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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 57.9, which is a satisfactory number.
Montenegro offers peace and stability to investors today due to its favorable political climate and a commitment to maintaining a secure and harmonious environment for businesses to thrive. With a stable government and a focus on attracting foreign investments, Montenegro provides a reliable and secure platform for investors to pursue their ventures.
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 2023 with a growth rate of 3.2%, which shows the country is on the right path. For 2024, the experts say 3%.
Besides that, the economy will keep growing since Montenegro's economy is expected to increase by 13.8% during the next 5 years, resulting in an average GDP growth rate of 2.8%.
The expected sustainable growth rate in Montenegro is a good thing for real estate investors as it indicates a steady and long-term increase in property values and demand. This means that investing in real estate in Montenegro can provide potential investors with the opportunity for capital appreciation and a reliable return on their investment over time.
In addition, there are other metrics to consider.
Montenegrin business owners are growing more confident in the economy
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 12 for Montenegro. It can be interpreted as "satisfactory", or "rather good".
If we look at the data, we can see that the trend is showing an upward progression: the BCI score, 12 months ago, registered at 8.
Local businesses in Montenegro are confident, which is good news for property investors. This shows that the country's economy is looking positive and will likely create more jobs and higher incomes. Because of this positive attitude, there is a higher demand for properties, making it a great time for investors to make money by renting out properties and potentially seeing their value increase over time.
Montenegro's population is 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.
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 2024.
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, inflation is projected to increase
Positive
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 16.7%, which gives us an average yearly increase of 3.3%.
This data means that Montenegro is expected to experience inflation. If we look just at this signal, then it may be a good time to consider buying property. This could allow you to sell it later for a higher price and make a profit.
Is it a good time to buy real estate in Montenegro then?
Time to conclude !
Without a doubt, 2024 offers a highly advantageous opportunity for property investment in Montenegro, bolstered by a range of strong indicators that favorably align for potential investors. The anticipated growth trajectory of Montenegro's economy over the next five years serves as a promising foundation for potential returns. The growing confidence of Montenegrin business owners in the economy further substantiates the country's attractiveness as an investment destination.
Furthermore, the increasing affluence of Montenegro's population complements the investment landscape, indicating potential growth in housing demand and potential long-term property value appreciation. The appeal of properties in Montenegro is further enhanced by their attractive yields, offering an enticing income potential for investors.
Although the projected increase in inflation is a neutral factor, the aggregate of positive and neutral signals creates a robust investment climate. Furthermore, the country's provision of peace and stability further contributes to Montenegro's allure as a promising property investment destination.
In summary, the alignment of Montenegro's growth prospects, business confidence, wealth accumulation, attractive yields, and peace and stability make 2024 a standout year for property investment. With positive and neutral aspects coming together, Montenegro emerges as an attractive option for investors seeking both stability and potential profitability in their real estate ventures.
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.
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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.
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