Before this time, Montenegro was firstly part of Yugoslavia and then, after it splintered as a result of the 1991 war, it was part of the snappily entitled Former Yugoslavian Republic of Serbia and Montenegro.  But now it’s all on its own.   Having spent most of the past 16 years lumped together with the Serbia, which was something of a pariah state during the 90’s, Montenegro’s economy suffered badly along with Serbia’s as a result of the sanctions that were levied on the country.  Perhaps surprisingly considering the fact that the country is bordered by Bosnia on one side and Kosovo on the other, Montenegro managed to avoid having much of the fighting occur on its territory and nor did it get bombed by NATO so, although it was economically ruined during this time, it didn’t suffer too much physically.   As the country is little more than a year old, accurate data on Montenegro is even harder to find than most of the countries that we cover.  But it doesn’t take a genius to realize that this is a pretty poor country.  In fact it is so poor that the average Montenegrin has a lower standard of living than the average

Turk or Egyptian.  Part of the reason is that unemployment in Montenegro is 27.7%.  But we get the feeling that this is going to be changing.  Fast.

Several countries have established embassies in the capital of Montenegro, Podgorica, but the majority of nations have not yet.  The same goes for multi-nationals.  This means that there is a high demand for decent accommodation in order to house all of the foreign employees.  It’s good news for property speculators as it means that rental yields are through the roof in Podgorica at the moment.  The bad news is that there’s very little property on sale in the city at the moment, even though prices are very low.  So if you see something decent for sale – grab it quick and you could make a quick killing.  We also haven't seen any new developments announced there yet either, but they will come in time.  We reckon that demand for quality housing in Podgorica will exceed supply for some time, which means there's great potential to see some swift prices increases.

You will probably need to provide your own financing to buy them though.  Mortgages are available, but they truly miserable at the moment, with a massive 13% interest rate and a maximum duration of 10 years.

The real action in Montenegro though is happening on the coast.  And boy, is it happening!

The property market on the coast has gone absolutely insane this year, with hordes of rich Russians (who don’t need a visa to enter the country) running around with suitcases full of cash buying up as much of it as they can.  And it’s not just your regular Russians buying – it’s the real heavy hitters.  Roman Abramovich, owner of Chelsea FC, was rumoured to be trying to buy up an 8-mile stretch of beach.  That rumour was false, but it's true that such oligarchs such as the mayor of Moscow, Yuri Luzhkov, definitely has.  One the top Greek shipping magnates has also just bought himself a big chunk of it too.

Read the latest news on Montenegro and you’ll soon see that people are ploughing some serious cash into the country now – with new luxury marinas, golf courses and gated communities for the super-rich all in development.  Most of the action is currently centred around Budva and Sveti Stefan, where prices have at least doubled in the past 12 months.  Some prime real estate in the centre of Budva was recently sold for EUR14,000/m2 – that’s the same sort of prices that property goes for in Mayfair and Monaco!  Other areas such as Kotor and Tivat are coming up almost as quickly.

Six months ago we were rather undecided about Montenegro, but now we are incredibly bullish.  Have you noticed that the four smallest countries in the new EU – Slovenia and the three Baltic States – have the fastest growing economies?  Well countries don’t get much smaller than Montenegro, so it has the same potential.

Maybe we have an overactive imagination, but with serious players like Abramovich, Greek shipping tycoons, Arab sheikhs and celebrities like Michael Douglas and Catherine Zeta-Jones getting interested in Montenegro, we can see the country has the potential of becoming the Monaco of Eastern Europe, with casinos, marinas, five star hotels – the works.  Montenegro is a truly beautiful country – as well as the coast, there are also lakes and mountains to attract upmarket tourists from both Eastern and Western Europe.

As long as the Montenegrin government doesn’t screw things up – and the progress that the little country has made in its first 12 months has been a pleasant surprise to many already, Montenegro could be on the fast road to being a millionaire’s playground.

As is often the case, Knight Frank disagreed with us predicting only 7.5% growth in 2007.  They certainly got that wrong as prices have grown substantially more than that in just the first half of the year.  Although you need some pretty deep pockets to buy into Budva already, go to other parts of the coast or inland and there should still be a choice of affordable properties available no matter how limited your budget might be.

Additional Background Information

Key Economic Data      Montenegrin Climate      Visitors' Guide

The above contains our thoughts on the current state of the market.  But, like any type of investment, there are no guarantees as prices are always influenced by a huge number of different variables.

You can keep abreast of developments in the market by checking out the articles in our News section where we’ve trawled the Internet for every story connected with property in Montenegro so you don’t have to.  By checking the news reports regularly and thinking through the consequences of each piece of news, you should be able to get a good idea as to how quickly or slowly property prices in the market are going to rise in the near future.

The information in this section only tells half the story, however as only a small proportion of Montenegrin property news is translated in English, which means that the locals are getting a lot more useful information than foreigners are.

Investing in the wrong markets could make the difference between making tens of thousands and losing tens of thousands over the next few years.  If you’re seriously considering investing in Montenegro, then you should think of subscribing to our Premium Service so that you can get all the breaking news from the market at the same time the Montenegrins are hearing it.

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