Foreigners invest in Montenegro's Adriatic coast

When she decided to spend her holidays in tiny Montenegro last year, Sian McDermott did not imagine she would be joining thousands of other English people discovering what she now calls a new paradise.

Only a year later, she has become the owner of an old-stone house near the sea and started working in a real estate agency in a bid to bring more Westerners to Boka Bay, the north-east part of Montenegro’s patch of the Adriatic.

“I came over here last August for the first time and I ended up buying a little stone house in [the village of] Lepetane, by water,” says McDermott.

Working with Britain’s Premier Properties Agency based in the medieval Montenegro’s coastal town of Kotor, McDermott said more people were expected to come, seeing investment but also a rental potential.

“For me, it was an investment for my pension. Its value has increased up to 80% in only one year,” she added.

A growing number of real estate agencies confirmed her words. Advertisements written in English but also in Russian could be seen throughout the town, a labyrinth of shady narrow streets with century old stone houses.

Montenegro proclaimed independence in June, bringing to a final end the 15-year-long and painful break up of the former Yugoslav federation.

“Many foreigners who knew ex-Yugoslavia are now rediscovering the region,” McDermott said.

Ever since it became independent, the newest state in the world of only 650 000 inhabitants has witnessed a surge of the real estate market in addition to a year-old boom, especially on the coast.

“Gaining independence seemed to have encouraged the market,” McDermott said.

And “Montenegro’s aspiration to join the European Union makes foreign investment even more secure,” she said.

The prices of land and real estate have skyrocketed in the past year, reaching up to €3 500 per square metre for a house in Kotor, the main town and port in the Boka bay.

But the prices are still rising, real estate officials said.

Boka Bay, surrounded by rocky mountains and close to the border with neighbouring Croatia, has become the most-wanted destination in Montenegro for foreign investors, mostly Britons and Irish, said Danijela Vukovic of Someplace Else, another British real estate agency.

Relaxed and curious foreign tourists stroll around Kotor or enjoy nice September weather in numerous cafes and restaurants.

McDermott said that only a year ago the scene was not the same.

“The change in this one year in Kotor and around is phenomenal.
There are more bars, restaurants opened,” she said.

Roads throughout the area have been repaired and local investments seem everywhere, she said.

Down towards the southern part of the coast, the Russians have become primary investors in the area.

Russian companies have already bought three hotels along the coast, in Herceg Novi, Petrovac and Perazica Do, and construction of two more hotels in the hamlet Becici has begun with their Montenegrin partners.

Local media have reported that Russian investors have also bought two abandoned villages above the most famous Montenegrin island of Sveti Stefan and plan to build luxurious rental apartments there.

Russian has often been heard at Montenegrin beaches, while many restaurants have their menus written in Russian.

Buying a house or a flat in Montenegro is quite easy, with foreign citizens having the same rights as locals, but purchasing the land is more complicated, as the law regulates only Montenegrins can own it.

But Prime Minister Milo Djukanovic said last week that the existing regulations would soon be changes as the government has already prepared new legislation that would allow foreign citizens to purchase land.

The new law is expected to provide another boost to the market but also to increase the prices, nowadays between €300 and €500 for a square metre of the coastal land.

A total amount of foreign investment in 2006 is expected to be at least €400-million without privatisation, Djukanovic said.

Such amount, along with government-planned investment in infrastructure, would probably enable Montenegro to improve its main source of income—tourism.

This year, the tourist season has already been considered as one of the most successful in the last 15 years, with 20% growth compared with 2005, officials said.

“People feel it is a safe place for a vacation, particularly bearing in mind terrorism threats in other destinations,” McDermott said, referring to a number of terrorist attacks in Egypt, Turkey and other world’s tourist destinations.—AFP

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