Montenegro: a Russian heaven

By James Gonzales

According to figures released at the beginning of the year Montenegro earns the greatest amount of foreign direct investment (FDI) per capita than any other country in Europe, with over £515 for each of its 650,000 inhabitants. Property investment alone accounted for €1 billion equal to 51% of the total FDI for 2007. A large proportion of property investment comes from Russian investors and the Montenegrin government are clearly capitalising on this market.

Montenegro’s capital, Podgorica, coined Moscow-on-Sea, openly welcomes the Russians with many advertising campaigns solely targeted at the ever-increasing Russian market. However, in terms of hectare ownership the Russians only just pip UK investors at the post. The stunning scenery undoubtedly adds to the country’s attractiveness as a property investment and second home destination. Hotel and apartment developments are a key driving force for foreign ownership, which now equates to 1.52 million sq m of residential and commercial property, and over 19,000 hectares of foreign owned land is earmarked for construction works.

Early predictions by the Central Bank suggested a downturn in Montenegro’s long running property growth for 2008. However, new laws, increased government spending and improvements to the country as a whole should hold Montenegro’s economic growth rate at a steady 7% year-on-year. Montenegro is in fact trying to position itself as a high-end, south of France style destination, which reflects in the type and income bracket of the property buyer. Huge marble hotels and prestigious resorts are now commanding over €7,000 per sq m.