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Montenegro's rental property market offers solid returns for investors, with coastal towns and the capital showing distinct yield patterns.
As of September 2025, Montenegro apartments generate average gross rental yields of 5.6%, with coastal destinations like Budva and Kotor delivering between 4.4% and 6.7%, while Podgorica consistently outperforms at around 6.4% due to lower purchase prices and strong local demand.
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Montenegro rental yields range from 4.4% to 7.6% depending on location and property type, with coastal areas generating premium rates during tourist season.
Net returns after all expenses typically land between 3.5% and 4.5%, making Montenegro competitive with neighboring countries like Croatia and Albania.
| Location | Average Gross Yield | Property Price per m² | Peak Season Occupancy | Net Yield After Costs | Best Property Type | Annual Rental Income |
|---|---|---|---|---|---|---|
| Budva | 5.1% - 6.7% | €2,000 - €4,000 | 90% - 98% | 3.8% - 4.5% | Studios & 1-bed | €8,000 - €15,000 |
| Kotor | 4.4% - 6.5% | €2,500 - €4,500 | 85% - 95% | 3.5% - 4.2% | Tourist zone apartments | €7,500 - €14,000 |
| Podgorica | 6.4% - 7.6% | €2,066 | Year-round demand | 4.5% - 5.2% | Studios & small units | €4,500 - €8,000 |
| Tivat | 5.0% - 6.2% | €3,000 - €5,000 | 80% - 90% | 3.7% - 4.3% | Modern apartments | €9,000 - €16,000 |
| Herceg Novi | 4.5% - 5.0% | €1,350 - €2,100 | 70% - 85% | 3.2% - 3.8% | City center units | €4,000 - €7,500 |
| Location Type | Average Yield | Studio Yield | Price per m² | Rental Demand | Seasonality Impact |
|---|---|---|---|---|---|
| Podgorica | 6.4% | 7.6% | €2,066 | Year-round strong | Minimal |
| Coastal Average | 5.2% | 5.8% | €2,500-€4,000 | Seasonal peaks | High (70% summer) |
| Budva | 5.9% | 6.7% | €3,200 | Tourist-driven | Very high |
| Kotor | 5.5% | 6.1% | €3,500 | Tourist-driven | Very high |
| Herceg Novi | 4.8% | 5.2% | €1,725 | Mixed local/tourist | Moderate |
How much do short-term holiday rentals on Airbnb or Booking.com usually generate per year?
Well-located short-term rental units in prime coastal locations generate between €8,000 and €15,000 annually in gross rental income.
Budva properties in central locations or near beaches typically achieve the higher end of this range, with some premium apartments reaching €18,000 per year during exceptional tourism seasons.
Kotor old town properties can generate €10,000 to €14,000 annually, while Tivat apartments near the marina often achieve €9,000 to €16,000 per year. Properties with sea views, modern amenities, and professional management consistently outperform basic apartments.
These figures represent gross income before deducting platform commissions (typically 3-5%), cleaning fees, management costs, and periods of vacancy during off-season months.
Podgorica short-term rentals generate lower absolute amounts (€4,500-€8,000 annually) but often achieve better net yields due to significantly lower purchase prices.
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What's the typical annual occupancy rate for tourist rentals in peak and off-peak seasons?
Peak season occupancy rates from June to September reach 90-98% for well-managed coastal properties in prime locations.
Off-peak occupancy drops significantly to 30-50% during October through May, with December and January showing the lowest demand except in select cities with year-round business activity.
Budva and Kotor maintain the highest peak season occupancy due to their established tourist infrastructure and international recognition. Herceg Novi typically achieves 70-85% peak occupancy, while newer destinations like Tivat can reach 80-90% during summer months.
Properties offering unique amenities, professional management, and competitive pricing can achieve above-average occupancy rates even during shoulder seasons in April-May and September-October.
Annual average occupancy for successful short-term rentals typically ranges from 65% to 75%, factoring in both peak and off-peak periods.
What are the average monthly rents locals are willing to pay for long-term leases?
Local rental markets show distinct pricing patterns between coastal and inland cities, with Podgorica offering the most stable year-round demand.
| City | Studio Monthly Rent | 1-Bedroom Monthly Rent | 2-Bedroom Monthly Rent | 3-Bedroom Monthly Rent | Local Demand Level |
|---|---|---|---|---|---|
| Podgorica | €345 | €500 | €700 | €1,000 | Very High |
| Budva | €450 | €650 | €1,000 | €1,350 | Seasonal |
| Tivat | €775 | €1,000 | €1,700 | Not available | Moderate |
| Herceg Novi | €350 | €500 | Not available | Not available | Low-Moderate |
| Kotor | €400 | €600 | €900 | €1,200 | Seasonal |
How much does the property purchase price per square meter vary between key areas?
Property prices per square meter show significant variation across Montenegro, with coastal premium locations commanding the highest prices.
Budva, Kotor, and Tivat coastal areas range from €2,000 to €4,000 per square meter for standard apartments, while luxury waterfront properties can reach €4,000 to €8,000 per square meter.
Podgorica maintains more affordable pricing at approximately €2,066 per square meter as of 2025, making it attractive for investors seeking higher yields on lower capital investment.
Herceg Novi offers the most accessible entry point with prices ranging from €1,350 to €2,100 per square meter, depending on proximity to the town center and property condition.
New-build properties typically command 15-25% premiums over existing stock, while properties requiring renovation can be acquired at 20-30% discounts to market rates.
What are the average management, maintenance, and service costs that eat into yields?
- Management fees: 8-15% of gross rental income for full-service management including guest services, booking management, and property oversight
- Annual maintenance costs: €150-€500 per year for standard apartments, with luxury or older properties potentially requiring €500-€1,000 annually
- Utility costs: €900-€1,400 annually depending on apartment size, occupancy rates, and seasonal usage patterns
- Homeowners association fees: €1-€2 per square meter per month for most residential buildings with shared facilities
- Insurance premiums: €200-€400 annually for comprehensive property and rental coverage
- Platform commissions: 3-5% of gross bookings for Airbnb, Booking.com, and similar short-term rental platforms
- Professional cleaning: €25-€40 per turnover for short-term rentals, adding up to €800-€1,500 annually for active properties
It's something we develop in our Montenegro property pack.
What local taxes, tourism levies, and income taxes apply to rental income in Montenegro?
Montenegro rental income faces a flat 15% income tax rate after allowable deductibles, making it relatively straightforward for international investors.
Tourism tax applies to short-term holiday rentals at €1-€2 per person per night, paid monthly to the local municipality. This tax is typically passed through to guests but must be collected and remitted by property owners.
Annual property tax ranges from 0.25% to 1% of the property's assessed value, varying by municipality and property type. Podgorica and major coastal towns typically apply rates at the higher end of this range.
Commercial rental registration requires annual fees under €50 for most municipalities, plus initial business registration costs of approximately €100-€200.
VAT (PDV) of 21% applies to commercial rental activities above certain thresholds, though many individual property investors remain below the mandatory registration threshold.
How do yields differ for new-build apartments versus older, renovated properties?
New-build apartments typically generate yields 1-1.5% lower than older, renovated properties due to higher purchase prices, despite commanding premium rental rates.
Older properties acquired below market value and professionally renovated can achieve gross yields of 6.8-7.5%, particularly in Podgorica and secondary coastal locations.
New-build properties offer advantages including modern amenities, energy efficiency, and lower initial maintenance costs, which can partially offset the yield difference through reduced operating expenses.
Renovated older properties in prime coastal locations often attract both tourists and locals due to character features combined with modern conveniences, leading to higher occupancy rates.
The break-even point typically favors older properties for investors focused on immediate cash flow, while new-builds may provide better long-term capital appreciation potential.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Montenegro versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What rental returns do investors usually achieve after accounting for all expenses?
Investors typically achieve net rental returns between 3.5% and 4.5% for short-term holiday rentals in prime coastal locations after all expenses and taxes.
Long-term rental investments in Podgorica and non-premium coastal areas often deliver net yields between 4.5% and 5.2%, benefiting from lower management costs and more predictable occupancy.
The difference between gross and net yields typically ranges from 1.5% to 2.5%, depending on property management efficiency, location-specific costs, and rental strategy employed.
Properties managed by owners who handle guest services directly can achieve net yields closer to the higher end of these ranges, while professionally managed properties sacrifice some yield for convenience.
It's something we develop in our Montenegro property pack.
How do yields in Montenegro compare to other nearby countries like Croatia or Albania?
Montenegro generally offers higher net yields than Croatia's established tourist zones, with Montenegro averaging 3.8-4.5% net compared to Croatia's 3.2-4.1%.
| Country | Average Gross Yield | Net Yield Range | Tourism Season | Market Maturity | Investment Barriers |
|---|---|---|---|---|---|
| Montenegro | 5.6% | 3.8% - 4.5% | June - September | Emerging | Low |
| Croatia | 4.9% | 3.2% - 4.1% | May - October | Mature | Medium (EU rules) |
| Albania | 5.8% | 4.5% - 5.0% | June - September | Early stage | High (legal complexity) |
| North Macedonia | 6.2% | 4.8% - 5.5% | Limited tourism | Emerging | Medium |
| Serbia | 5.4% | 4.0% - 4.7% | Year-round | Developing | Low |
Conclusion
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.
Montenegro's rental yield landscape offers compelling opportunities for both coastal tourism-focused investments and inland long-term rental strategies.
The combination of competitive yields, growing tourism infrastructure, and relatively accessible entry requirements positions Montenegro as an attractive alternative to more saturated European markets.
Sources
- Global Property Guide - Montenegro Rental Yields
- InvestRopa - Montenegro Property Guide
- Montenegro Prospects - Rental Yield Expectations
- MonoEstate - European Rental Yields 2025
- AirROI - Montenegro Short-term Rental Report
- Global Property Guide - Montenegro Price History
- Lavic Real Estate - Montenegro Investment Guide
- Henley Global - Montenegro Real Estate Investment
- Immigrant Invest - Montenegro Rent Prices
- InvestRopa - Montenegro Real Estate Market Analysis