Montenegro Real Estate Market Analysis 2022

Montenegro’s residential property prices continue to rise, buoyed by recovering foreign demand and improving construction activity. During the year to Q2 2022, the nationwide average price of new residential dwellings rose by 11.5% to €1,375 per square meter (sq. m), following y-o-y increases of 3.8% in Q1 2022, 15.3% in Q4 2021, 36.3% in Q3 2021 and 23.3% in Q2 2021, according to the Statistical Office of Montenegro.

Montenegro’s house price annual change

However, when adjusted for inflation, new residential prices actually fell 1.8% y-o-y in Q2 2022. The wide disparity between the nominal and real figures is due to surging inflation, which rose to 15% in August 2022 – the highest level in almost a decade.

On a quarterly basis, the average price of dwellings rose strongly by 8.7% (4.05% inflation-adjusted) in Q2 2022.

Demand is recovering, especially from foreign homebuyers. In the first half of 2022, foreign direct investment in real estate rose sharply by 122.7% to €201.55 million compared to the same period last year, according to the July 2022 central bank report.

Residential construction activity is also showing signs of improvement. In H1 2022, the number of dwelling permits rose by 150.6% to 812 units from the same period last year, after annual declines of 50% in 2021, 17.9% in 2020, and 32.4% in 2019, according to the Statistical Office of Montenegro.

Despite this, the outlook for Montenegro’s housing market remains clouded with heightened uncertainties caused by the Russian invasion of Ukraine and the ongoing political crisis in the country.

“In early 2022, food and energy price increases were exacerbated further by the fallout of Russia’s war of aggression against Ukraine. The war is also expected to have a negative impact on Montenegro’s tourism industry, as Russians and Ukrainians constitute 20% of total visitors,” said the European Commission (EC).

“On top of this, a political crisis materialized on 4 February 2022, when the government lost a vote of confidence 14 months after being formed. A new minority government was established three months later, but political uncertainty persists,” the EC added.

As such, both the International Monetary Fund (IMF) and the European Commission expect Montenegro’s economic growth to slow to 3.8% this year – a sharp decline from the 12.4% expansion in 2021. Likewise, the World Bank has recently downgraded its 2022 growth forecast for Montenegro to 3.6%, from its initial estimate of 5.9%.

Local house price variations

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

In Podgorica, Montenegro’s capital, the average dwelling price rose strongly by 12.9% to €1,393 per sq. m during the year to Q2 2022, according to the Statistical Office of Montenegro. The most expensive housing in the capital city can be found in Podgorica I and Podgorica II, which include the districts of Preko Morace, Block 6, and Gorica.

Montenegro avg price dwellings

  • In the coastal region, which has the most expensive housing in the country, dwelling prices soared 13.5% y-o-y to an average of €1,473 per sq. m in Q2 2022.
  • In the central region, the average dwelling price fell by 7.4% y-o-y to €611 per sq. m in Q2 2022.
  • In the northern region, the average dwelling price also fell by 4.5% to €915 per sq. m over the same period.

Residential construction improving, but still far below pre-pandemic levels

During the first half of 2022, the number of dwelling permits rose by 150.6% to 812 units from the same period last year, after annual declines of 50% in 2021, 17.9% in 2020, and 32.4% in 2019, according to the Statistical Office of Montenegro. Likewise, the floor area of permits issued also increased by 132.2% y-o-y to 51,488 sq. m in H1 2022.

Montenegro dwellings permits

In the first half of 2022:

  • Residential buildings with one dwelling: permits surged 146.2% from a year earlier to 64
  • Residential buildings with two dwellings: permits rose strongly by 160% from last year to 26
  • Residential buildings with three or more dwellings: permits soared 166.4% y-o-y to 690

Residential developments in Podgorica

Several residential projects are being built in Podgorica in recent years. The City Quarter, located in the immediate vicinity of Delta City shopping center, is the largest mixed-use complex in the capital. Twenty buildings are built, offering almost 1,250 housing units to prospective homebuyers.

Other residential developments 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.

What’s growing? The coast!

But what attracts foreign investors is actually the coast. Coastal areas, particularly Kotor, Tivat, Budva, Herceg Novi, and Bar have seen significant developments in recent years, especially before the pandemic, with numerous apartment buildings and several large-scale projects, according to CBRE Montenegro.

Residential properties in coastal cities cost an average of €1,473 per sq. m. in Q2 2022, according to figures from the Statistical Office of Montenegro. But in popular resorts, real estate prices can go higher.

  • In Budva, residential properties are sold for about €1,838 per sq. m., according to Immigrant Invest.
  • In Tivat, residential properties are priced at  €1,870 per sq. m.
  • In the Bay of Kotor, properties are sold for an average price of €2,025 per sq. m.

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 €250,000 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 €240,000 for a studio-type apartment.

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. It boasts several housing developments including The Village Residences, The Marina Apartments, the luxurious Sky Villas, and the One&Only Private Homes. At the Sky Villa Residences, three- to four-bedroom penthouses are sold for €5.86 million to €6.58 million. At The Marina Apartments, studio to four-bedroom apartments are available, with prices ranging from €310,000 to €6.58 million. At The Village Residences, one- to four-bedroom residences are priced from €530,000 to €3.37 million. In the One&Only Private Homes, prices for three- to four-bedroom villas range from €9.85 million to €15.29 million.

Dukley Gardens, a high-end project in the 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 Budva Old Town.

Bečići is one of the most popular coastal tourist resorts in Budva. This tourist complex is currently undergoing major developments.

In Boka Bay, high-end residential units are under construction - a luxury tourist destination, with extensive high-end amenities.

Luštica 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.

Porto Skadar Lake will have 30 private villas, a restaurant, a hotel, a marina, tennis courts, and an eco-spa, among others.

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 center 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 €1,400 to €2,500 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.”

With the easing of pandemic-related restrictions, demand for Montenegro’s coastal properties is expected to rise again. In the first seven months of 2022, tourist arrivals in collective accommodation rose strongly by 78.6% y-o-y to 620,290 visitors. But it was still more than 10% short of the 693,066 arrivals seen in Jan-Jul 2019 before the Covid-19 pandemic.

There are no restrictions on foreigners buying property, except for land, which can only be 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.

The Russians remain the biggest foreign homebuyers in Montenegro, despite sanctions

Despite the sanctions imposed by Montenegro on Russia related to its war on Ukraine, the Russians remain the biggest real estate investors in Montenegro. From the beginning of the Russian invasion of Ukraine in February to June 2022, Russians spent a total of €20 million on buying real estate in the country. Overall, Russians were the biggest investors in Montenegro, after they invested a total of €41.6 million over the same period.

“Russian investments involved investments in companies in Montenegro or their purchase, the purchase of real estate and so-called inter-company debt, in other words, companies from Montenegro borrowing money from companies from Russia. According to official data, the majority of investment was in buying real estate in Montenegro,” the central bank told the daily Pobjeda.

Russians are mostly interested in villas and apartments on the Adriatic coast, according to local real estate agent Maja Radunovic.

“Most of the Russians are buying or renting real estate in the coastal towns of Bar, Herceg Novi, Petrovac, and Budva. These coastal towns were popular among Russians in previous years, and there are also Russian communities in those towns,” said Radunovic. “If the war in Ukraine and Western restrictions on Russia continue, we could expect interest in buying property in Montenegro to increase even more.”

Other foreign homebuyers in Montenegro come from the United States, Canada, Turkey, Serbia, UAE, Ukraine, Britain, Western Europe, and China, among others.

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 have dropped significantly after the close ties between the two countries deteriorated.

In 2014, Montenegro backed the sanctions imposed by the United States and European Union on Russia for its unilateral annexation of Crimea. Their relationship was further strained after Montenegro accused Russia of sponsoring a coup attempt in 2016 to overthrow the pro-Western government and stop it from joining NATO. Montenegro joined the alliance on June 5, 2017.

Then on March 7, 2022, Russia added Montenegro to its list of enemy states, after the latter joined tough EU sanctions on Russia over its invasion of Ukraine.

Mortgage loans for foreigners

It is not easy for a foreigner to get a mortgage in Montenegro, though it is possible. Non-residents can get mortgages from a limited number of banks 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.

However, mortgage lending does not apply to all types of real estate, but only to newly-built houses from large developers. But there are exceptions if the property is located in a developer complex accredited by the bank.

Banks that offer mortgage loans to foreigners include Erste Bank, Hypo Alpe Adria, Societe Generale, Lovćen Bank, First Bank, NLB Banka, and Crnogorska Komercijalna Banka.


  Erste Bank Montenegro Lovćen Bank First Bank Crnogorska Komercijalna 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 Monthly
Source: Savills Dream Estates Montenegro

Mortgage rates continue to fall

In July 2022, the average mortgage rate stood at 4.54%, slightly down from 4.63% in the same period last year and the second-lowest mortgage rate ever recorded by the central bank.

Up to 1 year: 5.5%, unchanged from a year earlier but sharply down from 8.46% two years ago

Montenegro interest rates

Over 1 year: 4.54%, down from 4.62% a year earlier and 4.8% two years ago

Rental market growing

Residential rents continue to increase rapidly, buoyed by strong demand. Currently, one-bedroom apartments in Montenegro rent for about €330 per month and €690 for three-bedroom apartments.

Rents can go higher in Podgorica and other coastal cities:

  • In Podgorica, the average rent is currently €570 per month
  • In the Bay of Kotor, the average monthly rent is €880
  • In Tivat, rental rates are even higher at about €1,025 per month
  • In Budva, residential properties are rented out for an average of €1,370 per month

Rental yields in Montenegro range from 4% to 6%, based on estimates.

Montenegro’s tourism-reliant economy

The economy’s major growth driver is tourism. From 2013 to 2019, Montenegro’s economy expanded by about 3.6% every year, thanks to booming tourism, helped also by infrastructure projects such as the construction of the Bar-Coljare highway. Over the same period, tourist arrivals increased by an annual average of 9.2%.

However in 2020, tourism ground to a halt, due to the Covid-19 pandemic. Tourist arrivals plunged by 83.2% y-o-y to just 444,065 people in 2020, from more than 2.6 million arrivals in 2019, according to the Statistical Office of Montenegro. In collective accommodation (camping sites, tourist resorts, vacation facilities, boarding houses, motels, etc.), tourist arrivals fell sharply by more than 79% y-o-y to 268,878 people in 2020.

Montenegro gdp inflation

As a result, the overall economy contracted by a huge 15.3% in 2020, its worst performance in recent history.

During 2021, Montenegro’s economy bounced back strongly, registering real GDP growth of 12.4% - the highest rate among the six Western Balkan nations. The strong growth was driven primarily by strong private consumption and the gradual recovery in the tourism sector amidst the easing of pandemic-related restrictions. Tourist arrivals almost quadrupled in 2021 from a year earlier to 1,553,558 people – but still far below its pre-pandemic levels.

Both the International Monetary Fund (IMF) and the European Commission expect Montenegro’s economic growth to slow to 3.8% this year, mainly due to the adverse impact of the war in Ukraine. Likewise, the World Bank has recently downgraded its 2022 growth forecast for Montenegro to 3.6%, from its initial estimate of 5.9%.

“In early 2022, food and energy price increases were exacerbated further by the fallout of Russia’s war of aggression against Ukraine. The war is also expected to have a negative impact on Montenegro’s tourism industry, as Russians and Ukrainians constitute 20% of total visitors,” said the European Commission.

The country’s inflation soared to 15% in August 2022, almost five times the previous year’s 3.1% and the highest level recorded since October 2002, according to figures from the Statistical Office of Montenegro.

In the second quarter of 2022, nationwide unemployment stood at 14.6%, down from 16.8% in the previous quarter and 17.1% a year earlier.

The country’s fiscal deficit fell to 2% of GDP in 2021, from a whopping 11.1% of GDP in 2020. Likewise, the government’s gross debt narrowed to 80.6% of GDP last year, from 103.5% in 2020.