Irish buyers are credited with launching the first wave of investment in Montenegro a few years ago. Now people like Ralf Schumacher are buying there - and there's still good value to be found, says Daniel McLaughlin
FEW countries in Europe can match the scenery of newly independent Montenegro, where pine-covered mountains plunge down to the turquoise Adriatic, and few property markets anywhere can match its recent growth.
The combination of stunning landscape, historic towns and balmy weather has attracted a number of celebrity investors: actor couple Catherine Zeta-Jones and Michael Douglas have been hunting for a villa near the walled town of Kotor and racing driver Ralf Schumacher has bought land not far from the powerful mayor of Moscow, Yuri Luzhkov.
Reports say tennis players Venus and Serena Williams are also looking for property, and Roman Abramovich pays frequent visits on his yacht to the bays and harbours that dot a coastline which resembles that of Croatia, just to the north.
Major tourist developments are also under way: a Canadian gold mining tycoon is turning an old naval shipyard at Tivat into a marina for luxury yachts, and Singapore's Amanresorts is currently renovating the island hotel of Sveti Stefan - haunt of Richard Burton, Elizabeth Taylor and Sophia Loren in the 1970s - to deluxe standards for an exclusive clientele.
Russian investors are prominent along the coast, attracted to a country with a similar language and Orthodox heritage, but above all by the fact that taxes are low, they don't need a visa to visit, and flights from Moscow and St Petersburg land daily at Tivat's little airport.
Russian is the language most often heard on the beaches of Budva and Petrovac, but travel a few miles north to the UNESCO-protected Bay of Kotor, and Irish and English accents prevail.
Irish buyers are credited with launching the first real wave of foreign property investment in Montenegro four or five years ago, and the English followed on their coat tails.
Those brave early buyers in Kotor's old town, a pale stone maze of streets wedged between a sheer cliff and a deep blue bay, have flats and villas that are now worth several times what they cost when Montenegro was still a relative backwater stuck in a federal union with Serbia.
"Even if you chose badly back then, your minimum capital appreciation would have been 25 per cent per annum. Some people doubled the value of their property in 18 to 24 months," says Sasa Vukicevic of Dream Property Montenegro.
He says many investors discovered Montenegro only after finding prices just to the north around Dubrovnik in Croatia to be prohibitive.
"In the early days eight out of 10 of our clients was Irish, and they were very interested in Kotor, Perast, Tivat and Herceg Novi. These areas are still popular and convenient for Dubrovnik airport. But they are considerably more expensive now, and British buyers predominate."
Vukicevic says off-plan properties in the Bay of Kotor sell for between €1,700-€3,200 per sq m (€158-€297 per sq ft), and flats in the Kotor Old Town for €2,500-€4,000 per sq m (€232-€372 per sq ft).
In the little town of Perast, where development is strictly controlled, prices are about €4,000-€6,000 per sq m (€372-€557 per sq ft), Vukicevic says, "because you can look around and see pretty much what the neighbourhood will be like in 50 years.
"Villas are either newbuilds or old stone houses that often need extensive renovation but become magnificent properties - although the amount of construction work taking place all along the coast places a premium on builders and materials."
Danijela Vukovic, who works for the Someplace Else agency in Montenegro, said Dobrota and Prcanj near Kotor were now good bets, and picked the Ulcinj area towards Montenegro's border with Albania as a place with potential for rapid price rises, amid preparations for a major development along the 8kms Velika Plaza beach.
Land purchases were also increasingly popular, she said, especially on plots that had or were in line for building permission and had road access, electricity and water supply.
She noted, however, that foreigners had to establish a company in Montenegro to buy land - but not apartments or villas - although this process is relatively simple and swift.
Vukicevic and Vukovic urged potential buyers to engage a lawyer to check the ownership of property, verify that the seller is the sole legal owner, and ensure that all other permissions and paperwork relevant to the property is in order.
The lawyer can also act with power of attorney on a buyer's behalf when he is not in Montenegro.
Vukicevic said purchase tax was 2 per cent, and advised buyers against understating their property's value on the deeds to reduce their tax burden - the authorities almost always evaluate a property's worth, he said, and will demand additional payment if necessary.
He said there was no sales tax or capital gains tax in Montenegro, and that lawyers fees were usually between €750 and 1.5 per cent of the sale price; stamp duties and other fees added up to less than €500, while his agency charges 4 per cent of the sale price plus Vat, with a minimum charge of €300 plus Vat.
Dream Property Montenegro
Dublin, 01 6706791/6814; Montenegro: 00382 82 304788; www.dreammontenegro.com
Someplace Else
Dublin 1890 425425; Montenegro: 00381 82 304 480; www.someplaceelse.ie
Dragan Prelevic
Montenegro property lawyer 00381 81 232 122/348/358; www.prelevic.com
