Property in Montenegro the Problems and the Potential

As with any emerging property market Montenegro has its fair share of problems restricting the market currently and possibly likely to affect the long term appeal of property in Montenegro – but at the same time it has immeasurable potential which is why property investment activity in Montenegro is currently so high.

We’ve decided to break property in Montenegro down into the problems and the potential so that interested investors can see what they’ll be letting themselves in for if they do decide to go ahead and buy real estate in Montenegro.

Property in Montenegro – The Problems

One of the main problems currently bubbling away are the Montenegrin opposition parties who are relentlessly lobbying the government for a series of changes to tax and legislation relating to the property market and in particular, foreign buyers of real estate in Montenegro.

The Movement for Changes party is particularly active and vociferous when it comes to pushing for changes. 

One of their most laughable suggestions is that they want each and every foreign buyer of property in Montenegro who has to establish a local company structure to do so to enable them to own the land on which their property sits to employ at least one local citizen – to do what exactly?  Considering that these companies are simply nothing more than a redundant piece of paper for the people who have to establish them and that the formal company entity is just used for its name and status as a body that can own property, how on earth could the company owner make use of a Montenegrin employee?

Seemingly the Movement for Changes party aren’t concerned by such details…they think that in one fell swoop this clever idea could be implemented and result in the creation of 10,000 new jobs.  Wow, if only real life were so simple.  On top of this interesting idea they want a ‘second home’ tax created specifically for overseas investors and they want a large increase in purchase tax as well – both ideas would restrict the appeal of property in Montenegro for many.

The party does have one sensible suggestion up its sleeve – it wants improved planning regulations put in place to prevent buyers and constructors exploiting planning permissions granted and basically building more than what was agreed to in the original building permissions.  This is one idea that we also support.

The other problem that could potentially negatively affect the property market in the long term if it is true is the allegation also made by the Movement for Changes party that property in Montenegro as an asset class is being used for money laundering by the Russian Mafia…Oh and then there’s the one about making it illegal for foreigners to buy freehold – instead they should only be allowed a maximum of a 99 year lease according to the opposition parties.  Well, that was one of the nails in the coffin for the property market in Northern Cyprus towards the latter half of 2004 when they contemplated the self same thing, and although the decision was then revoked it irreparably damaged the market for the following year.

Property in Montenegro – The Potential

The price of property in Montenegro is still incredibly attractive – land prices in certain areas along the coast can still be as low as 50 euros a square meter with even the most attractive plots only touching 200 euros a square meter.  This makes Montenegro cheaper than Croatia with which it directly competes for property investor interest.

The amount of investment made into property in Montenegro between 2004 and last year actually increased four fold and now the government is profiting to the tune of around fourteen and a half million euros in property taxes annually which are being allocated to such noble causes as the alleviation and eradication of certain environmental issues. 

The government is actually considering increasing property tax from its current 2% level but is keen to calm investors’ concerns by saying that it is aware how important the property investment climate is for the ongoing improvement of the Montenegrin economy so it is not going to hamper its development by stacking up taxes.

And finally, the government is paying closer attention to the origins of money entering the country particularly for property transactions and this should help alleviate some of the local worries that the nation is being harmed by exposure to and exploitation through money laundering.

Special Reports: Property News for Montenegro

Montenegro Investment Property Buying Process
Buying investment property in Montenegro is buying in a truly emerging market and investors should be aware of the risks

Montenegro Property Buyer’s Guide
The real estate sector in Montenegro is emerging as one of the more exciting markets for property investors in Europe

Montenegro Property Investment Guide
Montenegro has substantial long term potential for a property investor seeking a rich emerging real estate market