Colliers International office in Belgrade has reported sharp increases in the cost of properties in the Montenegrin coastal districts. In the list of resorts with prices in the 2500 to 5000 Euro range are Bar, Hercog Novi, Tivat and Ulcinj, while the report implies that prices in Budva, Petrovac and Sveti Stefan are higher still.
A key consideration has to be the stability of this part of South Eastern Europe. Montenegro shares frontiers with Albania, Kosovo and Bosnia Hercegovina and this latest phase of the country’s independent existence dates back only 12 months. To put this in some sort of context; how many of the investors in properties in Tallinn or Riga would have been prepared to commit themselves as far back as 1992? Montenegro’s economy suffered from being tied to Serbia’s in the 1990s – an important factor in the move to independence – and the country has a low GDP (at $2.27bn considerably less than the last year’s profits for Tesco) and high levels of poverty. For foreign investors the factors in its favour are natural beauty, closeness to Western Europe and the use of the Euro.
Podgorica Airport has services to and from Paris, Rome, Vienna, Budapest, Frankfurt, Belgrade, Moscow and Zurich. There are also numerous charter flights from Western Europe. Closer to the coast is Tivat Airport with a somewhat shorter list of destinations. Just across the frontier in Croatia is Cilipi, the airport for Dubrovnik, probably the best bet for travellers from the UK. There are year round ferry links from Bar to Bari and Ancona on Italy’s Adriatic coast and summer season only connections to Kotor.
Factors that may adversely impact the value of investments into Montenegro are the lack of attention to the environment and the need to have connections for progressing a property development. Remember, too, that Montenegro’s coastline (excluding the beautiful fjord-like Gulf of Kotor) is less than 100 miles long. The country really needs to be viewed in conjunction with the rest of the Adriatic coastline to see how it compares and to be aware of trends that could affect investment values.
Hypo Group Alpe Adria Bank are now offering mortgages for property purchases in Montenegro but the terms do not seem that favourable with the LTV limited to 50%, interest at 9.33% and repayment due from within 3 to 10 years, possibly reflecting the bank’s analysis of the risk involved. Hypo Bank also charge a one-off 2% fee for setting up the mortgage. The Montenegrin authorities levy property purchase tax of 2%.
The wise conclusion would seem to be that the longer term investor should be wary but, if Montenegro has captivated you, residential prices are still reasonable and there’s no denying it’s a great place for a holiday.