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The Guide For Buyers

How Much Does It Cost to Buy and Maintain a Luxury Apartment in Montenegro

It is common knowledge that buying an apartment at the off-plan stage is quite profitable. Firstly, the price will be much lower in comparison with finished objects. Secondly, you will be offered an installment payment plan. Thirdly, you will be able to save on related costs. These rules are true for real estate markets in many countries. Let's see how it is implemented in Montenegro. We consider the buyer's expenses on the example of a one-bedroom apartment in the youngest resort town in Montenegro - Luštica Bay.

Luštica Bay is a Vivid Example of Luxury Real Estate in Montenegro

Luxury real estate market in Montenegro has changed lately. Buyers who wanted to purchase high-quality housing by European standards 10-15 years ago were forced to choose among rare private villas and detached small apartment complexes. These houses did not have their own infrastructure, and the whole surrounding area required renovation. As one would expect, typical problems of point development in a developing country.

Now everything has changed. Several large-scale development projects are being built on the Montenegrin coast. It's not just individual complexes rather than whole cities! They are thought out and built up comprehensively. This means that in addition to housing (in form of studios, apartments, hotel apartments, townhouses, villas), the developer immediately creates the entire infrastructure. Roads, public spaces, sports and entertainment facilities, schools, shops, banks… All this eventually forms a completely different quality of life.

Luštica Bay is the most ambitious projects of such a scale. The total investment in the construction of the city is €1.1 billion. This is the fourth part of the annual budget of the whole country.

The first construction stage of Luštica Bay has been completed. In the coastal area of the Marina Village (300+ apartments, villas and townhouses) 150-200 people live permanently, about 1500 more regularly come for vacation. The five-star hotel The Chedi operates, the marina accepts yachts, an embankment and three beaches are equipped, 18 retail spaces (boutiques, supermarket, restaurants), an amphitheater, a spa and a fitness center are open.

Almost all finished real estate in the Marina Village has been sold: buyers had sought to conclude deals at the construction stage. The average cost of a square meter is €6,000.

Luštica Bay continues to develop. Now the administrative center of the city - Centrale - is being built up, a new stage has been started in the Marina Village seaside quarter named the Iris Residences complex, and the whole Golf Residences district has been announced on the hills.

Real estate prices at an off-plan stage of construction are much lower than in ready-made ones. Judge for yourself…

How to Buy an Apartment and What Expenses You Have to Expect

For example, let's consider the most popular object which is a one-bedroom apartment. It is located in the Centrale district. The entire city infrastructure is nearby: the central square with shops and restaurants, an international school and kindergarten, shopping centers, banks, car service, sports complexes. The area is designed to live here all year round. The sea and the embankment are a few minutes' away.

 

Centrale Centrale

Apartment price - €197,000.

With that anount you can afford an apartment under construction with an area of 74 sq. m. with modern layout - an open kitchen combined with a living room, a separate bedroom with a wardrobe, a spacious bathroom and two simply gorgeous terraces, which is especially important in the warm Montenegrin climate.

Apartment layout in Centrale

The apartment will be fully finished: panoramic windows, air conditioners, high-quality finishing materials. The price includes built-in furniture, plumbing of European brands, kitchen equipment.

For example, look at what a ready-made apartment looks like in the same area of Luštica Bay.

Apartment, Centrale Apartment, Centrale

Initial payment: 15%

At the stage of signing the contract of sale, 15% of the price must be paid. The remaining 85% is distributed to equal payments and transferred within 3 years. You can coordinate with the developer a payment schedule that is convenient for you. And the installment is interest-free!

In addition, the developer of Luštica Bay has signed several partnership agreements with Montenegrin banks and, if necessary, will assist in negotiations on a loan.

Transfer of ownership tax: €0

Buyers of secondary real estate in Montenegro pay a tax on the transfer of ownership in the size 3% of the cadastral price. This fee does not apply to new buildings! There will be no additional state taxes on the transaction, even if you buy not one, but five apartments in Luštica Bay.

New buildings in Montenegro are subject to VAT at a rate of 21%. The buyer does not need to pay anything over the price: this fee is already included in the price of the object. Moreover, when registering real estate for a legal entity, you can request a VAT refund. A lawyers will advise you how to manage this.

Centrale Centrale

Realtor's fee: €0

Here is the best part: when buying a new building, you do not pay a fee to a realtor. At the same time, it does not matter whether you contact the developer directly or through a broker, the costs of the intermediary's work are reimbursed by the developer.

Legal fee: €0

Another advantage of buying an apartment from a large developer is that in this case there is no need to hire a lawyer to check the purity of the transaction.

Orascom Development is a world-renowned developer that builds integrated resorts around the world (Egypt, Switzerland, the UK, the UAE...). In Montenegro, the company operates with the support of the government, which owns 10% of the shares, and the Luštica Bay project itself is considered a priority for the development of the coast. It is difficult to imagine that in a complex with such a status there may be problems with documents, for example, construction permits have not been obtained. The company's legal department will provide you with all reports and prepare a purchase and sale agreement.

But if you want to be safe and conduct an additional examination, you can contact independent lawyers, who's services cost about €1,000.

Notary fee: €0

All real estate transactions in Montenegro take place with the participation of a notary. A government specialist checks the documents, and parties (or their official representatives) sign the contract of sale in their presence. 

The notary's fee depends on the value of the property and is calculated according to the approved tariffs. This amount for a small apartment is usually about €500-1,000, although it can reach €5,000. But! In the case of the purchase of real estate in Luštica Bay, the notary costs are borne by the developer.

By the way, you can save on a trip to Montenegro and conduct a transaction remotely. To do this, you need to issue a notarized power of attorney to sign the contract and issue related documents. The developer will provide you with a template. Distance transactions became especially popular in 2020, when travel between countries was limited. Buyers signed contracts, took ownership, rented apartments through the developer's management company and received income, without ever coming to Montenegro.

Translator's fee: €0

According to the laws of Montenegro, if a foreigner participates in a real estate transaction, a licensed translator must be invited to sign a contract with a notary. His services are paid according to the approved tariffs. The total amount is not so large - usually less than €500, but it's still nice that you can save on this too. When buying an apartment in Lustica Bay, the developer takes these costs on himself.

Total expenses for the purchase of a luxury apartment in Montenegro
The price of a 74 sq.m apartment €197,000
Initial payment 15%, the remaining amount is paid in interest-free installments for three years
Transfer of ownership tax €0
Realtor's fee €0
Legal fee €0
Notary fee €0
Translator's fee €0

 

Luštica Bay

Montenegro wins over many European countries in terms of real estate transactions. There are no restrictions for foreign buyers like in Switzerland or Austria, foreigners are not charged an additional stamp duty, as in the UK, and are not required to pay a tax on the transfer of ownership, as in Germany.

When buying a new apartment in Montenegro, your additional expenses will tend to zero. You can even save money on a trip to the countr by registering real estate remotely.

 

Here's what you can buy in Luštica Bay

1. Apartments in the Marina Village area

Marina Village Iris Residences

This is the flagship area of Luštica Bay, located right at the marina. Most of the block has already been put into operation, but now the construction of the Iris Residences complex has begun. Prices for studios here start from €234,000, one-bedroom apartments - from €422,000. It is enough to pay 20% of the price to buy an apartment, the remaining 80% can be paid in interest-free installments for four years.


2. Apartments in the five-star hotel The Chedi

The Chedi The Chedi

This property option is designed for investors who want to receive a guaranteed income. The hotel on the first line in the Marina Village area has already been built, fully equipped 49-meter apartments worth from €320,000 are available for purchase. The first installment is 30%, the remaining amount is paid in six quarterly tranches. The owner of the condominium is guaranteed a refund of 5% of the price of the object annually for the first five years.


3. Villas at the Golf Residence resort

Golf Residences Golf Residences

The Golf Residences project is the newest development area of Luštica Bay. At the first stage, the developer will build a complex of luxury view villas The Peaks. They will be located in a premium place, on top of a hill, above Hole No. 1 of the first and only professional golf resort in Montenegro. Sales were announced here only in September 2021. Prices have not been announced yet, but the first buyers will certainly make an interesting offer, for which you should contact the developer directly.

Other examples of real estate in Luštica Bay

See more 22 similar properties

How to Maintain an Apartment and What Expenses Will Be at This Stage

Let's continue our calculations on the example of the same one-bedroom apartment in Centrale, which costs €197,000.

Property tax: €300-1,100 per year

The annual real estate tax rate in Montenegro depends on the purpose of the object (commerce or main housing), the quality of the premises, the year of construction, distance from the sea, the legislation of a particular region... The tax authorities annually recalculate the exact amount for each object and issue an invoice to the owner.

On average, for foreign owners of apartments in Lustica Bay, the tax is about 0.56% of the price (in this case, €1,100). Local residents who have registered real estate as their main place of residence pay about 0.15% of the price (€300).

By the way, we recall that the purchase of any real estate in Montenegro gives the right to request a residence permit, that is, it can become the basis for moving the whole family.

Centrale

Management company fee: €1,970 per year

An important advantage of choosing a property in an integrated resort, such as Luštica Bay is the numerous amenities available to owners, thanks to which it becomes easy and pleasant to maintain an apartment.

For example, there is a customer support service in the city, which you can contact with any question about the maintenance of real estate to update plumbing, rent out an object or look after it during your absence... The territory is under protection; green spaces, roads and public spaces are carefully cared for. Buses run between the districts, and the owners of apartments in any of them have access to the entire urban infrastructure: beaches, swimming pools, spa centers, gyms. Private events, such as children's parties or concerts, are even arranged for residents.

There are two management companies in Luštica Bay: the first monitors the general urban infrastructure, the second - real estate. The fee of both will be about 1% of the price of the object, that is, about €1,900 per year.

Utilities: from €100 per month

Utilities (electricity, water, etc.) in Montenegro are paid by meters, so the total amount depends on how you use energy, how much time you spend in the apartment. Of course, if you come only for a couple of months, and the rest of the time the property is empty, the bills will be lower.

Centrale

Rental income: €6,000-10,000 per year

The owners of apartments in Luštica Bay can give the apartments to management if they do not live there themselves. The management company will look for tenants, rent out housing and solve all related issues. The owner's income depends on the type of property. For example, the owners of apartments in The Chedi Hotel are paid a guaranteed 5% of the price of the object. But on average, the complex should expect a return of 3-5% of the price of the object.

 

Total expenses for the maintenance of the apartment and possible rental income
Property tax €300–1,100 per year
Management company fee €1,970 per year
Utilities От €100 per month
Rental income €6–10,000 per year

 

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November 17, 2021 Author: 70