A distinctive feature of the recent crisis is that Russian private investors appeared in the leading position in almost all European markets of resort properties. But there is another market where the Russians were in the lead before the crisis, overpowering their foreign colleagues both in the number of purchased properties, and the amount of investment. Maybe this rampant, surreal, inexplicable by any internal economic processes growth of prices for resort property is associated with this circumstance. The country has undergone the growth a few years ago, and now, after the crisis it continues to be famous as a place where real estate is not quite cheap. We are talking about Montenegro.

Square values and nirvana

Before the crisis, Montenegro managed to surprise the world public with prices for resort housing, sometimes they could be compared to the cost of square meters on the French Riviera. In 2008, housing prices on the coast reached the mark of €6,000-7,000 per sq.m.
Pre-crisis economic picture was almost trouble-free: according to Monstat, GDP growth in 2007 and 2008 was, respectively, 10.7% and 7.5%. In early 2009, the country registered decline in industry and tourism sector. GDP fell by 5.7%. By 2010, average prices for quality housing in the coastal zone, as compared to the pre-crisis peak values, decreased by 30-50%. In Budva, one of the main centers attracting foreign buyers, prices per square meter fell to €2,500-3500.
Недвижимость в Перасте, Черногория
St. George island near Perast
In 2007 in another coastal town, Bar, prices for new properties decreased from a maximum of €2,800-2,900/m2 to €1,800/m2, and in some cases to €1,500/m2.
--------------------
"The market is not moving, no transactions, buyers are waiting, the most impatient realtors leave in panic for other niches... and local vendors do not hurry and do not reduce prices"
--------------------
But this fall in prices is almost over. From 2010 to 2013 difference to the cost of a square meter was a maximum of 5-10 %, and prices for properties with the most favorable location remained unchanged, though the market stayed in stagnation for a while. In 2010-2012, observations of behavior of the real estate market in this country provoked a lot of jokes about the local peculiarities and life style. These jokes illustrated the kind of "Zen" of the Montenegrins: they are never in a hurry. The market is not moving, no transactions, buyers are waiting, the most impatient realtors leave in panic for other niches... and local vendors do not hurry and do not reduce prices.
But today, the market experts say that Montenegro passed the "crisis exam" very well. Yes, some of foreign investors have ceased their activity, but the majority remained. A few very large investment projects appeared during the crisis, and this fact that says about trust to the market. One of them is a superproject of construction marina Porto Montenegro in Tivat, initiated by Canadian multimillionaire Peter Munk.
Недвижимость в Которе, Черногория
Kotor

Regions and prices

Maximum price falls during crisis touched the real estate in the capital Podgorica, and ski cities Kolasin and Zabljak. Price reduction was sometimes over 50% from the values of peak pre-crisis period, Coastal areas suffered less.
The most expensive real estate in Montenegro is located in historic areas, protected by UNESCO. For example, in Kotor and Perast. Real estate in the elite towns of Sveti Stefan and Petrovac is more expensive than in Budva, Tivat and Herceg Novi. Similar options (distance to the sea, condition, prestige of the area) in Bar will be cheaper than in Budva, and in Ulcinj cheaper than the Bar.
The Budva Riviera is considered to be the most expensive: Budva, Becici, Milocer, Rafailovići and Petrovac. Budva Riviera, with its center in Budva is the central part of the coast with sandy beaches and the most massive construction. Here prices fell from their peak in 2007-2008 by 40-50%. A square meter in a new apartment within 300 meters from the sea costs €2,600-2,800, at a greater distance from the coast - €1,800-2,200.
Недвижимость в Будве, Черногория
Old town Budva
Cheaper and more democratic is Bar Riviera: Sutomore, vicinities of Bar, Dobra Voda. Apartments in new homes are offered at prices from €1,600/m2, with a maximum of €2,200/m2.
The lowest prices for housing, around €1,500/m2, are near Ulcinj Riviera.

Timid steps up

"Over the past few years, prices almost have not changed. On the secondary real estate market, when it comes to the actual selling price, an average decline was about 10%. This is due to the fact that most of the properties, "frozen" during the crisis, have been completed and put into operation, that led to oversupply", said Natalya Dyakonova, partner, representative of Invest Montenegro in Russia.
Example: one-room apartment in Budva, in 5 minutes from the beach, ground floor, furnished (secondary market) is now for sale for €39,900 and half a year ago it cost €45,000. Another variant: a small two-bedroom apartment of 56 square meters in the center of Budva. Also resale, therefore furniture is included. It is offered for sale for €74,100, previously it cost €76,100.
"And I'm sure that you can still make it a bit cheaper, if you agree on the terms of payment. So you can and should bargain on the secondary real estate market", Natalya Dyakonova said.
--------------------
"Small territory of the country, the implementation of several large-scale projects and good transport accessibility are favorable for the real estate market, and for a good return on long-term investment"
--------------------
A very small growth in economy of the country, literally a fraction of a percent, started in 2010. In 2013 GDP growth was 1.5%. In January 2014, the European Bank for Reconstruction and Development (EBRD) in its report for countries with economy in transition gave a forecast of 2 percent growth of Montenegrin economy in 2014. The report states that the financial position of Montenegro is weakened by payment guarantees for the aluminum plant (KAP) and the rapid growth of public debt in recent years. Yet the EBRD expects economic growth this year by improving internal and external demand.
The situation in the housing market, where there are objective signs of recovery, is displayed by data from the National Statistical Office Monstat, according to which the capitalization of new construction projects that are put into operation, continues to grow, as well as the amount of foreign investment.
Купить недвижимость в Черногории, город Жабляк
Zabljak, the north of Montenegro

Investment or not?

"Montenegro is not the best country for short-term investments, since the change in property prices takes years. Unless, of course, you buy a ready-made business like a hotel or a hostel," Natalya Dyakonova said. "But as for long-term investments, there is quite a different situation."
Small territory of the country, the implementation of several large-scale projects and good transport accessibility are favorable for the real estate market, and for a good return on long-term investment. "To understand the features of the local real estate market it is important to know its scale. Territory of the country corresponds approximately to the size of the Kaliningrad region and the population (about 670,000) is less than in the Central Administrative District of Moscow. Coastline, where there are about 75% of all transactions with foreigners, is only 76 kilometers long," said Nina Kolotova, private broker.

Mosaic on one of  the Orthodox churches in Montenegro
"The majority of land plots for multistory buildings have already been built up. Wave of delivery of new houses with 5-7 floors passed in 2013. Almost all apartments in these houses have been sold out. Demand shifts toward the individual building and low-rise elite residential complexes", Natalya said.
There is another piece of news: at the end of 2013 Montenegro accepted for consideration a project of the Aliens Act, which, in particular, offers to issue residence permits to property owners (the ee24.com portal wrote about it in detail -read more).
"The amount of investment that will give resident status has not been determined yet. But we expect that the law will be approved at the end of February. If this happens, for Montenegro it will be a totally revolutionary and very positive innovation which will greatly light up the market," Natalya Dyakonova said.