Real Estate in Montenegro.

How to Get the Most for Reasonable Money

Luštica Bay is a unique project in Montenegro. Citizens of 44 countries own real estate here. Seven hotels, 500 villas and townhouses, more than a thousand apartments, two first-class marinas, four beaches, a golf course, shops and restaurants, a school and kindergarten, medical and sports centers… It isn't your typical resort, but an independent city on the Adriatic coast. What are the advantages of buying real estate in such a project? How can it benefit the owners? And how is it different from other projects on the market? Let's figure it out together.

Real estate in Montenegro. What is on the market?

A small country located on the shores of the Adriatic has a surprisingly lively and diverse real estate market.

Foreign buyers are mainly in areas by the sea with the buildings of the Venetian era (XV-XVIII centuries). Many mansions in the historical center of Budva, Kotor, Perast, Herceg Novi are refurbished and inhabited, rented to tourists. You can also find museums, hotels, shops, and restaurants in the area.

Kotor, Montenegro

Mass construction of the Yugoslav period took place mainly in the capital city of Podgorica. However, typical blocks of buildings familiar to all residents of post-socialist countries were even by the sea. Today it is the cheapest housing on the coast: many houses of the mid-20th century are outdated and require renovations.

After gaining independence (2006) and especially after receiving the official status of a "candidate for EU membership" (2010), a construction boom began in Montenegro. Developers saw huge potential, the number of tourists increased, and international demand for real estate jumped.

New buildings in Montenegro

Most new buildings in Montenegro are medium-rise with minimal amenities (fenced yard, parking, sometimes a swimming pool) or without infrastructure at all. After 2006, the construction was quite heterogeneous across the country. And large-scale urbanizations like in Turkey or Spain did not appear either.

There are several reasons.

  • Firstly, there is a shortage of land on the coast, where the mountains come close to the sea. It is extremely difficult to find a plot on which a residential complex with a developed infrastructure will fit.
  • Secondly, lots of local developers are small companies that did not have the resources to implement large-scale projects.
  • Finally, urban planning legislation. Montenegro simply did not have time to develop detailed plans for the development of territories in the first years of its existence.

The situation began to change 10-15 years ago. International developers came to Montenegro and began to develop grandiose projects here. They have formed a separate segment of the market - housing in organized complexes – which has its characteristics. Luštica Bay is a great representative of the Montenegrin real estate of the new generation (more about the project here).

Luštica Bay
Prices in Montenegro. How Much Do Apartments Cost?

The coast is the most expensive region of Montenegro. The cost of real estate here is higher than in the capital and even more so in the province. In recent years, new buildings have gradually become more expensive, while prices for the secondary stock are stagnating.

The minimum amount to be counted on is €1,500 per sq.m. It is a typical price for apartments in economy-class houses far from the sea. You will not find a developed infrastructure, beautiful views from the windows, and high-quality interiors in such places.

€2,500-4,000 per square is the average price range of quality real estate by the sea. With this amount, it is already possible to consider projects of a new generation. For example, in Luštica Bay, for € 197,000, you can buy a beautiful 74-meter apartment (€2,600 per sq.m): an open kitchen combined with a living room, a separate bedroom with a wardrobe, a spacious bathroom, and two simply gorgeous terraces. The object is in the new development area Centrale. The price already includes full finishing, built-in furniture, plumbing of European brands, kitchen equipment (more about the costs here).

Centrale Centrale

Premium options cost €4,000-8,000 per sq.m. With such money, the buyer can choose top locations, the best views, impeccable quality of construction.

Important! The price of real estate in Montenegro strongly depends on the stage of construction. It is profitable to buy apartments at the initial stages and invest in new phases of popular complexes. For example, when Luštica Bay was just entering the market in 2012, the average price per square meter in the flagship Marina Village area was €2,8000. Now, when this area is built up, the entire infrastructure is working, and people live here, a square meter on average costs €6,100.

Luštica Bay. Why a Well-Planned Complex is Better Than Infill Вevelopment
  • Balanced environment

Housing is built together with a comfortable environment – roads, public spaces, social infrastructure facilities. The world's leading experts work on architecture and landscape design, and developers who have invested millions in development strictly follow the project.

For example, the developer of Luštica Bay received the Award of Excellence from the American Society of Landscape Architects in 2013. The world-famous golf player Gary Player has been invited to develop the golf course project.

Golf Golf

This is especially important for Montenegro. The country is young, local authorities have not yet had time to update the infrastructure of the entire coast. Therefore, Montenegrin realtors usually do not recommend buying apartments remotely, it is better to come and explore the surroundings: the house itself can be of high quality, but the environment will disappoint. In organized complexes, you don't have to worry about this.

  • Environmentally friendly

This factor is important for those who invest money for a long time. ESG development is gaining momentum all over the world: investors are interested in complexes that take care of the environment, develop social initiatives and maintain high standards of corporate governance. And if this trend is just emerging now, then in ten years the discrepancy with the economic norms can become a serious obstacle to selling.

Small developers who build detached houses barely think about the environment. And in large international companies, this topic has been on the agenda for a long time.  Luštica Bay is proof of that. The land occupies 690 hectares, but only 10% of the territory will be built up. For compliance with environmental standards, the project has already received a LEED gold certificate (issued by the American Council on Green Buildings).

Luštica Bay Marina

  • A reliable developer

Small developers can build high-quality housing and meet deadlines. But in terms of reliability, they lose to an international company. The latter has many times more experience, resources, and capabilities. It does not depend so much on financing and can offer customers more flexible installment plans, it has established transaction processes, and the documents are clean and transparent.

Also, such large-scale complexes as Luštica Bay are usually controlled by the state. In this project, 10% of the developer's shares belong to the Government of Montenegro, which becomes another guarantee.

  • Property management

It is important for foreign buyers who do not plan to live in Montenegro. Who and how will monitor the house in your absence? Where are the guarantees that the pool will be cleaned and the bushes will be cut? And if a pipe breaks in the house, who will fix it?

The huge advantage of residential complexes is that developers do not abandon their projects but continue to manage them, and they have been doing this for decades. Look at El Gouna: the same company building up Luštica Bay began to build this Egyptian resort in 1990. 30 years have passed, and the city is thriving.

Two management companies have been established in Luštica Bay: the first one monitors the general urban infrastructure, the second one - real estate.

  • Renting out

And this advantage will be especially appreciated by investors. Firstly, it is much easier to find tenants in a famous complex than in a regular house. The reputation of the entire project works for each investor individually. Secondly, all processes are debugged. The local management company takes care of the search and placement of tenants and pays you income. And finally, a large project, unlike a small one, can offer investors a guaranteed rental income – in Luštica Bay it is about 5% per annum in euros, which is significantly more than deposits and many securities bring.

Important! The final return on investment in real estate depends not only on rental income but also on the capitalization of the object. According to this parameter, integrated resorts also benefit from ordinary housing. The demand for real estate in Luštica Bay is international (citizens of 44 countries have already bought houses and apartments here), which means that the project is less dependent on any local crises and has more potential for a steady increase in prices.

Perhaps, the disadvantage of the new generation of housing is only one: prices in organized complexes, as a rule, are higher than in ordinary houses that cannot offer residents all these amenities. But even this nuance can be circumvented if you are ready to buy an apartment at the first stage and wait a little while until it starts operating. The cost of apartments under construction in Luštica Bay starts from €145,000!

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