In the first three months of 2024, foreign nationals purchased real estate in Montenegro worth 113.5 million EUR, a 21% increase (or 20 million EUR more) compared to the same period last year. However, other forms of foreign direct investment (FDI), such as investments in companies and banks in Montenegro, as well as loans from abroad to local companies, are on the decline.
According to data from the Central Bank of Montenegro (CBCG), foreign interest in real estate in Montenegro has increased fourfold over the past five years, with the average price of a new apartment rising by approximately 50%.
Declining other investments
Foreign investments in companies and banks in Montenegro for the first quarter of 2024 amounted to 21.6 million EUR, compared to 36.1 million EUR in the same period last year—a 40% decrease. Foreign investments through intercompany loans (loans from foreign companies to their related companies in Montenegro) totaled 70 million EUR in this period, which is 5.5 million EUR less than last year.
Total foreign investments in the first quarter of 2024 reached 211 million EUR, an increase of 1% compared to the same period in 2023. However, this growth was significantly lower than the inflation rate of 2.7% during this period.
Buyers from all continents
The largest foreign buyers of real estate in Montenegro in the first three months of 2024 were individuals or companies from Serbia, who invested 19.2 million EUR. They were followed by investments from Turkey (16 million EUR), the United States (13.8 million EUR), Germany (11.5 million EUR), Cyprus (5.3 million EUR), Russia (4.7 million EUR), the United Arab Emirates (4.4 million EUR), Switzerland (3.8 million EUR), the United Kingdom (3.3 million EUR), and Kosovo (3 million EUR). There were also buyers from countries such as Australia, Kazakhstan, Armenia, Kyrgyzstan, Egypt, Malaysia, the Bahamas, South Africa, and even Oman.
Rising share of FDI in real estate
Over the past five years, there has been a significant trend of increasing foreign direct investment in real estate. In 2019, before the COVID-19 pandemic, total foreign investments in Montenegro amounted to 778 million EUR, with 178 million EUR (23%) allocated to real estate. In 2020, during the pandemic, foreign investments totaled 666 million EUR, with 116 million EUR (17.4%) invested in real estate.
In 2021, foreign direct investments reached 928 million EUR, with 30% of that amount (278 million EUR) directed to real estate. In 2022, foreign investments in Montenegro amounted to 1.15 billion EUR, of which 448 million EUR (39%) went into real estate. This record year was largely driven by the expiration of the economic citizenship program, which led many foreign buyers to purchase property in exchange for Montenegrin citizenship.
In 2023, total foreign investments were 862 million EUR, with 463 million EUR (54%) allocated to real estate. In 2024, from a total of 889 million EUR in foreign investments, 455 million EUR (52%) was directed to real estate. In the first three months of 2024, out of 211 million EUR in total foreign investments, 54% or 113.5 million EUR went into real estate.
Foreigners selling properties
Foreign investors are also involved in selling real estate in Montenegro, leading to an outflow of capital. In the first quarter of 2024, foreigners sold real estate worth 14.7 million EUR, which is 13% of the amount they invested in purchasing properties during the same period. The largest sellers were from Serbia, who sold properties worth 4 million EUR, which accounted for 21% of the money they invested in real estate.
Other significant sellers included investors from Georgia (1.8 million EUR), the United Kingdom (1.7 million EUR), Bosnia and Herzegovina (1.3 million EUR), and Slovenia (1.2 million EUR). In total, in 2024, foreigners sold 32.1 million EUR worth of real estate, which was 7% of their total investments in Montenegro’s real estate market.
Rising prices, more housing loans, slight decrease in interest rates
According to the latest data from Monstat, the average price of a new apartment in commercial construction in Montenegro was 1,943 EUR per square meter in the last quarter of 2023. This is a significant increase from the average price of 1,346 EUR per square meter at the beginning of 2022.
Real estate market experts suggest that prices will likely remain high, with possible minor fluctuations, as demand from foreign buyers continues. They also noted an increase in domestic buyers purchasing properties with loans due to rising wages and slightly reduced interest rates on housing loans.
CBCG data shows that in the first quarter of 2024, banks in Montenegro approved housing loans worth 49 million EUR, compared to 26 million EUR in the same period in 2023, representing an 88% increase. At the same time, the price of real estate increased by approximately 8%.
Minimal sales from solidarity housing funds
In the last quarter of 2023, the average price per square meter in solidarity housing funds (such as those for pensioners or trade unions) was 589 EUR. However, these properties accounted for only about 0.5% of the total number of apartments sold during this period. The average price of commercial properties in Montenegro, excluding those from solidarity funds, was 1,943 EUR per square meter.
