Thu, 06 Sep 07
Experts have predicted that property prices in Montenegro will soar by over 50% in the coming year...
Montenegro, now famous for the Casino Royale where James Bond entered into a high-stakes game of poker, could offer the greatest house price rise worldwide in the next few years, reveal experts at the Homebuyer Show.
The Republic of Montenegro, which was declared a fully independent state on 3rd June 2006, has reported some of the fastest growing property prices in the world, after values have risen by 85% in the last three years. And under the backdrop of strong economic growth and a booming tourism industry, experts believe that the average property price will soar by over 50% in coastal regions, next year.
World's fastest growing tourist destination
The Montenegro economy has recovered significantly since the collapse of socialism and the troubles of the 1990s (the Balkan Crisis in 1991 1995 and Kosovo in 1999). Since 2000, private companies and banking institutions have stumped up billions of pounds to kick start its economic progress. As a result, GDP growth has averaged at 5% per annum and this rate of growth is set to continue.
The investment into the previously neglected infrastructure is also well under way, with for example, the European Investment Bank investing €24 million for the construction of the Sozina Tunnel, which connects the central industrial area to the coast. Montenegro’s recent successful transition to the Euro has also encouraged further overseas investment into property and other ventures.
Boasting a coastline of over 293 kilometers of sandy beaches and coves, the world’s second deepest canyon, ski resorts and 240 days of sunshine, the country has also been tipped to be the fastest growing travel and tourism destination in the world. The World Travel and Tourism Council, which puts Montenegro in pole position, estimates that its tourism industry will generate over 21 per cent of the country’s total GDP by 2015.
An emerging property market
With average property prices between £38,000 and £88,000, at least 25% less than its neighbouring countries, such as Croatia, the potential for capital appreciation in Montenegro is significant. Underpinned by the tourist industry, the rental market is also undeniably strong with average rental yields expected to reach between 7-9% in hotspot areas, such as Kotor, Budva and Boka Kotorska.
Although there are limited cheap flights from the UK to its international airports Podgorica and Tivat this is set to change with the growing popularity of tourism and increased investment in infrastructure. Currently, visitors can fly from the UK to Croatia where it is only half an hour drive into Montenegro and flights cost £156 return.
However, although the property market in Montenegro is experiencing very strong growth, the industry is still hugely undeveloped. It is important that full due diligence is paid to the legal and buying processes to ensure investors can take full advantage of the genuine opportunities which exist.
Jonty Crossick, managing director of Ready2Invest, which specialises in property investment in emerging markets and will be exhibiting at The Homebuyer Show, comments: This is a market with great potential. The natural beauty of the land and the perfect climate will ensure continued rapid growth in the tourism industry. This, alongside a much anticipated move to EU membership, ongoing economic growth, and investment in its infrastructure means that Montenegro offers property investors excellent investment opportunities, for both rental income and house price growth.
Key Montenegro Facts:
- Sunshine per annum 240 days
- Property price rise in the last three years 85%
- Expected property price rise for 2007 50% in coastal regions
- Currency - Euro
- Fastest growing travel and tourism destination according to World Travel and Tourism Council
- Average rental yields in coastal areas 7-9%
- 293 kilometers long coast line 117 Sandy beaches
- The economy grew by 5% in 2006
- Property purchase tax is 2%
- No capital gains or Inheritance Tax
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