Building and selling luxury real estate is actually building and buying dreams, we could hear at this year’s REBEC conference. And it was no coincidence that luxury real estate was one of the topics of the conference – this particular market has experienced strong growth in the last few years.
This can especially be seen in Montenegro – the development of this segment began more than 15 years ago, when foreigners discovered Montenegro and its investment potential. Today, the value of the projects being developed along the Montenegrin coast is measured in billions of euros, the interest of investors is still strong, and the north of the country is slowly coming into the center of attention.
Although during the previous two years we had a crisis caused by the coronavirus pandemic, and then the war in Ukraine followed, investments in the real estate sector increased significantly this year. Namely, the total inflow of foreign direct investments from January to the end of July this year amounted to EUR 653.47 million, 44.53% more than in 2021. Of this, according to data from the Central Bank of Montenegro, EUR 238.03 million was invested in real estate EUR – as much as 100.25% more compared to the same period last year. Germans invested the most in real estate in the first eight months – EUR 39.55 million. Citizens of Russia follow with EUR 31.87 million , and Serbia with EUR 28.49 million.
The strong development and potential of the real estate market was recognized by Sotheby’s Realty, the global leader in luxury real estate, so they opened their representative office in Montenegro.
As Niko Laković, executive director and partner of Montenegro Sotheby’s Realty, said recently in an interview for eKapija, the luxurious real estate market is stable despite all the crises.
– The market is currently very strong and we expect a good trend in the future as well. Interest in Montenegro is taking the form of a mature market, the trend of interest is stable and as far as projects are concerned, I see that Montenegro is gaining more and more of the value it should have as a destination – said Laković for our portal.
Nataša Grdinić, executive director of CMM Investment Consulting Group, agrees with him.
– Investors’ interest in Montenegro has been growing steadily in recent years, and the worldwide crisis has resulted in an increase in interest in buying real estate. Currently, construction and tourism are the most developed branches in our country and the most accessible for investment, and therefore the most popular – Grdinić said.
How did it all begin?
The development of the luxury real estate market began in 2005. Interest in this market was first shown by the British, and then valuable investments from Russia followed. The turning point in development is certainly the construction of the Porto Montenegro complex , which with its marina, real estate offer, hotel facilities and numerous brands has completely changed the image of Montenegro as a destination.
This project was only the first in a series, so the realization of new investments soon began. Now on the coast, the tourist resorts Luštica Bay, Portonovi, Dukley Gardens are being successfully developed, the construction of the Bigova Bay complex is expected to begin , but also the arrival of new luxury hotel brands.
According to the data that the government received from investors, EUR 2.07 billion was invested in priority projects implemented on the coast by the end of last year , the largest part of which refers to the municipality of Tivat, where around EUR 1.18 billion was invested. It is followed by Herceg Novi, where projects worth EUR 855.24 million are implemented, followed by Ulcinj with EUR 24 million and Budva with EUR 11.7 million.
In addition to investing in complexes, investors are also interested in purchasing somewhat different properties – historic palaces in Boka, luxurious villas on the seashore, and apartments within branded hotels. They are ready to invest more than EUR 10 million in such facilities.
Also, the construction of condo hotels, condominiums, villas, and apartment buildings, which, in addition to contents intended for tourism, also offer the possibility of purchasing accommodation units, is becoming more and more popular. This is exactly the new construction trend when it comes to real estate in Montenegro and the entire region. This stems from the fact that buyers of luxury real estate want to get the whole package – good location, quality and service.
– And they will gladly pay for it. They want to buy something that they will enjoy and that they won’t have to worry about too much. The space became very important during covid, the accessibility of the location, nearby services, but also the energy efficiency and integration of the facility in the environment. That’s why I think that condominium projects have a bright future, because people value their time – Oliver Szocs, an independent property consultant, said at the REBEC conference.
Slavica Milić, senior marketing manager in Porto Montenegro, is of the same opinion, who pointed out at the same conference that buyers of luxury real estate are looking for an extraordinary experience, which needs to be created, because it builds both the destination and the product itself.
– There are currently three current trends related to the purchase of luxury real estate: lifestyle, investment and wellness, that is, our real estate must be something more, it must be our place to live, work and enjoy, do sports – she stated.
And Niko Laković believes that people are losing enthusiasm for buying real estate in which they will not have any services.
– That type of project is becoming a thing of the past, and everyone who builds in the future will have to build facilities with facilities, reception, maintenance, swimming pools, and a gym. People are increasingly realizing the advantages of living by the sea, especially in resorts, and I am quite sure that less and less classic buildings will be built, and more and more settlements and resorts with additional facilities. It’s simply a trend that all investors will have to follow – said Laković recently for eKapija.
CMM Investment Consulting Group is developing exactly such projects.
– All our projects are closed resorts, with many facilities such as outdoor and indoor swimming pools, conference rooms, spa area with sauna, Turkish bath, salt room, children’s playrooms, relaxation yoga area – Nataša Grdinić told us.
Golden passports brought investors to the north
In addition to the coast, intensive construction of condo hotels, apartment and residential-business facilities has also begun in the north of Montenegro. The reason for this is the economic citizenship project that was launched in 2019 and which, according to recent data from the Investment Agency, has brought Montenegro EUR 310 million .
A total of 779 applications were submitted for the golden passport, of which 168 were approved, 73 were rejected, and the rest are in the process of processing. As part of the program, 14 hotel complexes will be built, eight of which are in the north. Thus, seven hotels will be built in Kolašin, one in Žabljak, and two each in Budva, Tivat and Bar. With the last two projects that the Government added to the list last week, the total investment of investors in these hotels should exceed EUR 400 million, and the capacity will be over 2,500 accommodation units.
– The economic citizenship project had a lot of positive effects, so the construction of luxury resorts started in places where, otherwise, those hotels would probably never have been built, or it would have taken years for those investments to be realized and developed. This project really brought new value to Montenegro as a destination, and thanks to it, brands such as Swiss hotel, Westin, IHG are coming to the north. Aman is coming to Žabljak, and the construction of the Chedi hotel is also planned – said Niko Laković for eKapija.
Despite the investments and the creation of new jobs, this project was not approved by the European Union, so it will be shut down on December 31 of this year. That is why the Henley & Partners company, which in the past few years submitted 344 applications for the economic citizenship program in Montenegro, recently announced the reasons why it would be useful to extend this project.
– The total effect of the submitted applications so far amounts to EUR 320 million, which in itself is an exceptional effect and shows the significant potential of the program. If the full, initially planned potential of the program was realized, a realistic estimate is that it could generate over one billion euros of investments and income, in a relatively short period of time.As the program was originally conceived to fulfill the quota of 2,000 applications, which was planned by the official documents of the Government, and bearing in mind the state of public finances, it is logical to ask whether it is wise at this moment to interrupt such a program that is working, and which cannot be replace with other financial sources – this company stated, local media reports.