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Finance: There were very few mortgages in Montenegro, so it has been unaffected by repossessions and credit limits seen in other markets. Most individual investors have not raised finance for their purchase in Montenegro, so the withdrawal of finance has not affected the market. Most of those that used equity in their home property disappeared from the market a couple of years ago so there has been little impact here. However, a small number of local developers did raise finance and are now struggling to repay their loans.
Currency: There are a great deal of British owners of property in Montenegro. Some have wished to take advantage of a weak sterling by selling their property and converting their cash back into sterling as quickly as possible. They have been able to reduce the price by as much as 40% and still see the same returns. The run on sterling seems to have ended, and the experts predict a devaluation of the euro as the depth of the recession in the Eurozone becomes apparent. This is why some properties are reduced only for a quick sale.
Overvaluation: Some properties were overvalued. Asking prices were stimulated by demand and in some areas, prices quite blatantly were inflated in a “let’s test the market” scenario. Some of these still exist, but increasingly stick out like a sore thumb, and rather than driving the market upwards like the last few years, these will now eventually meet the rest of the market.
Infrastructure: The global recession (Montenegro is still in growth) has slowed down some important investments and projects but has not stopped them completely and infrastructure improvements are still continuing. On a positive note, the danger of overdeveloping Montenegro has now been reduced, and the development now looks much more sustainable. Buyers can now buy property 30% cheaper than last year, essentially at 2006/7 prices but with an infrastructure already much improved.
Buyers’ Market: There are few buyers around so it’s a great time to negotiate on prices, and find the right property. For the first time in Montenegro a buyers’ market exists. Further drops in price are inevitable, so many owners have pre-empted the market and dropped their prices already, to cut a steal on other sellers. The wide discrepancy in price reflects this trend. Compare prices and negotiate now rather than wait.
Developers’ Solvency: Many developers have gone into administration in other countries where raising finance was the norm, and this is rare in Montenegro, but it pays to be aware of the risks. Check the details and don’t buy if it looks dodgy. For complete assurance, buy a property that is completed or almost completed. If you are buying offplan, check the credentials of the developer, use escrow accounts where necessary and negotiate hard on price.
Tourism: Bookings for 2009 are lower than this time last year, the first time in years that tourism has dropped. However, there is plenty of time for the market to pick up but only with strong marketing. Montenegro Airlines now flies from Tivat or Podgorica to Paris, Frankfurt, Vienna, Zurich, Budapest, including 3 flights a week from London to Tivat. Easyjet will start flying from London , Berlin, Geneva, Paris, Milan and Liverpool to Dubrovnik from May. Prices start at about €60 return so this should work well for the independent holiday makers. Montenegro is well placed to profit from tourism in the next few years. With some increased PR from the Montenegro tourist agency, and some help from property owners, Montenegro can be billed as exotic and undiscovered, easy to get to and relatively cheap. |
