Montenegro

Montenegro – 'the New Croatia'

Summary

Montenegro is fast emerging as one of Europe's most lucrative property hotspots. Underpinned by low prices, stunning landscapes, soaring tourist numbers and to cap it all, 0% capital gains tax, it's not surprising investors are rushing into this tiny republic.

Add to that, a determined democratic government keen to gain accession to the EU, a stable economy, and tourist increases of 17%, Montenegro offers investors ideal conditions for solid capital growth and high rental yields for a good few years to come.

Over the past few years, billions in direct and foreign direct investment have poured into the country to boost every aspect of its infrastructure.

Business is also blossoming since Montenegro successfully adopted the euro currency in 2002 and property prices have risen at over 25% on average for the past few years, with hotspots chalking up over 80%.

Why Montenegro?

• Property prices increasing at 20%+ per annum
• Stable economy with years of sustainable capital growth ahead
• EU accession talks in progress
• 3rd fastest growing holiday destination in the world (WTTC '05)
• Tourist numbers rising by over 17% per annum (WTTC '05)
• 4.1% GDP (2005)
• 1.8% inflation (2005)
• Steady GDP growth averaging over 3.1% 2002-2005
• 293km of stunning coastline including 117 beaches
• Emerging lakes and mountain resorts
• Designated world's first 'ecological state' in 1991 by UN
• Over 80 tour operators fly in from over 15 countries including 6 in the UK
• British tourists increased by 156%

Property
Tourism
Economy
Politics
Geography

Property

With tourism thriving, an economy growing steadily at 4.5% (2005), and the first steps made towards joining the EU, all these factors are contributing to Montenegro's booming property market.

Over the last 3 years, property prices have risen by around 85% and are still rising at over 20% per annum.

Construction and planning is carefully governed and follows strict guidelines laid down by the Tourism Masterplan and 'Morsko Dobro', a government agency that ensures the coast doesn't become over-developed, or ruined by unsightly developments.

Main hotspot areas are situated around the Kotor fjord (named one of the Top 25 most beautiful bays in the world) and along the Budva Riviera. Regions to watch out for are around the lakes and mountains based inland.

It's worth remembering that buying processes are still immature, and caution should be exercised when purchasing property. As with any emerging market, a reputable lawyer and a modicum of patience are indispensable. That said, the administrative processes are far less complex than Croatia. Montenegro boasts a fully centralised and computerised land registry with successful title deed transfers having been known to go through in as little as 2 weeks.

Tourism

The World Travel and Tourism Council cite Montenegro as the fastest growing tourist destination the world by 2014, generating over 21% of the country's total GDP. In 2004, tourism was up by 17% and contributing 14.8% of Montenegro's GDP.

Before the troubles in Yugoslavia, Montenegro had a thriving tourist trade, which was at its peak in 1989 when it generated 250 million Euros. Today, the Montenegrin government is determined to re-establish the state's former popularity and surpass the industry's previous performance. Tourism is high on its political agenda.

Already this focus on tourism has helped to increase capital investment in construction and manufacturing by an estimated 42.8 million Euros in 2004. By 2014, this amount is set to have trebled to 121.2 million Euros, making up 20.4% of total investment in Montenegro.

Economy

Montenegro runs an autonomous, democratic government that manages its own economic affairs, tax collection and government spending. By switching to the euro in 2002, it instantly made international trade with other euro-integrated countries far easier.

Since the troubles of the 1990s, Montenegro's economy has recovered admirably, in part due to the many development agencies, private companies and banks that have invested billions to kickstart its economic transition.

The results are evident. Indicators show steady economic growth of over 3% since 2002, independently of Serbia, and the IMF forecast GDP of 4.5% in 2005. Inflation is also under control. The Central Bank of Montenegro recorded an inflation rate of just 4.3% in 2003, down from 6.7% and just 1.8% by 2005. Click here for more indepth Economic information

Politics

In 2003, the Federal Republic of Yugoslavia divided into the looser union of Serbia and Montenegro. Largely, it runs its own political affairs and has an autonomous economy.

Montenegro has been determined to gain accession to the EU as quickly as possible and the EU is keen to offer as much support as possible both politically and economically with the aim of preparing it for accession. Montenegro is also busy forging positive relationships with its former Federal allies, Croatia and Slovenia.

Filip Vujanovic, Montenegro's President (a social democrat), recently underlined that the only way for the Republic is up. "We have completely liberalized exports and imports, brought customs services up to EU standards, delivered treasury and public expenditure reforms and entered the economic system with more transparency"

Montenegro is also busy reforming its fiscal system, adopting transport regulations in cooperation with foreign organisations and developing new business opportunities through privatisation and the diversification of its economy.

Geography

Montenegro is blessed with extraordinary beauty and stunning geography. It boasts 293km of unspoiled coastline, mountains that reach heights of over 2,500m (8,274 ft), dramatic lakes, canyons, rivers and virgin forests, as well as Europe's most southerly fjord. Click here for a map of the country

Montenegro offers limitless possibilities for special interest tourism, such as skiing, white water rafting, fishing, sailing, bird watching, mountain climbing, not to mention less energetic activities such as sunbathing or relaxing at a health spa.

The country also offers a wide range of cultural attractions, with a heritage reflecting centuries of fascinating history. This diversity makes it appealing to a wide range of holidaymakers giving Montenegro the potential for year-round tourism.