Introduction

Montenegro is one of those markets which is still exceptionally good value for money; more by accident than design. Property values are closer to those in Bulgaria than in neighboring Croatia, but this isn’t because of any lack of attractions or natural beauty.
Montenegro may be one of the smallest countries in Europe, but it has mountains, lakes, pine forests, fjords, walled cities, world heritage sights; and, most of all, mile after mile of beach.
In the 1960s and 70s Montenegro’s upmarket Sveti Stefan Resort exerted a magnetic attraction on the rich and famous. Elizabeth Taylor and Richard Burton are said to have disturbed other guests with their arguing, whilst Sofia Loren gave the chef lessons in how to cook pasta.
In the last two years tourism in Montenegro returned to anything like the prewar number of arrivals.
The nature of the market is also changing. Long a favorite of Italians, Germans and Russians, the Brits and Americans are now arriving in droves. English is widely spoken, and the beach resorts are being redesigned to attract wealthy high end tourism comparable to that in Croatia or Italy.
The World Travel and Tourism Council now tips Montenegro as the number one country for tourism growth over the last ten years. Visitor numbers are expected to rise by an average of 9.9% every year between 2006 and 2015. Montenegro is now becoming a regular fixture on holiday programmes and in travel supplements. Many industry professionals privately consider this one of the best opportunities around.

Good place to buy?

Montenegro’s direct competitors are probably Turkey, Bulgaria, Croatia, Italy and the Mediterranean Islands. Cheaper than other Adriatic states, but with more old world charm, better year around weather, and a more sensitive attitude to development than the Black Sea states, Montenegro has all the best ingredients of the European sun and sea destinations.
In 2005 the World Travel and Tourism Council identified Montenegro as the ‘fastest growing travel and tourism economy in the world’. The amount of construction underway is dramatic. Building projects include infrastructure improvements and the reconstruction of Montenegro’s tired Soviet era hotels. Careful planning has, so far, helped Montenegro to avoid building the type of concrete jungle.
Montenegro has other advantages: the overspill of buyers from Croatia means that the property market is rising steadily. At present prices are rising most quickly in the north of the principality, but with only 290 kilometres of coastline the balance of supply and demand should favor early buyers and keep prices high.
EU funding is being used for new roads and infrastructure. In 2004 Serbia and Montenegro was picked by the ‘Doing Business’ report as the single top reformer for cutting red tape and creating an attractive business environment. The report looked at topics such as the ease of registering property and the ease of finding credit. Independent from industrial Serbia, the principality will concentrate on development as a tourism hotspot.
Prices
Houses needing a significant degree of reconstruction cost from €30,000 (£20,000) to  €50,000 (£30,000), close to the coast. New build apartments start from a higher base, often costing €60,000 (£40,000). To put the prices in context, apartments in Croatia are rarely available for less than €100,000 (£84,000). This kind of price also now applies in popular Kotor. The opportunity for capital appreciation in Kotor may now be past –and savvy buyers are advised to look south along the coast.

Which type of property?

Montenegro has a high number of good quality stone buildings which have been either abandoned or allowed to fall into disrepair. These buildings may require a lot of work, but they are often very good value. For most buyers though, it makes sense to invest in one of the new apartment or villa developments being built along the coast. Montenegro is aiming to remain an upmarket destination and new build trends should follow this, making off plan investment both viable and attractive.
With foreign and domestic investors given parity of treatment, rising tourism and a stock of attractive good sized buildings, Montenegro is also a good location for people hoping to set up bars, cafes or seasonal lets.
Montenegro will appeal to many different types of buyer. The country has all the qualities required to make it a top holiday and second home destination. For those with renovation or project management skills there are many opportunities to renovate old buildings here. However, there are also increasing opportunities for buy-to-let investors in new build and off plan developments which are being developed along the coast.

Hotspots

A new wave of buyers has explored Montenegro after crossing the border from Croatia. This has tilted the property market towards the north of the country and particularly towards KotorBay.
Kotor is a Unesco World Heritage Site, a medieval fortress city, which makes it more than just the usual beachfront resort. After rising by up to 50% in the last two years, property prices here are now directly comparable to Croatia. Herceg Novi, Budva and Bar are also popular resorts.
Budva is a walled town placed just outside Sveti Stefan. Budva is frequently compared to Dubrovnik for the pale stone and the town walls and is surrounded by 24 miles of beach. This area around Budva and Sveti Stefan is the most intense area for development throughout Montenegro.
Opportunities for capital appreciation are now better in the south or inland at mountain and lake resorts. Development is likely to run south along the coast before moving inland. A good bet is Ulcinj, which has 8 miles of beach and prices which remain at good value. Finally, for something different, Cetinje is the traditional capital and cultural centre of Montenegro. Now a university town, property can be picked up cheaply and rented to students.

Risks and opportunities

Montenegro has more secure property title than many of the surrounding countries as property here was never expropriated. As development intensifies, some of the more popular resorts may risk the overbuilding. At present the authorities are taking a more thoughtful approach to planning and encouraging the rejuvenation of older buildings.
Before the Yugoslavia of the early 1990s, Montenegro was one of the most desirable holiday locations on the Mediterranean. The government is now attempting to rekindle this reputation and should be able to do so as the country’s affiliation with Serbia diminishes. Prices remain low; in fact in many cases they are as much as 40% lower than in neighboring Croatia. These prices are set to rise as tourism increases along with the necessary infrastructure for international investment.
           
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