Montenegro challenges Croatia for Adriatic crown
Resort development is rife in the tiny Balkan nation. Louise Dransfield and Kate Hughes report
Montenegro, apparently, is the next big thing. Its visitors range from Hollywood A-listers to British chart topping singer Emeli Sandé, who reportedly was recently married there.
Having put its war-torn history behind it, Montenegro regained independence six years ago after the break-up of Yugoslavia and today there's little doubt of the country's charm with its sapphire sea, dramatic peaks and Venetian-inspired historic walled towns.
The World Travel and Tourism Council has predicted that Montenegro could have the world's fastest growing tourism industry, with 10 per cent year-on-year growth over a 10-year period. Half the size of Wales, with a population of approximately 600,000, this Adriatic nation is tipped by some to rapidly emerge from behind the shadow of its neighbour Croatia as the next property hotspot.
The property market is still in its infancy and therefore could represent good value for money compared with its more developed rival, says Aleksander Kovacevic, the head of sales for Foresight Montenegro. "The coast of Montenegro is a match for Croatia yet everything is close by as it is a small stretch of coastline," he says. "Even to go skiing, you are only two hours away from a big ski resort, which is very convenient."
Needless to say, development is well under way, and some might say that the country is rapidly becoming dependent on foreign direct investment that could leave it being susceptible to the effects of external economic factors, not to mention fluctuations of trade and import in the immediate and fragile aftermath of a global downturn from which Montenegro wasn't entirely immune.
But Mr Kovacevic argues the country has managed to avoid much of the fall-out from the economic crisis and worldwide recession that others in Europe did not.
"It didn't get the fall like other locations such as Spain and Greece," he says. "Before the crisis, Montenegro had a very high boom in prices and they were rising too fast and getting ridiculous. Now it has slowed down and prices have normalised. Buyers have stopped paying the inflated prices."
For British investors there's also the effect of dealing with a euro weakened against sterling. And, in the past 10 years the laws regarding foreign property purchasers have been simplified to promote the equal treatment of foreigners and domestic buyers.
Today, purchasing costs in Montenegro include a non-refundable reservation fee of approximately ¤5,000 (£4,020) offset against the purchase price, the cost of a lawyer, notary and translation fees. There is also Real Estate Transfer Tax (RETT) on resale properties, which is 3 per cent of the value of the property and is payable by the buyer. The value of the property is determined by the local municipality tax authority and usually matches the price listed in the sales contract.
Mortgages are available in Montenegro through a number of partner banks ranging in amounts from ¤50,000 to ¤300,000 with a maturity of one to 25 years.
One example of property in the pipeline is the Boka Group's Sea Breeze (seabreeze.me) development in Kavac – a few minutes' drive from prominent attractions including the Unesco-listed walled town of Kotor, Porto Montenegro, a luxury marina development, and the PuroBeach Club, plus two planned PGA golf courses.
The 50 two and three-bed, stone and terracotta villas at Sea Breeze are expected to sit on a sloping hillside with views over Kotor bay, surrounded by olive and pine groves. Prices start at ¤399,000 for a 210sqm two-bed villa up to ¤899,000 for three bedrooms. Rental returns are expected to start from ¤1,500 a week for the smaller villas and from ¤2,500 for the larger properties.
Clearly then, developers are going after the luxury market. "But even the luxury market needs a range of offerings," says John Kenney, a co-founder of the Boka Group. "We are focusing on price-competitive quality. What people want are detached properties, with pools, large living areas and spectacular views. These are the key elements that give a strong re-sale potential and a competitive advantage, especially when it comes to lettings."
The country's charms and financial attractions aren't news to a number of existing investors in the southern European country. "The Russians have already discovered Montenegro and it is a Russian dominated market, accounting for approximately 80 per cent of our buyers, but there is also an increase this year back from the UK and Irish markets," Mr Kovacevic says.
But, he adds that not every buyer is an oligarch and developers have had to quickly adapt to changing investor profiles.
"We're seeing a lot of lower budget buyers nowadays, it is not very wealthy Russians with tons of money," he says. "It's middle-class people looking for larger apartments – second homes basically.
"That's what is good with the Sea Breeze development as it matches the gap in the market," he claims. "We previously only had expensive villas or cheap apartments and this is basically a villa for the price of an apartment – something that has been in demand for the past two years."
Rival firm Orascom Development is in the middle of planning for Lustica Bay, which it says, will be nothing less than a fully integrated town 10km from Tivat, just across the water from Sea Breeze in Traste Bay. When complete it should feature apartments, villas, townhouses, a golf course with golf homes and two marinas.
Meanwhile Aman Resorts seems to be targeting the high-worth property investor by creating a luxury resort and spa at nearby Sveti Stefan, until recently a fishing village, and a number of well-known hotels, such as the Regent, are also in various stages of development on the site.
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