Future Value Of The Luxury Real Estate In Montenegro,
Niko Lakovic, partner and executive director of Montenegro Sotheby’s Realty – With the entry into the EU, the value of luxury real estate in Montenegro will further increase
Unreal nature, proximity to mountains and the sea, resorts on the coast, but also authentic and timeless buildings in one of the most beautiful bays in the world, have positioned Montenegro high on the map of the most attractive destinations when it comes to the luxury real estate market. As Niko Lakovic, partner and executive director in the Montenegrin representative office of the famous Sotheby`s Realty
, said in an interview for eKapija, the market is young and still insufficiently researched, and surprises again and again anyone who sets foot in this country for the first time. And whoever comes once, falls in love at first sight and stays.
With all this, prices in Montenegro are still acceptable compared to some other luxury destinations, and the fact that the country will be the next member of the European Union is an additional incentive for investors to invest in real estate, because their value will only increase in the years ahead.
– Montenegro is still unknown to people, they perceive it as a product from 20, 30 or 50 years ago. It is often difficult for them to decide to come due to objective circumstances – infrastructure, proximity to some other destinations… However, the moment they arrive, most people fall in love at first sight and decide to buy real estate in Montenegro. Being in Tivat, Budva or Kotor where the airport is 15 minutes or half an hour away, the possibility that you can be in Belgrade in 45 minutes, finish your work and return to the sea on the same day… Not many countries offer such opportunities and these are all the advantages that Montenegro has as a destination and for which an increasing number of people decide to settle permanently, or for a few months during the year, in Porto Montenegro, Lustica Bay or Portonovo – Lakovic said in an interview for our portal.
Has living in resorts become a trend on the market, so additional facilities in residential complexes are no longer just an advantage, but a necessity, especially when we talk about luxury real estate?
– Of course it is. Real estate is no longer just a place to live, investors now have to take into account the additional contents that accompany that real estate. After the covid crisis and other uncertainties that we are witnessing, people have awakened the tendency and thinking that they should change their lives, spend more time with their family, but also in contact with nature. They realized that they should lead a high-quality life, and the resorts with all the amenities that have a five-star level enable them to do just that.
Emotion is no longer enough. It is extremely important, a large number of people have that emotion towards Montenegro or the former Yugoslavia, the Adriatic, they want to be in a familiar and friendly atmosphere. But you also have to provide them with those additional features that will make them want to stay. If you are part of a community where you have a great network of people, it will be easier for you to decide to buy that property. Classic buildings are increasingly losing their primacy in relation to facilities with additional facilities or resorts. When you have a swimming pool, gym, 24/7 reception, facility management within the property – you feel safe, have a quality life and want to stay there.
Resorts brought emancipation to the market and placed the Montenegrin luxury real estate market in a position it had never been in before, and I am glad about that.
Baia penthouse in Porto Montenegro with private pool and marina view ( Photo: Montenegro Sotheby’s Realty )
Since the development of Porto Montenegro, and then the settlements of Lustica Bay and Portonovi, Boka Kotorska has positioned itself as the most popular destination when it comes to luxury real estate. How are the square footage prices moving in these complexes?
– If we take the example of Porto Montenegro, sales in this resort began in 2010 with a figure of EUR 4,000 per square meter. Today, the average price is between 9 and 10,000 EUR, and some units reach a value of up to 15,000 per square meter. Porto Montenegro is seriously maturing as a destination, in addition to its real estate offering, it also has serious retail. In May next year, the SIRO hotel with 145 rooms will be opened, which will operate under the One&Only brand, which is now present in Portonovi. A shopping center, a cinema, all those facilities that every local community likes to have, which will additionally make Porto Montenegro even more attractive in the winter months, will also be opened.
The next project that is already attracting a lot of attention is Synchro, it will have its own beach, another five-plus star hotel also under the One&Only brand, but also condo units on the water itself, which is a curiosity in itself. The arrival of serious names from the restaurant business and retail is also expected, and I believe that this project will be the crowning glory of Porto Montenegro and everything it represents.
The demand for real estate in this resort, which also has its own kindergarten, elementary and high school, is so great that it happens that we sell the same unit several times. For example, people stay in Tivat and then decide to go to another destination. However, those units have never been on the market for long, due to the excellent conditions, there is a lot of pressure and the properties are selling quickly. Another plus is the fact that Porto Montenegro, with its master plan, perfectly fits into the rest of Tivat and looks like an addition to the city itself.
Outside of Porto Montenegro, we have Lustica Bay and Portonovi as serious parallels.
The first golf resort is also being developed in Lustica, which will certainly raise the bar even further when it comes to positioning Montenegro as an elite destination. Is there already client interest in golf residences, and will this novelty in the offer further push the boundaries of the Montenegrin luxury real estate market?
– The first 18-hole golf course being built in Lustica will certainly be a strong added value to the Montenegrin real estate market and tourism. We in Montenegro do not have a parallel for it, it is a completely new and rather unknown product for us. However, judging by the projects in America, Canada, Spain, Greece or France, wherever golf courses were built, the value of residential units increased significantly, and the country`s tourist offer itself was enriched. I sincerely believe that it will be the same in Montenegro, and that this project will be a strong impulse that will bring us a clientele that we have not had in the country so far.
Lustica Bay is an integrated community that very carefully takes care of projects, Mediterranean architecture, the use of local materials in construction, which is very visible. What is characteristic of this resort, and what I believe is the future and an important segment of the luxury real estate market, are very good payment plans. In Lustica, you arrange everything directly with the investor, there is no additional paperwork and complications as can be the case with banks, you pay directly to the investor and you have a very efficient purchase.
All of us who are in that chain and deal with the sale of real estate must put ourselves in the position of a potential buyer and make it easier for him to complete the whole buying process. Most of them, for example, will be able to pay a 10% down payment and will start thinking about buying. However, if you ask him to pay 100% of the amount immediately, or to make the payment in four stages, it is a huge challenge and a demanding figure. A well-designed repayment plan can be the deciding factor for them to buy a property. It is an important factor for us in sales as well and makes it easier to bring in customers. That`s why I repeat that payment plans are the future of all luxurious projects.
The luxurious Mirišta villa, whose architectural design and aesthetics are based on coastal architecture and Venetian classicism (Photo: Montenegro Sotheby’s Realty)
The luxury real estate market in Montenegro has been developing for more than a decade, but it seems that it still hasn`t reached its peak. The interest of investors is not abating, and new renowned world brands are constantly coming to the country. What`s the secret? Where lies the advantage of Montenegro compared to other Mediterranean countries that are also working to position themselves as luxury destinations?
– If you compare Montenegro with Croatia, we have integrated resorts that are real small towns with their marinas, where you can have a completely independent life in relation to the rest of the territory. The development of the luxury market in Albania is still in its infancy, and we are cheaper than Italy and Spain, so here you can still buy a historic house on the seashore for a million or a million and a half euros.
Our nature is also very interesting to people, we are a safe environment, and healthy and high-quality air, food, and untouched nature are what will attract them in the future as well. In our country, size also has a comparative advantage, so the fact that you can reach Durmitor or Kolasin in two hours from the sea also attracts people. You can reach Dubrovnik, Italy and Belgrade, which is the center of the region, very quickly. These are all advantages that Montenegro has. People prefer an active life more and more, the time of the traditional understanding of tourism and real estate has changed, the buyer is not the same today as it was 15 years ago. Today, he`s looking for content, and that`s what foreigners understood, but we didn`t. Fortunately for us, they set the standard that we now follow and successfully adapt to those new trends.
We have seen real estate prices skyrocket over the last few years, and it seems that there is still no end to it. What is the situation when it comes to luxury real estate? Is there still room for their value to increase?
– During the last two years in Montenegro, we have recorded an increase in real estate prices at the level of 40%, and the strong buying trend continued. What makes me particularly happy is that we have an increase in interest from the Western European market. Germany is present with about 20% of the purchase share and we see that there is a strong room for improvement, because they are just discovering Montenegro as a destination. The same applies to Czechs, Slovaks and Poles who discover Montenegro and buy real estate for serious sums. We traditionally have a lot of pressure from the Russian and Ukrainian markets, currently around 100,000 Russians and Ukrainians live in Montenegro. It is very good for us, because they start and run their businesses there and thus contribute to the economy. We have significant interest from the British and Scandinavian markets, Turkish as well.
I always like to emphasize that the region has a strong presence as standard, and I think that this year, around 50% of purchases were made by people from the region. The closeness and emotion that binds us together with the 5-star amenities in the resorts is a winning combination.
When it comes to the space for further increasing the value of real estate, it certainly exists, and the possibilities for this will grow as we get closer to the European Union, but also as we improve the infrastructure.
I keep repeating that the infrastructure is our biggest weakness and without which we cannot function for a single season anymore. We have to make quick and active decisions. No matter how many good things we do for the country and the destination, we must put the infrastructure first, build roads, do something with the airports and bring them to a serious level, and if necessary, form teams that will invest in the country. We can no longer bring in big investors in infrastructure from Tito`s era, it is senseless.
Historical real estate represents the character of Sotheby`s – An elegant and unique villa known as the “Old Post Office” in the town of Rose (Photo: Montenegro Sotheby’s Realty)
Montenegro Sotheby`s International Realty has been a reliable partner to clients all over the world for more than three years, as evidenced by the numerous awards you have received. How much did the arrival of such a prestigious brand affect the development of Montenegro as a luxury destination?
– The entry of a company like Sotheby`s into our market brought a lot to Montenegro as a destination. It is a very well-known, current and recognized brand all over the world, which brings strong credibility to the destination. We are present in 80 countries around the world and what we do in Montenegro attracts a lot of attention from all partners. They see us as a destination they don`t know much about, but they would like to promote it. Last year, we hosted partners from 14 countries in Montenegro, who were completely delighted with everything they saw.
We have properties from the 15th or 17th century, from the period of the Venetian Republic, Venice. We have new resorts where you have great units and where you can bring the boat to 250 meters. We strongly promote Montenegro as a destination through world media such as Bloomberg, Forbes, Financial Times, Wall Street Journal. A country that was previously known only in a political context, is now becoming recognized as a destination where you can buy luxury real estate and which has gathered prestigious world brands such as Aman, One&Only, Accor, Hilton, Hyatt… in a small space.
In addition to the coast, thanks to the economic citizenship project, these brands have also reached the north, so a dozen hotels are being built in Kolašin. We expect that in the next ski season Radisson and Swissôtel will be opened, and then also hotels from the Westin and Accor groups. The InterContinental Hotels Group with the Crowne Plaza brand is coming to the center of Kolašin, and the construction of a resort on Durmitor is also expected. If we return to the coast, we also hope for the arrival of the Four Seasons and Ritz Carlton brands, and development will also begin in hitherto neglected cities such as Bar and Ulcinj.
Starting this year, for the first time in Montenegro, it is possible to sell and buy real estate through the famous Sotheby`s auction. Do you believe that this type of sale can take off in our region, or can we soon expect some Montenegrin real estate at auction?
– We are very excited about the cooperation with the concierge service. Within its group, Sotheby`s now has a company that deals with real estate auctions, not only art, and which achieves serious results in Hong Kong, London and New York. Their delegation has already visited our real estate several times and we expect that some of them will be auctioned in the coming months. I believe that we will show that real estate from Montenegro can be sold in this way.
We often hear that investing in real estate is an investment that always pays off. Is it always like that? And are there real estates that you think can only increase in value over time, and that they are just such safe investments?
– People invest money in real estate as a serious and safe asset, which may fluctuate in value, but is always there. We have witnessed that money can lose 30 to 40% of its value within two years due to inflation. However, real estate is always a safe investment. You can have rent income, and the value of the property itself can increase over time. What I see as something that is always worth investing in are amenity properties, resort properties, then historic and waterfront properties.
If people decide to engage in construction, it works very seriously in Montenegro. Here, I repeat my recommendation to investors to focus on projects that will provide future tenants with all the amenities and a certain added value, because this is definitely the future of construction.