Montenegro : rough diamond in the sun
The tiny Balkan state of Montenegro is yet again being considered by second home owners following a narrow referendum vote for independence from Serbia in May 2006. With its excellent beaches, ski resorts, 240 days of sunshine a year and the Unesco-protected Venetian city of Kotor, the country has a lot to offer the tourist looking for a bargain second home. With even the smallest prospect of joining the EU, property investors seem to be beating a path to buy, buy, buy.
Prices rising
Property prices have already risen by 20-30% in the past year as British, Irish, Scandinavian and Russian buyers move into the market. The coastline between Budva and Petrovac are said to offer the best investment opportunities.
Jonty Crossick of Ready2Invest, an estate agency and property consultancy specialising in Montenegro, tells The Mail on Sunday that "the property market is increasing at 30-50% a year in coastal regions", where "the high mountains close to the sea protect it from overdevelopment".
Infrastructure issues
While the Montenegro Government believes the tourism industry and booming property prices will lead GDP growth in the future, The Washington Post points out, "the tiny Adriatic country must confront problems it has never fully addressed: chronically bad infrastructure and endemic corruption".
UK property owners will know that there is still no direct year-round airline service to Montenegro from the UK. Instead, most visitors must fly to Dubrovnik in Croatia, then drive to Montenegro, which makes an impulsive weekend away much less attractive. Other downsides include water and electricity supplies that can be unreliable in summer, and telephone and internet connections far below UK standards, although it has to be said many buyers will see this as part of the charm of this rough diamond on the Adriatic.
Either way, buying property there is undoubtedly a risk. The black market is as pervasive as it was in the 1990s when it kept the economy moving during the Balkan wars, but that has made many developers and investors wary of putting their money there. UK buyers cannot get a Montenegrin mortgage, so current buyers must either borrow against their first property, or somehow finding the cash in other ways, which could be a risky option.
Montenegro for EU?
There are two arguments for Montenegro's future chances of joining the EU group of nations. One argues that its separation from Serbia gives it a greater chance of joining the EU, an advantage so often sought by property hunters. Some believe this may happen within five or six years. The opposing argument says that Montenegro has a smaller chance than it has ever had of getting a seat at the top table in Brussels. David Webb, first secretary at the British Embassy in Belgrade, told The Sunday Times: "If anything, independent Montenegro is further from the EU than Serbia and Montenegro. Is the EU really the place for a country with a lot of Russian connections and only tourism to keep it up?"
Prospective purchasers have to balance these arguments against the fact that prices are still a third lower than in neighbouring Croatia, itself a burgeoning property hotspot, albeit with only 15% locals making up the property ownership. It all goes to suggest a high degree of speculation and an uncertain future.
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