Foreigners bought real estate in Montenegro for 113,5 million euros in the first three months of this year, which is 21 percent or 20 million more than in the same quarter last year. All other forms of foreign direct investment are declining, such as investments by foreigners in companies and banks in Montenegro, and loans from abroad to domestic companies are also decreasing.
This is shown by data from the Central Bank of Montenegro (CBCG) for the period January-March this year. An analysis of official data from the CBCG and Monstat shows that the interest of foreigners in purchasing real estate has increased fourfold in the past five years, and that the price of an average square meter of a new apartment has increased by about 50 percent.
Other investments in decline
Foreign investments in companies and banks in Montenegro in the first quarter of this year amounted to 21,6 million euros, while in the same period last year they were worth 36,1 million euros. This is a drop of 40 percent. Foreign investments through the so-called inter-company debt (loans from abroad to affiliated companies in Montenegro) in this period amounted to 70 million euros, while last year in the first three months they were five and a half million higher.
Total foreign investments in this period amounted to 211 million euros, which was two million or one percent higher than in the first three months of last year. This growth was significantly lower than the inflation rate, which was 2,7 percent for the period January-March this year compared to the same period last year.
There are customers from five continents.
Foreigners who bought the most real estate in Montenegro in the first three months were citizens or companies from Serbia worth 19,2 million euros. This was followed by real estate investments from Turkey for 16 million euros, the United States with 13,8 million euros, Germany with 11,5 million, Cyprus with 5,3 million, Russia with 4,7 million, the United Arab Emirates with 4,4 million, Switzerland with 3,8 million, Great Britain with 3,3 million, Kosovo with three million, Poland, Ukraine and the Czech Republic with 2,3 million each, Bosnia and Herzegovina with 1,9 million, Canada and France with 1,4 million euros each,...
There were also buyers for Montenegrin real estate from Australia for 485 thousand, Kazakhstan for 706 thousand, Armenia for 584 thousand euros, Kyrgyzstan for 273 thousand, Egypt for 174 thousand, Malaysia for 200 thousand, the Bahamas for 145 thousand, the Republic of South Africa for 134 thousand euros,... and even from Oman for 14,7 thousand euros.
Significant growth in the percentage of FDI in real estate
In the last five years, there has been a significant trend of growth in the share of real estate purchases in total foreign direct investment (FDI), meaning that foreigners most often see Montenegro as a place to buy real estate, rather than to invest in some other business.
In the year before the coronavirus pandemic in 2019, total foreign investment amounted to 778 million euros, of which foreign investment in real estate was worth 178 million, which was 23 percent of the total value of all foreign direct investment. In the year of the Covid pandemic in 2020, total foreign investment was worth 666 million, of which their investment in real estate was 116 million or 17,4 percent.
In the first year since the start of the pandemic recovery in 2021, foreign direct investment was worth 928 million euros, of which 30 percent was invested in the purchase of real estate, or 278 million euros. In 2022, foreigners invested 151 billion and 448 million euros in Montenegro, of which 39 million in real estate, or XNUMX percent. This record in terms of foreign investment is probably related to the fact that the deadline for foreigners to apply for the economic citizenship program expired that year and when most of them purchased real estate - an apartment, along with which they and their family members also received Montenegrin citizenship.
In 2023, total foreign investments amounted to 862 million euros, of which 463 million or 54 percent were invested in the purchase of real estate. A small percentage drop was recorded in 2024, when out of the total investments of 889 million euros, 455 million or 52 percent were invested in real estate. In the first three months of this year, out of the 211 million total investments, 54 percent or 113,5 million went to the purchase of real estate.
From the beginning of 2019 to the end of March this year, foreigners purchased real estate in Montenegro worth two billion euros.
Foreigners also sell real estate, Serbs lead the way
Foreigners also have a so-called outflow of investments through the sale of real estate in Montenegro and the transfer of that money abroad. Thus, in the first three months of this year, foreigners sold real estate for 14,7 million euros, which is 13 percent of the amount they invested in the purchase of real estate at the same time. The foreigners who sold the most real estate and transferred money in this period are from Serbia, in the amount of four million euros, which is 21 percent of the money that buyers from this neighboring country invested in real estate in Montenegro.
After them, investors from Georgia led the way in selling real estate and withdrawing money from Montenegro with 1,8 million, from Great Britain with 1,7 million, from Bosnia and Herzegovina with 1,3 million, from Slovenia with 1,2 million euros,...
In the whole of 2024, foreigners sold Montenegrin real estate for 32,1 million euros, which is seven percent of the money they invested in real estate purchases at the same time. And in that year, the foreigners who sold the most real estate in Montenegro were investors from Serbia for 14,4 million euros, meaning they withdrew 21 percent of the money invested by buyers from that country.
After them, the most money through the sale of real estate in Montenegro was withdrawn by investors from Italy for three million euros, 2,2 million each from the Montenegrin real estate market were withdrawn by investors from Hungary, France and Spain, and 1,1 million each from Slovenia and Bosnia and Herzegovina. These data indicate that in the first three months, foreigners sold real estate in Montenegro for almost half the amount from the entire year 2024.
Prices are rising, the number of approved housing loans is falling slightly, and interest rates are falling slightly.
The latest Monstat report on apartment prices in new buildings refers to the last quarter of last year, when the average price per square meter in commercial construction was 1.943 euros.
This average does not include apartments from the economic citizenship program, as well as from special investment projects such as the residential-tourist settlements of Porto Montenegro, Portonovi, Luštica Bay and the ski resort in Kolašin.
Three years ago, at the beginning of 2022, the average price per square meter was 1.346 euros and has been growing almost constantly since then.
A source from the real estate market told Vijesti that prices have remained high for the past two years due to the continued high interest of foreigners in purchasing real estate. He also stated that they will remain at that level, with possible slight fluctuations up or down.
He also pointed out that in recent months the number of domestic citizens buying apartments on credit has been increasing due to rising wages and a slight decline in interest rates on these loans.
Data from the Central Bank of Montenegro for the first three months of this year show that banks in Montenegro approved housing loans worth 49 million euros during that period, while in the comparable period last year that figure was 26 million euros. In other words, the amount of approved housing loans increased by 88 percent.
For the same comparative period, the price per square meter increased by about eight percent.
Sale of apartments from solidarity funds minimal
A square meter of new buildings built by union or pensioner solidarity housing funds was purchased at the end of last year for 589 euros. However, there were only those in the last quarter and then in the central region excluding Podgorica, which includes the municipalities of Nikšić, Cetinje, Danilovgrad, Tuzi and Zeta.
Monstat statistics show that the average square meter in commercial construction, without solidarity funds, in the last quarter of last year at the level of Montenegro amounted to 1.943 euros, and that the average with sales from these funds was 1.936 euros.
In order for the average commercial price per square meter of an apartment to drop from 1.943 to 1.936, mathematically it is necessary to sell 200 square meters at a price of 1.943 and one square meter at 589 euros.
This shows that apartments from solidarity funds accounted for only about 0,5 percent of the total number of apartments sold in this period.
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