Montenegro has experienced one of Europe’s most intensive residential construction cycles over the past decade, yet a new assessment by the United Nations Economic Commission for Europe (UNECE) suggests that the country’s property market is becoming increasingly disconnected from demographic realities. The report highlights a striking paradox: while the number of housing units continues to expand rapidly, almost half of the country’s residential stock is not permanently occupied.
According to the 2023 population and housing census, Montenegro recorded 392,909 housing units, an increase of 78,205 apartments and houses compared with the 2011 census. Over the same period, however, the population increased by only around 2%, indicating that housing supply has expanded far faster than the number of residents.
UNECE notes that only around 54% of all residential units are continuously occupied, while a large share consists of secondary residences, holiday homes, tourism-oriented apartments, temporarily vacant units or abandoned properties. Nearly 46% of housing stock is not permanently inhabited, a figure the organization describes as a significant policy challenge.
The findings are particularly important because construction and real estate have become major pillars of Montenegro’s economy. In 2023, construction together with real estate activities accounted for approximately 8.8% of GDP, while construction alone contributed 3.5% of economic output. Residential development has been one of the strongest drivers of growth, especially along the Adriatic coast and in urban centers such as Podgorica, Budva, and Kotor.
A significant portion of new development has been linked to tourism, foreign investment and second-home purchases rather than domestic housing demand. Luxury apartments, coastal developments and tourism-oriented residential projects have attracted buyers from across Europe, the Middle East and the wider region. While this has generated substantial capital inflows, it has also contributed to a market where housing construction increasingly serves investment demand rather than permanent residency needs.
For investors, the report raises an important distinction between construction activity and underlying housing demand. Montenegro’s development cycle remains supported by tourism growth, foreign capital and premium coastal real estate. However, the demographic data suggest that residential absorption by the local population is significantly weaker than construction volumes might imply.
UNECE recommends that the government develop policies aimed at returning vacant housing into permanent use and occupancy. The organization argues that future housing strategies should consider not only new construction but also the utilization of existing housing stock, affordability issues and long-term demographic trends.
The findings arrive at a time when property prices across Montenegro remain elevated despite substantial new supply. The combination of foreign demand, tourism-related investment and limited availability of housing in prime coastal locations has prevented the oversupply dynamics often seen in other markets. Nevertheless, the growing gap between the number of housing units and the number of residents is becoming increasingly difficult for policymakers to ignore.
From a broader economic perspective, the report highlights a challenge facing many tourism-driven economies. Construction activity continues to support GDP growth, employment and investment inflows, yet a significant share of new housing functions more as a financial asset or seasonal accommodation than as permanent residential infrastructure. In Montenegro’s case, the next stage of housing policy may increasingly focus on occupancy, affordability and urban sustainability rather than simply expanding the housing stock.
