Real estate market and investments in Montenegro
Investments in Montenegro
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Investment strategies
Montenegro is a friendly country with a pleasant climate and is often considered for home ownership.
To invest in foreign real estate, first of all, you need to analyze the market and choose an investment strategy. The formats most often considered by buyers are:
- to move their finances into overseas assets;
- to invest and grow your finances.
In the first case, the main goal of a real estate buyer is to preserve finances and keep them safe from inflation.
Investing in square meters abroad is always profitable: funds can be converted into currency when selling.
It has happened that clients have bought real estate for €100,000, for example, when the exchange rate was 80 roubles per euro. And they sold it when the exchange rate rose to 100 roubles per euro. Even if the sale was for the same value as the purchase, the seller benefited from the difference in exchange rates.
In the format of saving finances, the buyer needs to choose an object that will not lose much in value in the long run.
Investing in square meters abroad is always profitable: funds can be converted into currency when selling.
It has happened that clients have bought real estate for €100,000, for example, when the exchange rate was 80 roubles per euro. And they sold it when the exchange rate rose to 100 roubles per euro. Even if the sale was for the same value as the purchase, the seller benefited from the difference in exchange rates.
In the format of saving finances, the buyer needs to choose an object that will not lose much in value in the long run.
When an investor adheres to the second model, where in addition to capital preservation, he wants to get a gain, there are two options for getting this gain: reselling the property at a higher value or renting it out.
But these formats can also be combined.
Example. Buying a property at the excavation stage at a low price. After the construction is completed, the cost of the apartment will increase by 30%. When rented out, ROI (Return on Investment) can be increased.
In addition, it is necessary to understand the turnover time of funds. If the buyer aims at return and growth of investments in a short time, other options are suitable for such transactions:
But these formats can also be combined.
Example. Buying a property at the excavation stage at a low price. After the construction is completed, the cost of the apartment will increase by 30%. When rented out, ROI (Return on Investment) can be increased.
In addition, it is necessary to understand the turnover time of funds. If the buyer aims at return and growth of investments in a short time, other options are suitable for such transactions:
- Flipping real estate. This can be a house or apartment that needs renovation or repair. When choosing such real estate, it is important to understand pricing. The cost of the property and the price for repairs should allow you to generate income and still remain in the price delta of the market. The turnover cycle of funds, which includes purchase, repair and further resale, is 3-6 months.
- Apartments under construction. The price of such objects grows during 1.5-2 years: from the excavation stage to the completion of construction.
Regions for investment
Montenegro's climatic zones offer different options for real estate investments and returns.
Coastal regions with a rental strategy
Budva is the main tourist city of the country. Therefore, most of the apartments are purchased by investors with the purpose of renting them out: both long-term and seasonal.
There is also an active sale of secondary real estate. The only nuance: it is not recommended to buy apartments in Budva to obtain a residence permit. Since there are many transactions in this riviera, the re-registration of ownership in the cadastre can take up to two years. And it is impossible to apply for a residence permit without a title deed.
Budva is the main tourist city of the country. Therefore, most of the apartments are purchased by investors with the purpose of renting them out: both long-term and seasonal.
There is also an active sale of secondary real estate. The only nuance: it is not recommended to buy apartments in Budva to obtain a residence permit. Since there are many transactions in this riviera, the re-registration of ownership in the cadastre can take up to two years. And it is impossible to apply for a residence permit without a title deed.
In the second case, it is better to choose real estate on the coast, as the main demand falls on popular tourist riviera: Budva, Bar, Herceg Novi, Tivat.
If the client is set up for the long term, then the central and northern parts of the country can be chosen. And the emphasis shifts towards land plots.
If the client is set up for the long term, then the central and northern parts of the country can be chosen. And the emphasis shifts towards land plots.
Primary residence
Prices
Apartment pricing will be influenced by: location, class of property (economy, comfort, luxury), area, view, floor.
In Montenegro the most expensive by square meter will be studio apartments on the upper floors. Especially if there is a sea view. The standard rule of developers: the higher the floor, the higher the price.
If we make a brief geographical excursion of prices, the situation is as follows:
Apartment pricing will be influenced by: location, class of property (economy, comfort, luxury), area, view, floor.
In Montenegro the most expensive by square meter will be studio apartments on the upper floors. Especially if there is a sea view. The standard rule of developers: the higher the floor, the higher the price.
If we make a brief geographical excursion of prices, the situation is as follows:
- Coast. In Bar the cost per square meter starts from € 1.9 thousand. Budva new buildings start from € 2.2-2.5 thousand per square meter. In Tivat you should focus on €3 thousand per square meter and above.
- Central region - Podgorica. Prices for apartments in construction in the capital start from €1.7 thousand per sq.m.
- The north of Montenegro is Kolasin. The cost per square meter in the town with a ski resort is comparable to the prices of the coastal region. For example, small-sized apartments with an area of 27 square meters are sold for €62.5 thousand.
Secondary real estate
Land plot
Coastal regions with price growth strategy
If we talk about investment potential with a strategy of price growth, it is better to consider regions where the surge has not yet occurred and prices have not reached the upper limit. In this format, the most interesting for investment are Bar, Ulcinj and Sutomore.
If we talk about investment potential with a strategy of price growth, it is better to consider regions where the surge has not yet occurred and prices have not reached the upper limit. In this format, the most interesting for investment are Bar, Ulcinj and Sutomore.
Capital region with long-term lease strategy
Podgorica is not a popular tourist destination. However, the metropolitan area is suitable for a conservative long-term rental strategy.
Podgorica is not a popular tourist destination. However, the metropolitan area is suitable for a conservative long-term rental strategy.
Central regions with prospects for investment in land plots
Regions such as Podgorica, Danilovgrad, Zeta are famous for spacious land. For example, it is almost impossible to find land with the area of 2 thousand square meters on the coast. But in the center of the country there are a lot of such offers.
What are the prospects for buying such a property?
First, when the building boom begins in these locations, land values will increase.
Secondly, the plot can be leased out for a long-term period for some kind of production or resold to a major player. For example, over the last two years, the Lidl retail chain bought three land plots in the central region.
Third, the construction of commercial or warehouse space for future leasing.
Regions such as Podgorica, Danilovgrad, Zeta are famous for spacious land. For example, it is almost impossible to find land with the area of 2 thousand square meters on the coast. But in the center of the country there are a lot of such offers.
What are the prospects for buying such a property?
First, when the building boom begins in these locations, land values will increase.
Secondly, the plot can be leased out for a long-term period for some kind of production or resold to a major player. For example, over the last two years, the Lidl retail chain bought three land plots in the central region.
Third, the construction of commercial or warehouse space for future leasing.
Northern regions as an alternative to the coast
The north of Montenegro is becoming increasingly popular with investors. Here you can buy apartments for rent, a chalet-style house or a plot of land with the prospect of building a house.
Kolasin ski tourism gives a good ROI, which falls mainly in the winter period. Žabljak rents non-stop both in winter and summer: the national parks and lakes of this region attract tourists from Europe and China, not excluding the flow of domestic tourism.
The north of Montenegro is becoming increasingly popular with investors. Here you can buy apartments for rent, a chalet-style house or a plot of land with the prospect of building a house.
Kolasin ski tourism gives a good ROI, which falls mainly in the winter period. Žabljak rents non-stop both in winter and summer: the national parks and lakes of this region attract tourists from Europe and China, not excluding the flow of domestic tourism.
Buying an apartment at the initial stage of construction allows the investor to get the maximum profit. Apartments at the excavation stage on the coast start from €1.9 thousand per square meter. The projected price increase is 30%. Price increases are phased in as the construction stage progresses:
- the starting price on the excavation;
- first rise when the foundation and underground garage are poured;
- second promotion when the rough work is finished;
- third promotion, when glazing is done and interior finishing is in progress
It should be noted at once that there is no legal difference between apartments and apartments. Both types belong to residential real estate and allow you to obtain a residence permit. What is the difference?
Apartments are our familiar living quarters for permanent residence.
An apartment refers to a property that is intended to be rented out.
Not all apartments and apartments are suitable for business. What to look out for.
Apartments are our familiar living quarters for permanent residence.
An apartment refers to a property that is intended to be rented out.
Not all apartments and apartments are suitable for business. What to look out for.
- The type of house in which they are located. Montenegro has a lot of low-rise construction from Yugoslav times. Such properties are often unsuitable for winter living and therefore for long-term rentals.
- Location. When choosing a liquid apartment you should pay attention to the proximity of infrastructure and the sea.
- Quality of construction. Montenegro has problems of high indoor humidity and mold growth.
How you can make money from the land:
Buy a plot of land and wait for the price to rise in that location.
In my practice, UK citizens were looking for a small plot of land to build a house. In the process of searching, they found a plot that met the criteria and budget of the buyers. More precisely, it was a part of a larger plot. This separate parcel was surveyed and registered in the cadastre.
After two years, the purchased 500 square meters tripled in price: from €35 thousand to €105 thousand.
At the same time, no work has been carried out on the plot. In other words, the property in its actual condition without additional investments can be sold for three times the price.
Buy a plot of land and wait for the price to rise in that location.
In my practice, UK citizens were looking for a small plot of land to build a house. In the process of searching, they found a plot that met the criteria and budget of the buyers. More precisely, it was a part of a larger plot. This separate parcel was surveyed and registered in the cadastre.
After two years, the purchased 500 square meters tripled in price: from €35 thousand to €105 thousand.
At the same time, no work has been carried out on the plot. In other words, the property in its actual condition without additional investments can be sold for three times the price.
Buy a plot for the purpose of construction and further resale of the object.
This is a more complicated and long-term procedure: getting all the permits, finding contractors, etc. However, this format of earning money is also possible.
Land parcels are perhaps the most legally complex type of real estate. It is all about urbanization plans. In Montenegro, there is a GUP (General Urbanization Plan) and a DUP (Detailed Urbanization Plan).
When buying a land plot, the first thing to ask the owner is whether a detailed plan has been passed in this location. Plots of land outside the ROV cannot be sold to a foreigner as an individual. A non-urbanized plot can only be purchased by a company
As a rule, all lands with low prices are outside the DUP zone. Another reason for such a high price is that it is impossible to build legally on these plots. Therefore, if an investor wants to buy a land plot as an individual, two requirements must be met:
find a site in the urban plan area;
the area of the plot shall not exceed five thousand square meters.
Urbanized areas give the opportunity to build facilities. But for this purpose it is necessary to study urbanized technical conditions. According to them (abbreviated as UTU) it is possible to understand what kind of object can be built.
At this stage, the buyer will definitely need the advice of a geodesist (geometer). In accordance with the UTU, he will calculate the coefficients for a particular cadastral parcel, tell what area of the base is possible and in which part of the plot to locate the object.
It is impossible to do this on your own, as there are a lot of requirements on the indents from the boundaries of the site, the presence of "green zones", prohibiting the location of the object, etc.
In terms of prices, non-urbanized or agricultural land is sold from €12 thousand. To buy a plot of land with a building permit you should budget at least €30-50 thousand.
This is a more complicated and long-term procedure: getting all the permits, finding contractors, etc. However, this format of earning money is also possible.
Land parcels are perhaps the most legally complex type of real estate. It is all about urbanization plans. In Montenegro, there is a GUP (General Urbanization Plan) and a DUP (Detailed Urbanization Plan).
When buying a land plot, the first thing to ask the owner is whether a detailed plan has been passed in this location. Plots of land outside the ROV cannot be sold to a foreigner as an individual. A non-urbanized plot can only be purchased by a company
As a rule, all lands with low prices are outside the DUP zone. Another reason for such a high price is that it is impossible to build legally on these plots. Therefore, if an investor wants to buy a land plot as an individual, two requirements must be met:
find a site in the urban plan area;
the area of the plot shall not exceed five thousand square meters.
Urbanized areas give the opportunity to build facilities. But for this purpose it is necessary to study urbanized technical conditions. According to them (abbreviated as UTU) it is possible to understand what kind of object can be built.
At this stage, the buyer will definitely need the advice of a geodesist (geometer). In accordance with the UTU, he will calculate the coefficients for a particular cadastral parcel, tell what area of the base is possible and in which part of the plot to locate the object.
It is impossible to do this on your own, as there are a lot of requirements on the indents from the boundaries of the site, the presence of "green zones", prohibiting the location of the object, etc.
In terms of prices, non-urbanized or agricultural land is sold from €12 thousand. To buy a plot of land with a building permit you should budget at least €30-50 thousand.
Prices
- Prices depend on territorial location, cleanliness of documents, condition and class of the object.
- Secondary studios cost from €65-80 thousand.
- One-bedroom comfort-class apartments start from €120-150 thousand.
- The cost of apartments with two bedrooms - in the neighborhood of € 200 thousand.
- When buying a detached house should be guided by the amount of € 150-250 thousand.
- The cost of mini-hotels starts from €300 thousand.
When choosing real estate buyers are in doubt whether to buy a house or an apartment. In the format of real estate for business it is better to choose an apartment, as it is easier to maintain. Houses are chosen mainly for permanent residence.
Mini-hotels or guest houses are part of secondary residential real estate. Despite the fact that this type works as commercial real estate, they are documented as residential (stambeni prostor). So it is possible to obtain a residence permit for them.
Unlike Western Europe, Montenegro does not have technical commissions and licensed building examinations. That is, all possible hidden defects fall on the buyer.
There are private individuals who provide a service of inspection of the premises. They check sockets or the condition of roof tiles, but they do not give an official opinion.
After choosing a property, you need to check the documents. The main document is the title deed. In Montenegro, it is called the sheet of "invalidity".
The data from this document contains all information about the property: area, number of owners, presence or absence of encumbrances. To check the document, you need to know which cadastral district the property belongs to and the number of the unclassified sheet.
The legality of the object is a key parameter when buying. About 80% of real estate in Montenegro is built without a building permit.
One of the problems that may affect the owner when buying an illegal object is the legalization procedure. It is time-consuming and involves additional costs, for example, the removal of a surveyor.
With the right property and a competent property management strategy, the return on investment from rent can be as high as 8% per annum. But this is the exception rather than the rule. The average rental income is 5-6%.
Mini-hotels or guest houses are part of secondary residential real estate. Despite the fact that this type works as commercial real estate, they are documented as residential (stambeni prostor). So it is possible to obtain a residence permit for them.
Unlike Western Europe, Montenegro does not have technical commissions and licensed building examinations. That is, all possible hidden defects fall on the buyer.
There are private individuals who provide a service of inspection of the premises. They check sockets or the condition of roof tiles, but they do not give an official opinion.
After choosing a property, you need to check the documents. The main document is the title deed. In Montenegro, it is called the sheet of "invalidity".
The data from this document contains all information about the property: area, number of owners, presence or absence of encumbrances. To check the document, you need to know which cadastral district the property belongs to and the number of the unclassified sheet.
The legality of the object is a key parameter when buying. About 80% of real estate in Montenegro is built without a building permit.
One of the problems that may affect the owner when buying an illegal object is the legalization procedure. It is time-consuming and involves additional costs, for example, the removal of a surveyor.
With the right property and a competent property management strategy, the return on investment from rent can be as high as 8% per annum. But this is the exception rather than the rule. The average rental income is 5-6%.
The choice of developer is one of the fundamental factors when buying an apartment under construction. Every buyer asks the following questions: "how safe is it to buy an apartment at the initial stage and is it certain that the project will be completed?
Here are some tips to help you choose a real estate developer:
When buying an apartment in a new building, the developer must receive the funds for the sale of the apartment in a bank account in Montenegro. A maximum of €10 thousand can be transferred in cash. As a rule, this amount can be transferred at the time of signing the contract of sale and recorded in the contract as a deposit.
When buying an apartment in a Montenegrin new building, you can take an installment plan. The initial installment is 50% of the value of the property. The balance of the amount must be paid before the end of construction. That is, the buyer has approximately one year of installments.
Here are some tips to help you choose a real estate developer:
- Find out if this developer has already built in Montenegro. If it is not his first project, ask to see previous houses to familiarize yourself with the quality of construction and finishing.
- Find out the reputation of the company. There are developers who have been in business for years and have proven themselves to be reliable partners.
- Give preference to companies that have alternative businesses: grocery stores, stores, medical centers, etc. These developers are building with their own funds, not with borrowed funds.
When buying an apartment in a new building, the developer must receive the funds for the sale of the apartment in a bank account in Montenegro. A maximum of €10 thousand can be transferred in cash. As a rule, this amount can be transferred at the time of signing the contract of sale and recorded in the contract as a deposit.
When buying an apartment in a Montenegrin new building, you can take an installment plan. The initial installment is 50% of the value of the property. The balance of the amount must be paid before the end of construction. That is, the buyer has approximately one year of installments.
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