NewsWhy do foreigners buy real estate in Montenegro?

Why do foreigners buy real estate in Montenegro?

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Buying real estate in Montenegro is interesting to foreigners for both lifestyle and investment reasons. In addition to the mild Mediterranean climate and natural beauty, real estate prices in Montenegro are still lower than in other European Mediterranean countries.

Find out why real estate in Montenegro is a particularly good investment, as well as what can be expected from the real estate market in this country in the future.

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In which parts of Montenegro do foreigners buy real estate the most?

It is not difficult to assume that real estate in Herceg Novi, attractive real estate in Tivat or Kotor is particularly interesting to buyers.

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Coast has always been attractive, but in recent years, other parts of Montenegro have also shown investment potential. In addition to Podgorica as the capital, there is also the north of Montenegro, especially Kolašin. This part has become particularly interesting since the completion of the first section of the Bar – Boljare highway from Podgorica to Mateševo.

How will joining the EU affect real estate in Montenegro?

Given that Montenegro is the most serious contender for the imminent accession to the EU, investors expect an active growth trend in real estate prices, which, for example, in Croatia was 5-15% per year, depending on the attractiveness of the location in the first five years after accession to the EU, in Bulgaria 62, 5% on average in the first two years, and in Romania as much as 66.7% on average in the first year after admission to the EU.

The growth in the price of square meters in Montenegro, as well as the entire market, will certainly be contributed to by the increase in the financing of purchases by domestic banks as a result of the harmonization of regulations in this area with European ones.

Currently, financing of non-residents by Montenegrin banks is sporadic and burdened by complicated procedures and unfavorable conditions – variable interest rates of 4.45% + 6 month Euribor or fixed interest rate of 5.45% with a minimum deposit of 50% of the bank’s exposure, which is uncompetitive the conditions of the countries from which the customers come.

It is important to mention the possibility of obtaining temporary residence based on the purchase of residential real estate in Montenegro. After the outbreak of the war in Ukraine, a large number of Ukrainians and Russians especially applied for this, but the number of Western Europeans who want a temporary stay in Montenegro is also constantly increasing, especially in the last two years.

Low tax rate as an excellent reason for opening a company in Montenegro

There is a noticeable increase in the number of companies registered by foreigners:

2020: 4,217 companies
2021: 5,558 companies
2022: 7,070 companies

The growth trend undoubtedly exists. Citizens of Russia and Turkey lead the way, followed by citizens of Serbia, Ukraine, Germany, the UK, China, and the USA in noticeably smaller numbers.

If we exclude the citizens of Russia and Ukraine, who for obvious reasons are trying to achieve economic activity in Montenegro, the rest are motivated by the relatively low tax rates in Montenegro, which amount to:

Citizens’ income tax in the amount of 9% for income up to EUR 1,000 per month and 15% for income over EUR 1,000 per month

Corporate income tax is progressive and amounts to 9% up to EUR 100,000 profit;

From EUR 100,000 to EUR 1.5 million, the tax is EUR 9,000 + 12% on the amount over EUR 100,000;

Over 1.5 million profit, the profit tax is: 177,000 EUR + 15% on the amount over 1.5 million EUR;

The property tax depends on the municipality, but ranges between 0.25% -1% of the market value of the real estate.

It is expected that the period of the next 3-4 years and, hopefully, the admission of Montenegro to the EU, will show the full potential and capacity of this real estate market, and our definite recommendation is that you invest in this market in the next couple of years.

 

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