Montenegro is one of Europe’s newest independent states and one of its most exciting investment opportunities. With international tourism up by 19% for the first 9 months of 2007, high foreign investment creating a strong economy and EU membership a government priority, the demand for quality property both now and in the future is clear.

Considerable construction is already underway to prepare for this growing tourist trade including improvements to the country’s infrastructure. Reconstruction of Montenegro’s old Soviet-era hotels presents many interesting opportunities for large corporate investors. An example of this is to be found on the rather decrepit but beautifully set island resort of Sveti Stefan, which has been bought by the luxury hotel group Aman Resorts and will soon be restored to create a world-class tourist destination.

The Montenegro economy enjoys international support from sources such as the World Bank, who are currently developing a four-year strategy for Montenegro to encourage private sector investments. According to the bank, this strategy will focus on supporting Montenegro on the path toward European Union membership, promoting growth and jobs through investments in environmentally sustainable tourism infrastructure, along with other high priority infrastructure needs. This will create a strong, growing economy that will, in turn, support an equally strong real estate market.

Since the Republic of Montenegro was declared a fully independent state in June 2006, the country has recorded some of the most impressive property price growth in the world. Property values have increased by 85% in the last 3 years, and on average by 20% per year, with agents reporting a solid 30% rise in property along the northern coast where tourism is growing at an astonishing rate. Strong economic growth and a booming tourism industry is leading experts to believe that average property prices in key areas such as coastal regions will double over the next year. Should this trend continue, investors in such regions can be confident of healthy capital growth.

Montenegro’s recent house price growth is partly due to the government’s ambitious strategy for each region’s development. These include new marinas and luxury golf resorts for extensive swathes of the coastal regions and the transforming of an old navy base at Tivat into the largest marina on the Adriatic. All of these improvements will increase tourist numbers driving up demand for both short-term rentals and second home property purchases, delivering strong returns to investors and providing consistent opportunities within the disposal market.

To date, Montenegro has primarily seen foreign property investment in renovation projects with strong capital growth potential, although recent demand has extended to new-build apartments in attractive locations that are often sold before building commences
The Budva Riviera has proved the most attractive area for investment, with everyone from multi billionaire Spiros Lacis to international film stars like Catherine Zeta-Jones joining the rush. However, there are also investment opportunities in the interior of Montenegro such as the areas around Lake Skadar and the old Royal Capital of Cetinje. These offer far lower prices, up to 200% less than coastal areas, yet they enjoy an ideal location not far from the sea, near the mountains, near the capital Podgorica, and surrounded by superb natural beauty. The well-known winter holiday resorts in the North: Bjelasica, near Kolasin, and Durmitor at Zabljak, also offer great investment potential.

In summary, with rapidly rising property prices, positive government and international support for both the economy and tourism in conjunction with the potential membership of the EU in the near future, Europe’s newest state is also one of Europe’s best investment opportunities.