Buying Real Estate in Montenegro
Montenegro has gained interest in real estate purchases in recent years from many countries around the world. There have been many people moving to Montenegro from outside of the country in recent years, and many are exploring whether it makes sense to invest in Montenegro by buying property.
,In general, Montenegro is gaining traction with digital nomads. Montenegro’s sunny fresh air, natural landscapes and slower life are the most attractive. But buying a property in Montenegro is not easy because there are many details to look at before buying. Before consulting our Montenegro Experts team, we’ve created a guide on what to do before purchasing any real estate in Montenegro:
What are the Advantages of Buying Real Estate in Montenegro?
- Low Property Tax: Only 0.1% to 1% annual property tax is paid for property in Montenegro.
- When you buy a house in Montenegro, you are entitled to a residency permit, regardless of the price of the house you buy. In addition, if you live in Montenegro, you can get a permanent residency permit 5 years after you buy your house. This creates a very attractive opportunity for digital nomads and retirees who want to invest and live.
- Montenegro is a very tempting country, with an 18% increase in the number of tourists every year. Therefore, even if you do not want to live in the real estate you buy, you can earn rental income in Euro currency. In addition, Montenegro has a relatively low rental income tax on real estate at a fixed rate of 9% compared to many countries around the world.
- Montenegro became a member of NATO in 2017 and is now expected to be more politically and economically stable as it is foreseen as the next member country to the European Union.
- Montenegro has airports with relatively low-priced flights to many European countries that take 1-2 hours only.
What Types of Real Estate Can Foreigners Buy in Montenegro?
There is no legal barrier to foreigners acquiring property in Montenegro. However, as we mentioned above, you cannot take advantage of the residency permit if you just buy land. In addition, in order to obtain a land registered in the name of your passport, the land must be urbanized as a residential area. In order to buy any other land (a farm land for example), you can establish a company and make purchases on behalf of the legal entity. In addition, you can buy apartments, villas, village houses, businesses, offices, tourist service facilities, etc.
Where Does It Make Sense to Buy Real Estate in Montenegro?
Currently the most popular places in terms of real estate for locals and foreigners are the coastline between Herceg Novi and Petrovac. The most popular places on this coastline are Kotor and Budva, since it is thought that the value of houses and plots here will keep their value and will be easy to rent. When you get closer to the Albanian border on the coastline, there are cities Bar and Ulcinj, but those are not very popular, so it will be more difficult to sell or rent properties there. The answer to the question of where to buy real estate actually depends on what purpose you buy real estate. For example, if you want to have a house by the sea and you think you will live in it, it is much more possible to find lower-priced houses in hidden paradises such as Bar and Ulcinj instead of looking at the cities of Kotor and Budva. Besides the coast, inland places such as Zabljak and Kolasin are also very popular where there are ski and sightseeing tourism. It makes sense to buy a land or house for rent thanks to the tourism activity in these cities.
What are the House Prices in Montenegro?
With average values, property prices in 2022 are around €1800 per square meter for Tivat and Herceg Novi, and around €2250 per square meter for Kotor and Budva. Of course, these prices vary considerably with criteria such as proximity to the sea, quality of the house and scenery. Podgorica is neither a popular tourist destination, nor at the coastline to enjoy the sea, but it is the capital of the country and is the most populous city in the country. The prices in Podgorica are around €1000 per square meter on average.
In terms of comparison, for example, the average house prices in Dubrovnik, the touristic city of Croatia, which is just across the border of Montenegro, are around €3,350 Euro per square meter. One reason investors chose Montenegro is that at such a close distance, the gap between the Montenegrin and Croatian prices will be closed soon (especially after Montenegrin membership to the European Union).
What should I pay attention to when buying real estate in Montenegro?
Montenegro, which does not have fully organized state bodies yet, also requires you to be very careful in terms of real estate acquisition. You should definitely not buy a property just by seeing it and looking at its price. Apartments constitute the least risky purchase, while plots are the most risky purchases. Before purchasing, you should seek help from experienced people and lawyers. The Montenegro Experts team consists of both experienced real estate agents and lawyers who will give you the support you may need.
Here are some things we’ll pay attention to when acquiring real estate:
- Property documents: Montenegro is a country where many people, even from outside the country, can claim the property ownership through inheritance and kinship, and often the property belongs to more than one person. This, in general, is due to the disintegration of Yugoslavia and then the separation of Serbia-Montenegro in 2007. Therefore, you need to carefully check the property deed status before purchasing.
- Other possible rights claimed on the real estate: In Montenegro, land deeds are usually sold at the notary through cadastral parcels. However, we need to know the parcellation status of your land: i.e. the latest status in the city plan. Some cadastral parcels may be divided into subdivisions (parcels) after the detailed city plan, and for example, the road may be going over the land you want to buy, but you can’t just see it from the deed. Thus, sellers and intermediaries can hide it from you and you need to be careful about it.
- Urbanization Information: There is also a technical documentation prepared for the land that has been urbanized for residential purposes. This documentation contains important information such as precedent, number of floors and base area floor count, as well as information about some other possible restrictions (e.g. construction limits). This document should also be examined in detail and the land shall be evaluated to check the suitability for the desired construction. These assessments can be made by legally authorized geodesy technicians and architects. Montenegro Experts team can help you with this.
- Building Permit: Another important issue is whether you can easily obtain a license for your construction on the property. Construction permits can also be obtained for the lands which does not have any urbanization information (i.e. not urbanized yet). Before purchasing your plot, we recommend considering important factors such as building permits, water, electricity, roads and sewerage. These situations, which are not taken into consideration at first, can manipulate your construction costs dramatically due to the amounts you may pay to the municipalities.
Our experienced team at Montenegro Experts consisting of lawyers, architects, contractors, geodesy specialists and real estate agents can help you with this in your real estate acquisition process in Montenegro.