Montenegro is first of all a country for a holiday. Less often it is a country to move to. As an investment destination, it is considered last. But now there is no need to be picky (Russians certainly), so the income that can bring a small state on the shores of the Adriatic is very interesting. Where and what to buy in Montenegro to maximize profits?
Since the country is famous primarily for resort holidays, it seems logical to earn here on short-term rentals. Although there are a few ‘buts’. Yes, in the season resort property, rented daily, really brings more, but the season in Montenegro is not so long - five or six months.
Rent in the short term is much more difficult - at least in terms of management of the object.
Finally, since 2022 more and more foreigners come to Montenegro for a long time. Accordingly, they are interested in long-term rentals. How much can you get by renting out a property on a long-term basis?
An Immediate Surprise: The Capital Is The Best!
In many countries, the main city is the most popular or one of the most popular destinations for tourists and foreign property buyers. Montenegro is an exception. The local capital Podgorica is quite small even by European standards. Including the suburbs here lives just over 200 thousand people.
But it is not only about the scale (after all, the whole Montenegro is small). The city in guidebooks, of course, called ‘cultural and administrative center’, but it is a stamp. There are no special sights and beauties in Podgorica, which was heavily destroyed during the Second World War, and visitors to Montenegro are interested in nature, climate and service. And these are offered first of all by resorts.
In 2023, foreigners booked only 2.4% of overnight stays in the capital, while on the coast of Montenegro this share reached 94.3%. It can be concluded: Podgorica is primarily a long-term rental market.
Industry - however modest - is here. Political decisions are made here. Prices are relatively low: the cost per square metre of a new building in Podgorica, according to the statistical agency Monstat for the second quarter of 2024, is €1763 (on the coast more than €2 thousand).
So it is not surprising that Podgorica has turned out to be the most favourable place in the country for long-term rentals. According to analysts Global Property Guide, studios in the capital provide the highest yield - 7.62%, one-bedroom flats bring a little less - 6.77%. The average yield in Podgorica is 6.67%.
Montenegrin Experts Give Similar Figures
“A 40 square metre flat in the capital will cost about €80,000,” says Svetlana Smirnova, head of the Tradegoria agency. - The monthly rental fee for such an object will be about €400-500, and the profitability will be 6-7%’.
Can such profitability be considered good? For comparison: in Cyprus, which in some ways resembles Montenegro (a small resort country with modest industry, and the capital is by no means the main centre of attraction), the average rental yield in GPG is estimated at 4-5%.
However, all these figures are obviously in the moment: the current prices are simply divided by the current rate. And given that in Montenegro they change rapidly (in Podgorica new housing for the year rose in price by more than 11%), the rate of return can also jump.
Other Options
Foreigners are rarely interested in Podgorica. Probably because they rarely buy housing in Montenegro solely to generate income, trying not to miss out on opportunities for recreation. And if anywhere to come to the country, it is on the sea.
However, in the last two years the demand for long-term rentals has increased there as well. According to Forbes estimates, only in 2022 about 100 thousand citizens of the Russian Federation were registered in the small country. In the first three months of 2023, more than 20 thousand received a residence permit. And the majority of relocants - even those who started working remotely in Montenegro - came to seaside resorts.
But the profitability of long-term rentals by the sea is still lower.
Podgorica:
- Studio: buy for €52k, rent for €330 per month, yield 7.62%
- 1-bedroom: buy for €93k, rent for €450 per month, yield 5.81%.
- 2-bedroom: buy for €124k, rent for €700 per month, yield 6.77%
- 3-bedroom: buy for €185k, rent for €1k per month, yield 6.49%.
- 1-bedroom: purchase for €220k, rent for €1k per month, yield 5.45%
- 2-bedroom: buy for €280k, rent for €1.1k per month, yield 4.71%
- 1-bedroom: purchase for €154k, rent for €700 per month, yield 5.45%
- 2-bedroom: purchase for €240.5k, rent for €1.1k per month, yield 5.49%
- 3-bedroom: buy for €335,000, rent for €1,200 per month, yield 4.30%.
This is partly due to higher prices on the coast. This is partly due to the specifics of the offer: owners try to rent out good options to tourists.
If we take seasonal letting into account, then, of course, the income from it will be higher,’ comments Svetlana Zamotina, head of Tradegoria agency. - But, as a rule, a mixed strategy is used to get the maximum profit: in summer this flat is rented out at seasonal prices for daily rent, and in the rest of the time - in long term’.
What To Choose?
The most popular among tourists is accommodation with a small area. Svetlana Timoshova, head of the Red Feniks agency, advises to choose a one-bedroom apartment for short-term rent.
‘This is the most preferable option for families, including those with children,’ comments the expert. - The demand even for studios is lower, because for young couples - and they are the potential tenants of small apartments - the ability to cook at home is not particularly valuable. This means that they don't necessarily need a kitchen and more often prefer to stay in hotels’.
The key factor when choosing a flat for rent to tourists is proximity to the beach. That is why in this case, for example, Becici is a more promising place than neighbouring Budva, says the expert. ‘In general, when choosing an object for short-term rentals, pay attention to the quality of the coastline. In the same Tivat beaches are not very good, respectively, and the demand here is less,’ - says Svetlana Timoshova.
But if you plan to earn money on long-term rent, you should choose objects of larger area, because, as a rule, in long-term rent often rent families with children. And for them space is important.
According to the expert, those who expect to earn income from long-term rent, it is better to choose housing in the city centre. The most popular options are near schools in Herceg Novi or Tivat. In Bečići, for example, you should not count on long-term rentals: this place is more about tourist rentals.
When choosing between a flat and a house, experts advise you to opt for the first option. A standard house will not bring as much as a comfortable, stylish flat in a good location,’ says Svetlana Zamotina. - It is economically more profitable to rent a flat. Plus, it is easier to maintain: it does not require such large expenses for the services of the management company.
Finally, between secondary housing and new buildings experts choose the second. At the excavation stage it is still more profitable to buy: in recent years, during the construction of housing grows in value by about 30%. But this option is suitable only for those who are ready to wait. Investors who want to make a profit here and now, of course, should look at ready-made housing.
Note. If the owner rents out Montenegrin property, he is obliged to pay a fixed tax of 15% per year from 70% of the proceeds. The remaining 30% does not need to declare.
Those who do not live in Montenegro on a permanent basis or do not want to burden themselves with property maintenance issues in general, should also take into account the costs of a management company. They will pay your bills, clean the property, and look for tenants if necessary. As a rule, such companies take payment only if the flat or house is rented out. But they will charge a lot for their services - 25% on average.
