Special edition newsletter
REAL ESTATE & CONSTRUCTION - Where Space Turns Into Opportunity
Prices are rising, but so is the demand for square footage - Real estate market is stabilizing, Montenegro is still on the map of foreign investors
(Photo: ImageFlow/shutterstock.com)
While the data for the third quarter of this year are awaited, Monstat`s statistics for the second month show that the average price per square meter in new buildings was EUR 2,201. Compared to the same period last year, this is a growth of 21%, while compared to the first quarter of 2023, real estate prices increased by 47%. If we go back another year, we reach a growth of as much as 60 percent.
Our interlocutor confirms that the prices of square meters in new buildings are at a historical maximum.
- In the second quarter, a square meter in a new building cost 2,201, which is the highest price recorded in the history of Montenegro. However, we have a very slight growth compared to the first quarter of this year of only two percent, which is significantly less compared to the second quarter of 2024, where we had an increase of about 20%. Therefore, I think that we are slowly entering the phase of stabilization. I believe that prices will continue to have an upward trajectory, most likely in line with the growth of inflation or slightly above it, but without large jumps as in the previous period - said Mišković.
When it comes to prices, official statistics provide only one part of the picture. However, the situation on the ground is a little different.
- The average price of a square meter in a new building in Podgorica is EUR 2,108, and the official statistics correspond to the real situation on the ground, because that figure corresponds to the average. However, there are real estate properties in the capital that range from EUR 1,800 to EUR 3,000 - he says.
According to our interlocutor, the biggest deviation in statistics can be seen in the southern region, where Monstat recorded an average of EUR 2,333 per square meter.
- Nevertheless, we know that, in practice, this is the lowest price at which an apartment can be bought. Only in Ulcinj, as the southernmost and least developed coastal municipality, a square can be found at a price of 1,700 to 2,000 EUR. In the other coastal municipalities - Bar, Budva, Kotor, Tivat and Herceg Novi - the prices are significantly higher. Even in Bar, it is currently difficult to find a square meter under 2,300 euros, while in Budva, Tivat, Kotor and Herceg Novi they range from 2,500 and up, depending on the location and quality of the building. In luxury resorts, a square meter costs from 5,000 to even 20,000 EUR - Mišković points out.
When asked what has the greatest influence on the growth of square footage prices, he answers that one of the main reasons is the fact that Montenegro has chronically had a lack of new real estate supply for the past few years.
- This is definitely the key reason for the price increase - supply does not follow demand. Although the demand has decreased slightly, the supply of apartments has fallen significantly more, which creates excess demand in the market.
He also notes that a significant reduction in the number of building permits issued in the first half of 2025 is noticeable.
- At the level of Montenegro, we have only 30 issued permits in the first quarter and 10 in the second quarter, which is drastically less compared to the 317 issued in 2024. The reasons for this can be found in the changes to the law on the construction of buildings, which certainly slowed down all those who want to build to some extent. Adaptation and licensing according to the new law of all those who prepare technical documentation certainly contributed to the reduction of the number of permits - says Mišković, adding that there is also a certain amount of caution on the part of investors due to uncertainty on the market.
He notes that additional pressure on the market is created by a large number of foreigners who usually invest in real estate that is used for short-term rental in tourism.
- We must not ignore the new legalization law, which prevents the circulation of illegal objects. This will have a significant impact on the market, as it will further reduce the real estate portfolio. Although real estate in the central part of the country did not account for a large percentage of the total turnover, in the southern region they had a significant share. This law, therefore, will further impoverish the supply and create a shortage of real estate on the market, which will certainly affect the further rise in prices - our interlocutor points out.
When it comes to the most attractive locations, Mišković says that they are Budva, Kotor and Tivat, as the three tourist centers in the south where foreign citizens dominate the demand.
- In addition, Podgorica, as an economic center, has a constant growth. A large number of people immigrate to it, both from the coast and from the north, because of work and economic activities that are concentrated in the capital - he adds.
The value of the Montenegrin real estate market is constantly increasing from year to year, as evidenced by data on foreign direct investments. Thus, in the period from January to July of this year, the total inflow of foreign direct investments amounted to EUR 536.61 million, of which more than 50% of funds, more precisely close to EUR 273 million, were invested in real estate.
The eKapija interlocutor states that Montenegro is still a very attractive market for foreign investors.
- The key to that, for sure, was the Porto Montenegro, Portonovi and Luštica Bay projects. There is no other destination on the entire Adriatic that has three such resorts. Also, with its liberal attitude towards investors, Montenegro managed to attract renowned global brands, which was crucial for the growth of the attractiveness of the market - says Mišković.
Additionally, joining NATO in 2017 made Montenegro a safer place to invest.
- Since then, a continuous growth of foreign direct investments has been noticeable. We believe that membership in the European Union, when it becomes certain, will further increase the attractiveness of Montenegro as a destination for investment in the real estate sector - he adds.
When asked about forecasts for the next period, Mišković states that market stabilization is expected in the short term.
- To znači blagi, takozvani "hladni" rast od nekoliko procentnih poena u narednih 12 mjeseci. Zavisno od dinamike reformi i napretka ka članstvu u EU, moguće je da će taj rast ubrzati kada proces postane izvjestan, jer iskustva drugih zemalja pokazuju da ulazak u EU uvijek dovodi do skoka cijena nekretnina – zaključuje Stefan Mišković u razgovoru za eKapiju.
Stabilization in the apartment rental segment as well
When it comes to renting out apartments, Mišković says that, after a major expansion in 2022 and 2023, a drop in rent prices was already recorded in 2024.
- This year we have a drop of about 20%, so we can conclude that the market is in the adjustment phase. During 2022 and 2023, the demand was predominantly created by Russian and Ukrainian citizens, mainly from the IT sector, with high incomes, which led to an increase in prices. In 2024, Turkish nationals partially replaced that demand, but due to their poor reputation for honoring contracts and maintaining real estate, they quickly lost market confidence. Landlords then turned to the domestic population, which, however, is not able to pay rent prices as they were in that period. Now we have an adjustment process, in which there is a slight drop in prices, because priority is given to domestic tenants compared to foreign ones - Mišković explained.
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"REAL ESTATE & CONSTRUCTION - Where Space Turns Into Opportunity"
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