupation, including 500 years of Ottoman aggression,” he said.
“Investors with money buying small houses in out-of-the-way stone villages are bound to experience neighbor frustration as people see friends and family move away to be replaced by wealthy foreigners, modernizing and building swimming pools, only to use the building a few months of the year.”