Montenegro’s house prices plunging

Lalaine C. Delmendo | January 05, 2021

Montenegro’s housing market condition is now rapidly worsening, amidst pandemic-induced economic recession.

Montenegro house prices

The average price of new residential dwellings in Montenegro plummeted by a huge 21.93% to €876 per square metre (sq. m) during the year to Q3 2020, according to the Statistical Office of Montenegro, much worse than the previous year’s 2.43% y-o-y fall and the biggest decline on record. When adjusted for inflation, new residential prices actually fell 22% y-o-y in Q3 2020.

During the latest quarter, the average price of dwellings dropped 12.4% q-o-q (-12.73% inflation-adjusted).

Demand is plummeting, especially from foreign homebuyers. In the first three quarters of 2020, foreign direct investment in real estate plunged 44.1% y-o-y to just €72.4 million, according to the October 2020 central bank report.

Surprisingly, construction activity continues to rise. During the first three quarters of 2020, the number of dwelling permits rose by 9.8% to 1,131 units from the same period last year, according to the Statistical Office of Montenegro.

The housing market is expected to remain depressed in the medium-term, amidst struggling economy caused by depressed tourism and persistently low oil prices. Montenegro’s housing market, as well as the wider economy, is strongly influenced by the tourism sector, which accounts for about 20% of GDP. During the first three quarters of 2020, arrivals in collective accommodation plunged almost 80% to just 240,395 people, from 1,079,186 people last year, due to the pandemic and the subsequent lockdowns and travel restrictions imposed worldwide.

As a result, the European Commission downgraded its 2020 economic forecast for Montenegro to a contraction of 14.3%, much worse than its earlier estimate of a 5.9% decline, after a much bigger and extended second wave of infections adversely impacted tourism and retail services, as well as trade and investment. The economy grew by an annual average of 3.6% from 2013 to 2019.

There are no restrictions on foreigners buying property, except for land, which can only purchased by foreigners through a company. After a building is constructed, ownership can be transferred to individuals through a simple procedure.

In 2015, the federal government passed a law allowing foreign homebuyers to obtain a residency permit in Montenegro upon purchase of a property, regardless of its value, according to IvanaVukicevic of property firm Montenegro Prospects.

Local house price variations

Residential property prices in Montenegro vary considerably, depending on location.

  • In Podgorica, Montenegro’s capital, the average dwelling price rose slightly by 1.7% to €1,100 per sq. m during the year to Q3 2020, according to Statistical Office of Montenegro.
  • In the coastal region, which has the most expensive housing in the country, dwelling prices rose by 3.6% y-o-y to an average of €1,414 per sq. m in Q3 2020.
  • In the central region, the average dwelling price plummeted 22% y-o-y to €515 per sq. m in Q3 2020.
  • In the northern region, the average dwelling price also fell sharply by 10.8% to €603 per sq. m over the same period.

Montenegro avg price dwellings

Residential construction rising

During the first three quarters of 2020, the number of dwelling permits rose by 9.8% to 1,131 units from the same period last year, after annual declines of 32.4% in 2019, 47.3% in 2018, and y-o-y rises of 0.4% in 2017 and 1.6% in 2016, according to the Statistical Office of Montenegro. Likewise, the floor area of permits issued also increased 6.4% y-o-y to 64,078 sq. m in Q1 to Q3 2020.

Montenegro dwellings permits

In the first three quarters of 2020:

  • Residential buildings with one dwelling: permits were unchanged from a year earlier, at 19 
  • Residential buildings with two dwellings: permits tripled from last year to 12
  • Residential buildings with three or more dwellings: permits rose by 9.6% y-o-y to 1,095

What’s growing? The coast!

Despite weakening overall housing market, the coastal areas of Kotor, Tivat, Budva, Herceg Novi, and Bar remain resilient. Coastal areas have seen significant developments in recent years with numerous apartment buildings and several large-scale projects, according to CBRE Montenegro.

In Q3 2020, the average price of dwellings in the coastal region rose by 3.6% to €1,414 per sq. m., following y-o-y growth of 0.3% in 2019 and 20.5% in 2018, according to the Statistical Office of Montenegro.

They are very attractive to tourists because of their beautiful sandy beaches and nightlife, so there are a lot of new projects:

  • Porto Montenegro is a large-scale development in the coastal town of Pivat, in the Bay of Kotor. Penthouses are priced from €200,000 to €5.5 million. Boka Place, a newly launched project at the Porto Montenegro, consists of 213 private residences, ranging from studios to three-bedroom duplexes. Prices at the Boka Place start from €190,000.
  • Dukley Gardens, a high-end project in Zavala peninsula, recently officially opened. Developed by Stratex Group, there are 36 villas and 202 houses.
  • DOMXXI is another high-end residential development in Budva, near BudvaOld Town.
  • Bečići is one of the most popular coastal tourist resorts in Budva. This tourist complex is currently undergoing major developments.
  • In the Boka Bay, high-end residential units are under construction - a luxury tourist destination, with extensive high-end amenities.
  • Lustica Bay, developed by Orascom Development Holdings, is a large-scale complex in the northwestern Traste Bay in Tivat. The entire development, when fully completed, will have more than 1,000 apartments, over 500 residential villas, 2 marinas, hotels, restaurants and shops, spa and wellness, and more. Apartments, townhouses and villas are priced from €2,700 to €6,500 per sq. m.
  • Portonovi, a new luxury resort in Kumbor being developed by Azmont, has high-end residences, a lavish One&One hotel, Henri Chenot’s wellness center and 2 marinas.
  • Porto Skadar Lake will have 30 private villas, a restaurant, hotel, marina, tennis courts, and eco-spa, among others.

Several residential projects are also being built in Podgorica. The City Quarter, located in the immediate vicinity of Delta City shopping center, is the largest mixed-use complex in the capital, according to CBRE Montenegro. Other residential projects include the New City Quarter (with 12 new residential buildings); Ljubovic (developed by GradnjaPromet consisting of around 170 apartments); two new residential developments at the Old Airport; a mixed-use development in Block X (developed by Normal Company consisting of 142 residential units); and a 420-unit residential building in Block VII, also developed by Normal Company.

Montenegro’s charm attracts foreign buyers

To some extent, Montenegro’s coastal property market fluctuates with the fortunes of Russia’s economy - i.e., with the price of oil!

It’s a scene of glitz and glam, not subtle, but in your face.

Budva is a charming coastal resort and Venetian port-city, with sandy beaches and a diverse nightlife, and is the centre of tourism, accepting well over half a million visitors annually. The larger Budva area had the most expensive housing in Montenegro, with prices currently ranging from €1,300 to €2,000 per sq. m.

Montenegro tourists

The marvelously beautiful adjoining village of Stefi Stefan was a famous resort between the 1960s and 1980s, visited by celebrities like Orson Welles, Elizabeth Taylor, Sophia Loren, Princess Margaret, Carlo Ponti, IngemarStenmark and Kirk Douglas. Now after the war it is back, with an Aman resort.

The major foreign property buyers in Montenegro include Russians, Serbians and British buyers.

"The rugged beauty of Montenegro continues to attract high-profile visitors, including Michael Douglas, Catherine Zeta Jones, Madonna and The Rolling Stones," says Glenda Lazare of overseas investment specialist company, Key Universal. "It is being tipped as the next Monte Carlo."

The Russians remain the biggest foreign homebuyers

Despite the recent spat between the two countries, the Russians remain the biggest real estate investors in Montenegro. In 2019, a total of €170 million were spent by foreign nationals on buying real estate in the country, according to the central bank. The Russians accounted for about €39 million or almost a quarter of the total last year, unchanged from the previous year.

Serbian citizens were the second biggest real estate buyers in Montenegro, spending about €16.6 million last year, followed by the Turks, who spent a total of €1.7 million.

Russian nationals bought about 100,000 real estate properties in Montenegro between 2005 to 2010, according to estimates. Leading Russian daily Novaya Gazeta previously claimed that more than 40% of Montenegro properties are owned by Russians! However in recent years, the number and the value of properties being bought by Russians has dropped significantly.

Mortgage rates continue to fall

In October 2020, the average mortgage rate stood at 4.77%, down from 4.95% during the same period last year and the lowest mortgage rate ever recorded by the central bank.

  • Up to 1 year: 8%, up from 6.99% a year earlier
  • Over 1 year: 4.77%, down from 4.95% a year earlier

Montenegro interest rates

Despite this, the mortgage market has been struggling mainly due to the pandemic. During the first ten months of 2020, the total amount of new housing loans drawn dropped sharply by 22.2% to €54.4 million from the same period last year. This was in sharp contrast to the annual growth rates in new housing loans of 16.8% in 2019 and 13.7% in 2018.

Montenegro new housing loans

Non-residents can get mortgages with a loan-to-value (LTV) ratio of 50% of the value of the real property, with maximum terms of up to 25 years, according to Dream Estates Montenegro.


  Erste Bank Montenegro Lovćen Bank First Bank CrnogorskaKomercijalna Banka
Loan amount €10,000 - €400,000 €10,000 - €200,000 €5,000 - €100,000 €50,000 - €300,000
Payment period Up to 20 years Up to 10 years Up to 25 years Up to 25 years
Nominal interest rate From 3.99% +6M EURIBOR From 4.95% 7.99% to 11.49% 5.5% to 7%
Loan processing fees Up to 1% Up to 1.25% 1.5% to 2% Up to 1%
Payment method Monthly Monthly Monthly Montly
Source: Savills Dream Estates Montenegro

Montenegro’s tourism-reliant economy is struggling

The economy’s major growth driver is tourism. From 2011 to 2019, tourism grew by an average of 9% annually. In 2019, tourist arrivals rose strongly by 20% y-o-y to 2,645,217 people, according to the Statistical Office of Montenegro. In collective accommodation (camping sites, tourist resorts, vacation facilities, boarding houses, motels, etc.), tourist arrivals increased 20.1% y-o-y to 1,293,189 people in 2019.

Thanks to booming tourism, the economy grew continuously by an annual average of 3.6% from 2013 to 2019, helped also by infrastructure projects such as construction of the Bar-Coljare highway.

Montenegro gdp inflation

However during the first three quarters of 2020 there was an 80% plunge in arrivals in collective accommodation to just 240,395 people, from 1,079,186 people last year, due to the pandemic. Tourism revenues are expected to have fallen to €650 million in 2020, from €1.3 billion last year.

The European Commission has downgraded its 2020 economic forecast for Montenegro to a contraction of 14.3%, much worse than its earlier estimate of a 5.9% decline.  The country’s fiscal deficit is projected to reach 10% of GDP this year, from just 3.6% last year. Likewise, the government’s gross debt is also expected to increase to about 90% of GDP this year, from 76.5% of GDP in 2019.

The country’s inflation stood at -0.6% in October 2020, down from 0.5% a year earlier, according to the Statistical Office of Montenegro. Consumer prices are expected to fall by 0.1% this year, following an annual rise of 0.4% in 2019, based on IMF estimates.

In October 2020, nationwide unemployment surged to 19.3%, sharply up from its pre-pandemic level of just over 15%.


Old Entries


Be the first to comment on this article!

Login or Register to submit a comment!
In order to promote open and spam-free conversations, Global Property Guide moderates commetns on all articles. You can expect that your comment will be published within 24 hours.


Get GPG fortnightly newsletters delivered to your inbox

A quick summary of global real estate trends.