New Developments in Montenegro's Real Estate Market

New Developments in Montenegro’s Real Estate Market: A Comprehensive Update

Montenegro’s Real Estate Market in 2024: Key Trends and Changes

Montenegro’s real estate market continues to evolve, influenced by global economic conditions and local regulatory changes. Here are some of the latest developments shaping the market in 2024:

Introduction of Progressive Property Tax

Starting January 1, 2024, Montenegro has introduced a progressive property tax, which significantly impacts the real estate market, especially in the premium segment. The new tax system includes a 3% tax for properties up to €150,000, a combination of fixed and percentage-based taxes for properties between €150,000 and €500,000, and a fixed rate plus a percentage for luxury properties above €500,000. This change aims to generate more revenue from high-value property transactions while potentially stabilizing the market by slowing down speculative investments in luxury real estate.

Rising Property Prices

The average price per square meter has seen a considerable increase, particularly in coastal cities. For instance, in Tivat, the average price per square meter has reached €2,800. It is followed by Kotor at €2,500 and Budva at €2,450 (Montenegrobusiness). Podgorica, the capital, also experienced a rise in property prices, with current averages at €1,520 per square meter, up from €1,190 in 2021. This surge in prices is driven by high demand, the influx of foreign buyers, and increased construction costs.

Rental Market Dynamics

Rental prices in Montenegro have escalated dramatically, with an average increase of 60% since 2021. The most expensive rental markets are Tivat and Kotor, where average rents for one-room apartments are around €700 per month (Montenegrobusiness). The rise in rental prices is attributed to a high influx of foreign nationals and limited supply. Despite some signs of market stabilization, with a slight improvement in rental availability, prices are not expected to revert to pre-2022 levels (Montenegrobusiness).

Stabilization and Market Predictions

Experts predict a stabilization in the real estate market, with a slight decline in rental prices due to increased availability. However, sales prices for apartments are expected to remain steady, driven by persistent demand and inflationary pressures. The market’s sensitivity to global economic conditions, including geopolitical events and inflation, means that any significant changes could alter these predictions (Montenegrobusiness).

Investment Opportunities

The investment landscape in Montenegro remains robust, with foreign investments in real estate surpassing €400 million in the past year. This trend is reminiscent of the market boom seen in 2007 and underscores the country’s attractiveness as a safe investment haven amid global economic uncertainties (Montenegrobusiness).