The return on investment in luxury real estate in Montenegro is the best in the region - Value of the market continues to grow

The value of the real estate market in Montenegro continued to grow this year. If we look at the official statistics, the prices of apartments in new buildings in the first quarter of this year increased by 23% compared to the same period last year. For a period of five years, the price of square meters in new buildings increased by as much as 130%. After a slight drop of 1.72% in 2024, at the beginning of this year there was also growth in foreign investment in the real estate sector. Thus, according to data from the Central Bank, they bought real estate in Montenegro for EUR 113.5 million, which is 21% more compared to last year.

Monstat announced that the average price per square meter of a newly built apartment in Montenegro in the first quarter of 2025 exceeded EUR 2,000 and amounted to EUR 2,158. As already stated, it is 23% more compared to the comparable period last year. Compared to the first quarter of 2023, the average price per square meter of a newly built apartment increased by 61%, and if we take a five-year period for comparison, we will notice that compared to the same period in 2020, the average price per square meter increased by as much as 130%. The average market price of a square meter in a new building in the first quarter was EUR 2,161.

Prices also grew in Podgorica, where a square meter cost EUR 2,066 in the first quarter, and for a period of five years, they recorded an increase of 139%. Apartments are the most expensive on the coast, so the average price in new construction was EUR 2,328, which is about 25% more compared to the same period last year, or 71% more compared to 2020. In the first quarter of this year, a square meter of an apartment in a new building in the north cost 1,209 EUR, while the cheapest square meters are still in the central region - 1,050 EUR. Statistics show that, although the price per square meter in central Montenegro is the lowest, there has been a 64% growth over a period of five years.

All these are official statistics which for the calculation of the average price per square meter of an apartment in a new building takes into account only apartments that were sold for the first time on the market, i.e. for which the purchase contract was concluded for the first time. The situation on the ground is significantly different. Thus, real estate agents say that you cannot buy real estate in Podgorica for less than EUR 2,000 to EUR 2,500 per square meter in the construction phase, while in the elite parts of the city, a square meter costs up to EUR 5,000.

The growth of real estate prices in Montenegro is something in which Montenegro surpasses the European Union, so Eurostat data show that real estate prices in the EU increased by 3.6% in 2024, and in our country by 21%.

The total inflow of foreign direct investments in the first quarter of 2025 amounted to EUR 211.76 million, according to the Central Bank. More than half of that amount, i.e. 113.5 million, was invested in real estate. As we stated at the beginning, this is a 21% increase.

As Mile Gujić, president of the Committee for Construction and Construction Materials Industry in the Chamber of Commerce, said at the RE:D conference in Podgorica recently, from the beginning of 2019 to the end of March 2025, foreigners bought real estate in Montenegro with a total value of about EUR 2 billion.

- The data show that the interest of foreigners in buying real estate has increased four times in the last five years, and investors from Serbia showed the most interest in investments, followed by Turkey, the USA, Germany, Cyprus, Russia, the UAE and Switzerland - he said.

He stated that, especially in the last 10 years, the real estate market in Montenegro has been experiencing active growth, thanks to tourism, which is the main driver of price growth.

- The economy of Montenegro has recorded significant growth in the last decade - GDP in 2023 amounted to EUR 7 billion, which is nominally 16.4% more than the previous year. Tourism and real estate investments had the biggest contribution to growth. According to the data of the Monstat Administration for Statistics, Montenegro had over 2.6 million tourists in 2023 - which is a significant number, taking into account the relatively small population. The increased number of tourists has a direct impact on the demand for real estate, especially on the coast - said Gujić.

Gujić added that, according to research, return on investment in luxury real estate in Montenegro is the best in the region. This is also confirmed by the list of the British insurance company William Russell, according to which Montenegro is ranked among the best destinations for real estate investment in Europe for the year 2025, taking a high sixth place.

- Thanks to the combination of a solid rental yield, moderate purchase costs and favorable tax treatment, Montenegro is recognized as one of the most perspective markets for investors who are looking for new opportunities on the European continent - it was explained.

The value of the real estate market is increasing, however, what is happening to construction? Although we can hear that the demand for apartments is still high, statistics show that only 30 building permits and work applications were issued in the first quarter, of which 22 relate to individuals and eight to legal entities. If we look at the total number of apartments and their area, according to the issued work reports, the construction of 117 apartments is planned, with a total area of ​​7,183 m².

This is significantly less than in the first quarter of last year, when 99 permits were issued for the construction of 398 apartments with a total area of ​​28,765 square meters. A larger number of permits were issued in the last quarter of 2024 - 59. The construction of 233 apartments with an area of ​​15,474 square meters was planned.

The Committee for Construction of the Chamber of Commerce recently told Vijesti that these data indicate a decline in the volume of planned housing, but not the complete withdrawal of investors from the market.

- The period immediately after the pandemic was marked by intensive project implementation which were postponed in those few years, which led to a sharp growth of activity in the sector. In addition, the growth of the average net salary in Montenegro enabled more citizens to access loans for housing, which additionally stimulated demand. It is important to point out that in March 2025, two new Laws on Spatial Planning and Building Construction were adopted, which re-introduce the obligation to issue a construction permit, instead of the previously valid construction application from 2017. This regulatory change requires an additional adjustment of the sector, which can temporarily affect the number of formally recorded projects. In conclusion, for a more comprehensive assessment, it is necessary to wait for the analysis of the results from the following quarters, which will provide a clearer insight into the direction of the construction sector - they stated from this committee of the Chamber of Commerce.

An interlocutor of Vijesti from this business said that prices have been rising for the past three or four years due to the increased interest of foreigners in buying apartments, first the Russians and Ukrainians, and later the citizens of Turkey.

- It is not realistic to expect that this interest will last indefinitely, along with rising prices, but although reduced it still exists. Investors are probably waiting to see how the situation unfolds, so they have slowed down with new projects until they sell the apartments from the current construction. It is not the goal of anyone from this business to build more apartments than the market can accept - he said.