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The real estate market in Montenegro: 2024 forecast

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As we step into the year 2024, the real estate landscape in Montenegro continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Montenegro's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our pack of documents related to the real estate market in Montenegro. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Montenegro.

How's the Montenegrin economy doing?

Current state

The real estate market in Montenegro has been influenced by various factors, including the country's economic stability and government policies. Let's delve into these aspects to understand the trends and dynamics better.

Historically, Montenegro's economy has seen periods of growth and stability, especially since its independence in 2006. This stability has positively impacted the real estate market. However, like many countries, it has also faced challenges, such as the global financial crisis of 2008 and more recent global economic fluctuations.

The real estate market in Montenegro has generally been robust, with a growing interest in both residential and commercial properties.

This growth is partly due to the country's picturesque landscapes and favorable climate, which attract tourists and investors alike. The housing market, specifically, has seen a steady demand, especially in popular areas like the coastal regions and the capital, Podgorica.

Government policies have played a significant role in shaping the real estate market.

For instance, Montenegro's efforts to join the European Union have spurred infrastructure development and increased foreign investment. In the past, initiatives like the Citizenship by Investment program significantly boosted property demand, attracting foreign investors with the prospect of gaining Montenegrin citizenship through real estate investment.

More recently, the government has implemented policies to regulate the real estate market better, ensuring more transparency and stability.

These include stricter regulations on property development and enhanced legal frameworks to protect both buyers and sellers.

Notable events that have impacted the real estate market include the increase in tourism, infrastructural developments like new highways, and Montenegro's bid for EU membership. These factors have collectively made Montenegro more attractive to investors.

Regarding regulatory changes, the Montenegrin government has been working to align its real estate laws with European standards, which includes improving property registration processes and ensuring more transparent property transactions.

Montenegro is indeed a country where many like to invest in real estate, partly due to its natural beauty, growing tourism sector, and strategic location in Europe. Popular areas for investment include the coastal towns of Budva and Kotor, known for their stunning beaches and historic architecture.

Also, the luxury property segment in Porto Montenegro is quite sought after.

For foreign investors, specific incentives include the potential for good rental yields, especially in tourist areas, and the prospect of capital appreciation. However, drawbacks might include navigating a different legal system and potential language barriers.

When comparing real estate prices in Montenegro with neighboring or similar countries, it's generally more affordable than some Western European nations but can be higher than in some Balkan countries.

This pricing reflects Montenegro's growing status as a premium tourist destination.

Outlook and forecast

Over the past few years, the trend in Montenegro's real estate prices has largely been upward, reflecting the country's growing appeal as a tourist destination and a potential investment hub.

This trend, however, has not been uniform across the country or across different types of properties.

During past economic crises, like the global financial crisis of 2008, Montenegro, like many other countries, experienced a dip in real estate prices. However, it's important to note that the country's real estate market rebounded, partly due to its growing tourism sector and foreign investment. In times of economic booms, particularly when the country's tourism sector flourishes, real estate prices have generally seen an upward trend.

Comparing current real estate prices with those a decade ago, there's been a significant increase.

This rise can be attributed to several factors, including Montenegro's growing reputation as a luxury travel destination, ongoing infrastructure developments, and its strategic location along the Adriatic coast.

Currently, real estate prices are showing a trend of either stability or slight increase, depending on the region and property type. The coastal regions, particularly Budva, Kotor, and areas around Porto Montenegro, are experiencing the highest growth in real estate prices.

This growth is driven by high demand for properties in these areas, known for their beautiful beaches, historic towns, and luxury amenities.

Urban and rural real estate prices in Montenegro do show a marked difference. Urban areas, especially those in and around major cities and tourist hotspots, command higher prices due to the greater demand for housing, commercial properties, and investment opportunities.

In contrast, rural areas, while offering scenic beauty and tranquility, typically have lower real estate prices due to lesser demand and fewer amenities.

Specific factors driving these trends include the increase in foreign tourists and investors, Montenegro's candidacy for EU membership which boosts investor confidence, and government policies aimed at encouraging investment, such as the Citizenship by Investment program.

Additionally, infrastructure developments like improved roads and airports make certain regions more accessible and appealing to both domestic and foreign buyers.

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What about housing prices in Montenegro?

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Current state

In Montenegro, the real estate market has experienced a notable trend over the past few years, largely influenced by its economic landscape and evolving position as a desirable destination in Europe.

Looking at the trend, there has been a general increase in real estate prices. This escalation can be largely attributed to the country's burgeoning appeal to tourists and investors, boosted by its scenic landscapes, relatively favorable climate, and ongoing development projects.

The appeal of the Montenegrin coast, with its blend of natural beauty and cultural heritage, has particularly played a significant role in driving real estate values.

Regarding reactions to economic crises or booms, Montenegro's real estate market has shown resilience. For instance, during global economic downturns, such as the 2008 financial crisis, property prices in Montenegro did experience a decline.

However, the market rebounded, driven by a combination of domestic economic recovery and an influx of foreign investment, particularly in the tourism and real estate sectors.

Comparing current real estate prices with those from a decade ago, there’s a noticeable increase.

This rise can be seen as a reflection of the country's steady economic growth, increased foreign interest, and ongoing infrastructural improvements. The trend towards higher prices is more pronounced in certain areas, particularly those that attract tourists and investors.

As of now, the real estate prices are either stable or on an upward trajectory, depending on the specific region and property type. The regions experiencing the highest growth are primarily the coastal areas, such as Budva, Kotor, and the Porto Montenegro area. The growth in these areas is driven by their popularity among tourists, the luxury housing market, and overall lifestyle appeal.

These regions have become hotspots for both domestic buyers and international investors looking for vacation homes or rental properties.

When it comes to urban versus rural real estate prices, there's a significant difference. Urban areas, especially in and around major cities and tourist destinations, command higher prices. This trend is due to higher demand, better infrastructure, and more amenities. In contrast, rural areas, while offering natural beauty and tranquility, generally have lower property prices.

This lower pricing is due to less demand, fewer amenities, and sometimes more challenging access.

The specific factors causing these trends are multifaceted. They include Montenegro's ongoing efforts to join the European Union, which has enhanced its international profile and stability; increased investment in infrastructure, making regions more accessible and attractive; and the country's natural appeal, which continues to draw tourists and investors.

Additionally, government policies like the Citizenship by Investment program have also played a role in attracting foreign capital into the real estate market.

Outlook and forecast

In Montenegro, the state of real estate prices is being influenced by a mix of economic and demographic factors.

Understanding these factors is key to grasping the current and future trends in the housing market.

Firstly, one of the primary economic factors is tourism. Montenegro's growing reputation as a tourist destination, especially its coastal areas, has led to increased demand for both short-term and long-term accommodations. This demand drives up property prices, particularly in tourist hotspots like Budva and Kotor.

Another factor is foreign investment, which has been rising due to the country's potential EU membership and its attractive natural landscapes. This investment is not only in the tourism sector but also in residential and commercial real estate.

Demographically, there's a trend of urbanization, with more people moving from rural areas to cities. This shift increases the demand for urban housing, pushing up prices in these areas.

Additionally, there's a growing interest among expats and retirees in settling in Montenegro, attracted by the country's lifestyle, climate, and relatively lower cost of living compared to other European destinations.

Looking towards the future, several specific facts, trends, or events could lead to an increase in housing prices.

Firstly, if Montenegro progresses towards EU membership, this could significantly boost investor confidence and attract more foreign investment. Secondly, continued infrastructure development, like improved roads and airports, would make more areas accessible and attractive for development, thereby increasing property values.

Also, if the global travel industry continues to rebound post-pandemic, Montenegro's tourism sector is likely to benefit, further driving up demand for real estate.

However, it's important to note that these increases might not be uniform across all regions. Coastal and urban areas, being the main beneficiaries of tourism and infrastructure developments, are likely to see more significant price increases compared to rural or less developed regions.

On the contrary, there are also factors that could lead to a decrease in housing prices. Economic instability, both globally and locally, could reduce investor confidence and demand for property. Political instability or significant changes in government policies, particularly those affecting property ownership or taxation, could also negatively impact the real estate market.

Additionally, any downturn in the tourism sector, possibly due to global economic factors or natural disasters, could lead to a decrease in demand for properties in tourist regions.

Again, the impact of these factors would vary regionally.

Urban and coastal areas, which are more reliant on tourism and foreign investment, might be more susceptible to these negative influences compared to more rural or domestically-focused regions.

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How's the demand for the real estate market in Montenegro?

Current state

The current demand for residential real estate in Montenegro presents a fascinating picture, shaped by various factors including economic conditions, consumer preferences, and government policies.

As of now, there's a noticeable demand for residential real estate, particularly in certain regions. The coastal areas, renowned for their picturesque landscapes and tourist appeal, are especially in demand.

Here, the market dynamics often indicate more buyers than sellers, leading to a competitive market environment. In contrast, in some urban and rural areas, the market might be more balanced or even have a surplus of properties available.

The supply of new housing is an important aspect of this scenario.

In key areas like Budva, Kotor, and the capital, Podgorica, there has been significant development of new residential properties, including apartments, villas, and townhouses. These developments are in part trying to meet the growing demand, especially from foreign buyers and investors.

However, in less popular or more remote areas, new housing developments are less frequent, and the supply may not align as closely with demand.

Regarding the type of properties buyers are looking for, there's a diverse range. In tourist-favored coastal regions, luxury apartments, and villas with views of the Adriatic Sea are highly sought after. These properties often come with amenities like swimming pools, gardens, and proximity to beaches. In urban areas, buyers might look for modern apartments or family homes that offer convenience and access to city amenities.

In contrast, some buyers, including expats and retirees, are interested in more traditional properties in rural areas, seeking peace and the charm of the Montenegrin countryside.

Current interest rates for mortgages play a crucial role in shaping the buying power and demand of consumers.

However, any fluctuations in these rates can directly impact the affordability of properties and, consequently, the demand. Higher interest rates typically reduce buying power and might cool down the market, whereas lower rates can stimulate it.

Government policies and regulations are also key influencers in the real estate market. Recent years have seen various changes in this regard. Tax changes, such as adjustments in property tax rates, directly affect the cost of owning real estate. Subsidies for homebuyers, if introduced, can encourage first-time buyers or specific segments of the population to invest in property.

Zoning laws and regulations related to construction and property development can impact where and what type of housing developments can occur, influencing both the supply and the nature of new properties in the market.

Outlook and forecast

Demographic shifts, such as aging populations and urbanization, are indeed influencing the demand in Montenegro's real estate market.

As the population ages, there's an increased interest in properties that cater to the needs of older individuals. These might include homes in quieter, more accessible areas, possibly with features that make daily living easier for those with reduced mobility. Additionally, as more people move to urban areas, the demand for properties in cities, particularly in and around the capital, Podgorica, and coastal cities like Budva and Kotor, increases.

This urban migration often leads to a higher demand for apartments and smaller, more manageable living spaces that are close to amenities and employment opportunities.

Current trends in household formation also play a role. There's a growing trend of smaller households, which influences the demand for smaller apartments or houses. This shift can be seen especially among young professionals and couples who prioritize location and lifestyle amenities over larger living spaces.

As a result, there's a notable demand for one or two-bedroom apartments in urban and coastal areas, where residents can enjoy the benefits of city or coastal living.

In terms of real estate as an investment, there's a clear trend towards purchasing properties in areas with high tourism potential. Investors are particularly interested in coastal properties, luxury apartments, and houses that can be used for holiday rentals or resold at a higher price in the future.

This trend is driven by the attractive returns these properties can offer, especially during the tourist season.

Cultural trends also influence the demand in the housing market. For instance, there's a growing interest in sustainable living and eco-friendly homes.

This trend is not just limited to a niche market; it's becoming more mainstream, with buyers looking for properties that are energy-efficient, use sustainable materials, and have a lower environmental impact. This shift favors properties that incorporate green technologies and sustainable design elements.

Regarding the purpose of buying properties, there's a mix of buyers purchasing for living purposes and those buying as investments. The trend towards investment buying is particularly strong among foreign investors, who often purchase properties in tourist areas for rental income or capital appreciation.

Foreign investment plays a significant role in Montenegro's real estate market. It creates more demand, especially for certain types of properties like luxury apartments, waterfront villas, and properties in major tourist destinations.

Foreign investors are often attracted to Montenegro for its natural beauty, potential for rental income, and relatively lower property prices compared to other European countries.

There are both restrictions and encouragements for foreign investors.

While the government has introduced policies to attract foreign investment, like the Citizenship by Investment program, there are also regulations and procedures that foreign buyers need to navigate.

These policies can either boost or slow the demand, depending on how they are perceived by potential investors.

Lastly, speaking of niche markets, there are unique trends in areas such as luxury properties and eco-friendly homes. The luxury property market, particularly in coastal regions like Porto Montenegro, is thriving, catering to high-end buyers and investors.

Similarly, the market for eco-friendly homes is growing, though it's still relatively small compared to the mainstream market.

These properties, often featuring sustainable designs and technologies, are attracting a specific segment of buyers who are conscious about environmental impact and sustainable living.

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How's the rental market in Montenegro?

Current state

The rental market in Montenegro has its unique characteristics, shaped by the country's economic and demographic landscape, as well as its growing appeal as a tourist destination.

Currently, the demand for rental properties in Montenegro is robust, particularly in areas that attract tourists and expatriates. In these regions, specific types of properties are in higher demand. For example, in coastal cities like Budva, Kotor, and the luxury marina area of Porto Montenegro, apartments – especially those with sea views or proximity to beaches and tourist attractions – are highly sought after.

These properties cater to both short-term holiday renters and long-term expatriates or locals looking for the coastal lifestyle.

In terms of features most sought after by tenants, location is key. Properties located in central areas, close to amenities like shops, restaurants, and public transport, are in high demand. Size and amenities also play a crucial role; modern apartments with balconies, good views, and updated facilities are preferred.

In tourist-heavy areas, additional amenities like swimming pools, parking spaces, and furnished interiors can significantly increase a property's rental appeal.

Tenant preferences do vary between urban, suburban, and rural areas. In urban areas, such as Podgorica, tenants often look for convenience and accessibility, preferring properties that offer a balance between living space and proximity to city amenities and employment opportunities.

In suburban and rural areas, tenants might prioritize more spacious properties, often seeking houses with gardens or outdoor spaces, valuing tranquility and natural surroundings.

The demographic characteristics of tenants vary across regions. In urban areas, you'll find a mix of young professionals, families, and students, especially in cities with educational institutions. These groups often look for rental properties that balance affordability with access to work, schools, and entertainment.

In coastal tourist areas, the tenant demographic is more diverse, including short-term vacationers, retirees, and expatriates.

These groups often have different needs, with vacationers looking for short-term rentals with plenty of amenities, and retirees and expatriates seeking comfort and a sense of community.

Income levels and economic factors heavily influence the type of properties tenants are renting. In areas with higher income levels or a significant influx of foreign renters, such as the coastal regions, there's a tendency towards renting higher-end apartments or houses.

Conversely, in areas with lower income levels or fewer foreign residents, the rental market is more geared towards affordability, with a greater focus on basic amenities and functionality.

Certain regions in Montenegro do have a high concentration of specific tenant groups. For instance, university towns or areas with a strong educational presence attract students, who generally look for affordable, shared accommodations. Regions known for their lifestyle appeal, like certain coastal towns, attract a significant number of retirees and young professionals, often from abroad.

These groups tend to look for properties that offer a blend of local culture, comfort, and convenience.

Outlook and forecast

The rental market in Montenegro is influenced by a variety of factors, each contributing to its unique dynamics.

One of the most significant influences on the rental market is the country's growing status as a tourist destination.

The influx of tourists, especially to coastal regions like Budva, Kotor, and the Bay of Kotor, drives high demand for short-term rentals. Properties with views, amenities, and proximity to tourist attractions are particularly in demand. This tourism-driven demand often sets the pace for rental prices and the types of properties being developed for rent.

Evolving lifestyles and work patterns, such as the rise in remote work, are also influencing rental preferences.

With more people able to work from anywhere, there's a growing interest in rentals in areas that offer a balance between leisure and livability.

This trend might lead to increased demand for rentals in quieter, scenic regions that traditionally weren't considered work hubs, like the serene coastal towns or the picturesque northern regions of Montenegro.

Demographic changes in certain cities or regions are reflecting in their rental markets. For example, in Podgorica, the capital city, and educational centers, the influx of students and young professionals leads to a higher demand for affordable, conveniently located rentals.

Similarly, in coastal towns, the growing expatriate and retiree populations influence the demand for higher-end, amenity-rich rental properties.

Emerging urban areas are becoming new hotspots for rental properties. Towns like Tivat, boosted by developments like Porto Montenegro, are experiencing growth in the rental market, attracting both tourists and long-term residents with their mix of luxury and lifestyle offerings.

Technological advancements and innovations are also impacting the rental market. The use of online platforms for rental listings and virtual tours has made it easier for potential tenants, particularly foreigners, to find and secure rental properties.

This digital shift is especially relevant in the context of the pandemic, where physical viewings were limited.

Sustainability and green living trends are gradually influencing the rental market. Though still a niche, there's a growing interest in properties that are energy-efficient, have green spaces, and use eco-friendly materials.

This trend is more pronounced in regions where environmental awareness is higher, and among specific tenant groups who prioritize sustainability.

The rental market forecast varies across different regions of Montenegro. Coastal areas, with their high tourist appeal, are likely to continue seeing strong demand for short-term rentals. Urban centers will probably maintain steady demand driven by employment and education opportunities.

In contrast, rural areas may see less dynamic rental markets, with demand primarily driven by local residents or those seeking a quieter lifestyle.

The long-term outlook for the rental market in Montenegro, considering all these factors, appears positive, particularly in tourist-favored coastal areas and emerging urban centers.

The combination of tourism, evolving work and lifestyle patterns, technological advancements, and a growing interest in sustainable living suggests a diverse and resilient rental market going forward.

Finally, in terms of niche markets, luxury properties, especially in coastal regions, are experiencing unique trends. There's a high demand for high-end, furnished rentals that cater to tourists and affluent expatriates.

The market for eco-friendly homes, though smaller, is also emerging, appealing to a segment of the population that values sustainability and environmental responsibility.

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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.