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Everything you need to know is included in our Montenegro Property Pack
Are you considering buying real estate in Montenegro? Are you pondering if it's the right time to buy or if you should consider waiting until next year?
Market timing is a topic that elicits various opinions from people. Your Montenegrin friend living in Podgorica might advise you that now is the worst time to buy property, whereas your real estate agent may have a different opinion and recommend taking advantage of the current market.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Montenegro, we base our work on facts and data we can trust, not opinions or rumors.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Montenegro.
We hope you find this helpful!
How is the property market in Montenegro now?
Montenegro offers, today, peace and stability to investors
Neutral
When investing in real estate, stability is important because it provides a strong base for property value increase and investment returns. It is an information you need as a foreigner who might buy a property in Montenegro.
You'll be glad to hear that Montenegro is seen as stable country for investors. The last Fragile State Index reported for this country is 56.9, which is a satisfactory number.
Montenegro offers peace and stability to investors today due to its strategic commitment to Euro-Atlantic integration, exemplified by its NATO membership since 2017, which enhances regional security and investor confidence. Additionally, the country's legal framework and ongoing reforms aimed at aligning with EU standards provide a stable and predictable business environment conducive to investment.
There is a secure base for investment in the country. It's time to analyze the economic forecast.
Montenegro will keep growing in the next 5 years
Positive
Before buying real estate, check the economic viability of the country.
In accordance with IMF projections, Montenegro will end 2024 with a growth rate of 3.7%, which shows the country is on the right path. If we take 2025, the experts say 3%.
Besides that, the economy will keep growing since Montenegro's economy is expected to increase by 14.4% during the next 5 years, resulting in an average GDP growth rate of 2.9%.
The expected sustainable growth rate in Montenegro indicates a stable and expanding economy, which can lead to increased property values and rental demand over time. For real estate investors, this means a higher potential for returns on their investment as the market continues to grow.
In addition, there are other metrics to consider.
Montenegrin business owners have faith in the economy's growth prospects
Positive
Although the GDP forecast is an important metric, being based on foreign institutions, it may not fully capture the local sentiment in Montenegro. Thankfully, in Montenegro there is a designated metric that is regularly reported. We're lucky because this isn't true for every country.
Assessing business leaders' confidence in the current and future economic conditions, the Business Consumer Index (BCI) is calculated based on surveys and assessments.
According to The Global Economy's analysis, the Business Confidence Index is at 9 for Montenegro. It can be interpreted as a rather neutral score.
Things haven't changed much, as the BCI score was, 12 months ago, at 9.
Local businesses in Montenegro are experiencing a moderate level of confidence, which still offers promising news for property investors. This suggests that the country's economy is on a stable path, with potential for job creation and income growth. Despite the moderate outlook, there remains a steady demand for properties, presenting a favorable opportunity for investors to earn rental income and potentially benefit from property value appreciation over time.
Montenegro's population is growing and getting richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Montenegro, the average GDP per capita has changed by 6.7% over the last 5 years. It's a satisfactory number. Furthermore, the Montenegrin population is growing (+3% in 5 years).
This means that, if you purchase a seaside villa in Budva and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Montenegrin cities like Podgorica, Budva, Kotor or Tivat in 2025.
Properties produce attractive yields in Montenegro
Positive
Rental yield is a popular way to measure real estate investments.
It's the annual rental income of a property divided by its price. For example, if a Montenegrin property is purchased for €300,000 and generates €20,000 in annual rental income, the rental yield would be 6.7%.
According to Numbeo, rental properties in Montenegro offer gross rental yields ranging from 4.4% and 7.1%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Montenegro.
It's competitive with other investment opportunities.
Everything you need to know is included in our Montenegro Property Pack
In Montenegro, expect minimal inflationary effect
Neutral
In two words, inflation is when costs increase.
It's when your typical plate of cheese in Montenegro, like the famous Njeguški sir, in Podgorica, costs 8 euros instead of 6 euros a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
As per the IMF's forecasts, over the next 5 years, Montenegro will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Montenegro is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in Montenegro then?
Time to conclude !
Montenegro is currently a beacon of peace and stability, making it an attractive destination for investors looking for a secure environment. This stability is crucial for anyone considering a property investment, as it reduces the risks associated with political or economic upheaval. In 2025, this peaceful atmosphere is expected to continue, providing a solid foundation for property investments. When you invest in a place where the political climate is calm, you can focus on the potential returns without worrying about sudden changes that could affect your investment.
Looking ahead, Montenegro's economy is on a promising trajectory. With an expected growth of 14.4% over the next five years, the country's GDP is set to increase at an average rate of 2.9% annually. This sustainable growth indicates a stable and expanding economy, which is great news for property investors. As the economy grows, property values and rental demand are likely to rise, offering a higher potential for returns on your investment. By 2025, this economic growth will likely translate into a more robust real estate market, making it an opportune time to buy property.
Another factor to consider is Montenegro's growing and increasingly affluent population. As more people move to the country and the existing population becomes wealthier, the demand for housing is expected to rise. This demographic trend can lead to increased property values and rental demand, providing a lucrative opportunity for real estate investors. By investing in property in 2025, you can capitalize on this growing demand and potentially enjoy significant returns as the market continues to expand.
Moreover, rental properties in Montenegro currently offer attractive gross rental yields, ranging from 4.4% to 7.1%, according to Numbeo. This means that even if you're not looking to sell your property immediately, you can still benefit from a steady income stream through rentals. Additionally, Montenegro is expected to experience minimal inflationary effects, which helps maintain the value of your investment over time. All these factors combined make 2025 an excellent time to consider buying property in Montenegro, whether you're looking for a long-term investment or a source of rental income.
We genuinely hope this article has provided you with valuable insights and information.. If you need to know more, you can check our our pack of documents related to the real estate market in Montenegro.
-Will real estate prices go up in Montenegro?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.