Why Do Foreigners Buy Real Estate in Montenegro?

The purchase of real estate in Montenegro is interesting to foreigners for both lifestyle and investment reasons. Even with the mild Mediterranean climate and beautiful natural landscapes, the prices of real estate in Montenegro are still lower than in other countries of the European Mediterranean.

Learn why real estate in the territory of Montenegro is an especially good investment and what can be expected from the real estate market in this country in the future.

In which parts of Montenegro do foreigners buy real estate the most?

It is not difficult to assume that real estate in Herceg Novi, or attractive real estate in Tivat or Kotor, are especially interesting to the purchasers.

The seaside area has always been attractive, however, in the past years, other parts of Montenegro have shown an investment potential. In addition to Podgorica, as the capital city, there’s also the north of Montenegro, especially Kolasin. This area has become especially interesting since the first section of the Bar-Boljare highway, from Podgorica to Matesevo, was completed.

How will accession to the EU influence real estate in Montenegro?

Considering that Montenegro is the most serious candidate for accession to the EU in the near future, investors expect an active trend of real estate price growth, which, in Croatia, for example, was 5-15% year-on-year, depending on the attractiveness of the location in the first five years following the accession to the EU, and in Bulgaria, 62.5% on average in the first two years, and in Romania, as much as 66.7% on average in the first year following the accession to the EU.

The growth of the prices of floor area in Montenegro, as well as the entire market, will certainly be influenced by the growth of the financing of purchase by local banks, as a consequence of the harmonization of the regulations in this field with the European ones.

At the moment, the financing of non-residents by Montenegrin banks is sporadic and burdened by the complicated procedure and unfavorable conditions – the variable interest rate of 4.45% + six-month Euribor, or the fixed interest rate of 5.45% with a minimum deposit of 50% of the bank’s exposure, which is non-competitive compared to the conditions in the countries that the purchasers come from.

It is important to also note the possibility of getting temporary residence based on the purchase of residential real estate in Montenegro. A large number of Ukrainians and Russians applied for this, especially after the outbreak of the war in Ukraine, but the number of people from Western Europe looking for temporary residence in Montenegro is constantly growing as well, especially in the past two years.

Low interest rate as an excellent reason for opening companies in Montenegro

There is a noticeable increase in the number of companies registered by foreigners:

• 2020: 4,217 companies
• 2021: 5,558 companies
• 2022: 7,070 companies

The trend of growth is undoubtedly there. Residents of Russia and Turkey are in the lead, and they are followed, in noticeably lower numbers, by residents of Serbia, Ukraine, Germany, UK, China and USA.

Excluding the residents of Russia and Ukraine, who are trying to realize economic activities in Montenegro for obvious reasons, the others are motivated by relatively low tax rates, which, in Montenegro, amount to:

– The personal income tax in the amount of 9% for a monthly income of up to EUR 1,000 and 15% for an income of over EUR 1,000 a month

– The corporate income tax is progressive and amounts to:

• 9% for an income of up to EUR 100,000;
• from EUR 100,000 do 1.5 million, the tax is EUR 9,000 + 12% to the amount over EUR 100,000;
• for over EUR 1.5 million, the tax is: EUR 177,000 + 15% to the amount over EUR 1.5 million;

– The property tax depends on the municipality, but ranges between 0.25%-1% of the market value of the real estate.

It is expected for the period of the next 3-4 years and, we hope, the accession of Montenegro to the EU, to show the full potential and capacity of this real estate market, and it is our definite recommendation for you to invest in this market in the next few years.

The author: Ivan Dasic, Montenegro Prospects

Montenegro Prospects

Ivan Dašić

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