I spend every Summer here in Montenegro with my family. We absolutely love it.
I’ve been in the real estate game in Montenegro since 2016 and it’s been a good ride. In the past few years the country has seen tremendous growth and development. Real estate prices are up as well.
But there are still pockets of very good value to be found
Bar, in the south of Montenegro is developing fast, is easily accessible, and has very decent infrastructure.
Yes, Bar is not as beautiful and luxury-laden as the Bay of Kotor, but it is growing fast and there are catalysts in place.
To give you an idea of the type of value that can be found, I asked Ksenija to show us a front-line apartment being sold for a bit over €3,000 per m2.
In this video we discuss Bar, Montenegro, view the apartment, and run through all the numbers in terms of ROI for short term rentals / Airbnb.
Full analysis of the real estate market in Montenegro
I wrote a whole analysis of the Montenegro real estate market, with the latest statistics, macro indicators, insights, etc. You won’t find better anywhere.
To a World of Opportunities,
The Wandering Investor.
Other articles on Montenegro:
- How to flip a house for a 50% gain in Montenegro
- Decent rental yields for Real Estate in Montenegro
- Buying Montenegro Real Estate – a Case Study with ROI figures
- The Pros and Cons of living in Montenegro
- Montenegro Real Estate Market Analysis
Available services in Montenegro:
- My Favourite Real Estate Agents in Montenegro
- How to obtain Residency in Montenegro
- Create a Company in Montenegro
- Real Estate Lawyer in Montenegro
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Transcript of “Is Bar the next Montenegro real estate investment destination? A case study with numbers”
LADISLAS MAURICE: Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. Today, we are near Bar, in Montenegro, and we’ll be discussing the real estate market in this part of Montenegro, because prices have gone up a lot in Montenegro over the past few years, but it’s still possible to find really nice pockets of value. For example, right here, we’re going to check an apartment. This is the private beach of the apartment. Literally, here, private. This is a private area. You jump in the water here. The water is approximately 25, 26 Celsius, so it’s nice and warm, and the building is up there, so completely private, and front line, full sea views, a bit over €3,000 a square meter. Charming Ksenija is going to show us that apartment in a bit.
Real estate investing situation in Bar, Montenegro
LADISLAS MAURICE: But Ksenija, you’ve been here. You’re from Montenegro, you’ve been in the real estate game for many, many years, and you’re starting to see that things are happening around Bar and the whole area.
KSENIJA: Hi, everyone, first of all. It’s nice also to be here for a change in this part of coastline in Montenegro. Definitely, you are right, Ladislas, that the Bar area has been developing a lot, and the Bar city so it’s generally the biggest city on the coastline. In terms of the infrastructure, it is, I would say, the most developed one. However, there has been growth in investments as well and new developments in this part of the coastline. And as you will see now from the video, the nature and where we are at it’s something that really attracts many people from all around the world.
LADISLAS MAURICE: Okay, so right now we’re about 20 minutes south of Bar. Can you tell us a little bit about this area specifically?
KSENIJA: We are around eight kilometers from city of Bar. This is called Dobra Voda. It’s like a small bay with few, let’s say, small beaches, pebbly beaches and sandy beaches as well here a bit, like, rocky part. This is a part of the Bar Riviera, which is very attractive for people who come with families and kids. It’s like a vacation place. It’s not that big. You have everything in walking distance, that’s why it’s very convenient for families. However, if you want to get to Bar area where, obviously, there is all the infrastructure, hospitals, schools, big supermarkets, it’s around 20 minutes’ drive from here. It’s still close by but yet you have your own privacy here, and you can enjoy these amazing views.
Bar, Montenegro apartment tour
LADISLAS MAURICE: Great. Ksenija, tell us about the numbers.
KSENIJA: This is a two-bed, two-bathroom apartment, 89 square meters, €290,000 with furniture included.
LADISLAS MAURICE: And parking?
KSENIJA: Parking, you need to purchase additionally. There’s a garage space, €20,000.
LADISLAS MAURICE: Okay, cool. This is really, really stunning.
KSENIJA: You can see the view from the main terrace, it’s pretty amazing.
LADISLAS MAURICE: This is guaranteed. And this here, they’ll probably build at some point, so I’d say this whole section is a guaranteed frontline view that people and investors will get.
KSENIJA: Frontal property with access to the garden, private beach, private pool, very well maintained as well, the building.
LADISLAS MAURICE: We’ll check out the terrace upstairs that has a pool, everything is really nice.
KSENIJA: Yeah. Very nice touch the fireplace here in the living room. For winter times, it can be useful. There’s also under-floor heating.
LADISLAS MAURICE: Cool, all right. And there’s the smaller bedroom here.
KSENIJA: Yeah, this is the small bedroom with the small laundry room as well. Don’t mind the things, there are tenants living here. And this is the main bedroom.
LADISLAS MAURICE: Beautiful.
KSENIJA: The terrace as well.
LADISLAS MAURICE: Yeah. And here you can see where we were walking.
KSENIJA: Just imagine waking up to this view.
LADISLAS MAURICE: The beach with the private access?
KSENIJA: Yeah.
LADISLAS MAURICE: Stunning.
KSENIJA: This is where we were before.
LADISLAS MAURICE: Cool. After this, we’re going to go upstairs to check out the rooftop terrace with the pool. There’s a playground as well. We’ll do all the numbers for the return on investment for investors, Airbnb numbers. And then here there’s a second bathroom.
KSENIJA: Yeah, this is the second bathroom. It needs a bit remodeling, but our development furnishing team can take care of it easily.
LADISLAS MAURICE: Yeah, I’d redo that one completely, for sure.
KSENIJA: Yeah.
LADISLAS MAURICE: Okay, fantastic. Great, thank you. Let’s go.
KSENIJA: Cool.
Real estate investment case in Bar, Montenegro
LADISLAS MAURICE: All right, fantastic. Let’s do the numbers. Purchase price, €290,000. What are the taxes here when you buy?
KSENIJA: Now, when we are talking about this property, the tax, real estate transfer tax is progressive. There is, on this property would be paying €4,500, plus on the amount above €150,000, you pay 5%.
LADISLAS MAURICE: Okay. In the numbers, what we did is we just left it at €290,000 because in Montenegro, when you buy real estate on the secondary market, you can negotiate. We’re just running with the assumption that, essentially, you negotiate it down and it would cover the transfer tax and the legal fees. Great. Ksenija, at your company, you have a whole department that does rentals. You manage over 100 properties across Montenegro, right?
KSENIJA: Yes, yes, we do manage properties from Herceg Novi to Bar area, and we take care of everything, basically, from the promotion to the check-in, check-out and cleaning of the properties.
LADISLAS MAURICE: We lowered the numbers to what we felt was more realistic, because especially if you have a new listing, etc., then it’s a bit harder to get–
KSENIJA: First season, yeah.
LADISLAS MAURICE: First season, it’s a bit harder to get business. But the team, based on their data, their numbers, the numbers were actually higher. But anyways, let’s go with the more safe number. So May?
KSENIJA: May, we have the occupancy rate 65% and the price per night they stay €130. Already in June, as the season is picking up, we have the occupancy rates around 80% and the price per night is €180. And then, again, July and August, it’s €200, and the occupancy rates go up to 95%. September and October, slightly lower, €180, 80% in September, and then October, €130 and 65% occupancy.
LADISLAS MAURICE: Those are always the easiest apartments to rent out. I don’t think an apartment like this would have any occupancy issues. It’s literally just a matter of pricing, because that’s what everyone wants when they come to Montenegro.
KSENIJA: It’s very convenient also for families, just to jump in, because there is a playground. For kids, there is a pool, and then, again, there is the area of the private beach, maybe for those who prefer the sea. It has a combination of what different kind of tourists would prefer.
Bar versus Tivat and Kotor
LADISLAS MAURICE: Yeah. Okay, so why was Bar traditionally cheaper than other parts of Montenegro, like Tivat, Kotor, Budva, the main tourist centers? Why were people not coming here as much?
KSENIJA: I would say, being, first of all, geographically, the farther one. It’s one of the southern city on the coastline. Because everyone is, firstly, looking into the Kotor Bay, Budva, these are the, let’s say, traditionally most popular places for tourists, especially the Kotor Bay due to the being UNESCO protected. Then, again, the big projects that came in, like One&Only, Hyatt Hotel in the Kotor, as well Porto Montenegro or Luštica Bay. These are the things that have put Montenegro now on the global scene, and generally is the most popular destination in this part of the Europe.
Bar, I would say, was more a place where you get a lot of locals coming. And again, different type of tourists who like this kind of nature, this kind of vibe. Again, it’s a place where you will see a lot of Germans relocating, which is very interesting.
LADISLAS MAURICE: Yeah. A lot of Germans are moving to this part of Montenegro specifically because it’s a lot more affordable. And Germans are in a situation where they don’t actually have that much equity back home in Germany, because typically they rent. When they want to buy something in Montenegro, they have to buy cash like everyone else. They don’t necessarily have that much money, so they move to this part of Montenegro, which strikes a balance between affordability and being close to the sea.
Rental income in Bar, Montenegro
LADISLAS MAURICE: And then also what’s interesting to see is the shoulder seasons are becoming ever stronger in Montenegro, May, June, September, October. A lot of Europeans like to come down to the Balkans that part of the year because there aren’t all the tourists, so you have a lot more retirees or people that work online that choose to take their vacation during the shoulder period. And then we also put some numbers in there for long-term rent.
KSENIJA: Yeah, we did here.
LADISLAS MAURICE: Can you talk a little bit about that?
KSENIJA: For the long-term rent, €700 per month, but we didn’t do the six months, we again went for the worst case scenario, let’s say, four months occupancy for those periods. And the total income for this would be €2,800. There is still people who might want to come here, as you said, to work online, to spend the time here by the beach. But again, as I was saying before, that’s why we did the four months because, still, this area is kind of dwelling on the peak of the season, and from May to October, yet out of the season, due to the lack of facilities in Dobra Voda, it might not be appealing to everyone.
LADISLAS MAURICE: Yeah. Having said this, it’s frontline, there’s a fireplace, an amazing view, under-floor heating, so it’s pretty good for winter. And so I agree, these numbers are very conservative. And then it still allows for the owner to come here for two months of the year. November, April, they’re actually pretty decent months in Montenegro.
But what we’re seeing in Montenegro is an increasing amount of people who want to spend a lot of time within the Schengen area, but who can’t. They’re limited at 90 days every 180 days. Before, they could go to Croatia to recharge their Schengen days. Now they can’t anymore now that Croatia is in Schengen, so an increasing amount of people are actually coming down to places like Montenegro. They’re waiting out. They’re coming here for three months, waiting out for the Schengen days to come back online. That’s actually an increasingly big business here in Montenegro in the off-season.
Culture of Bar, Montenegro
KSENIJA: Yet the infrastructure is one thing that is, I would say, maybe a downside for this part of the coastline. Therefore, it’s not still that popular, because in some areas, also, especially going towards the Ulcinj part, where there is still lack of water in some parts, water supply and so on. This is some of the challenges for this part of the coastline.
LADISLAS MAURICE: Yeah, infrastructure is definitely worse. Also, it’s important for people to understand that the ethnic makeup is a bit different. In other parts of Montenegro, it’s mostly Montenegrins, Serbs. Here, it’s a mix of Montenegrins, and Serbs, and Albanians, so it’s a very different vibe. You see mosques, you see Catholic churches, which you see less in other parts of Montenegro. It’s just the whole vibe is very different here. But the city itself is developing, I find, from an infrastructure point of view. They’re revamping the whole port, there are ferries to Italy as well, so that’s nice, overnight ferries to Italy, which I might try later this year.
KSENIJA: Well, actually, Bar City is also has a good strategic location, I would say, being having the port, the biggest port in Montenegro, therefore, a very vital transport hub for Montenegro. Then again, it’s 45 minutes’ drive from Podgorica, where we have one of the main international airports.
LADISLAS MAURICE: I think this is a big one, 45 minutes away from Podgorica Airport, the biggest airport in Montenegro. That’s a big one because when you’re in Kotor Bay, or even in Budva, you have Tivat Airport, but Tivat Airport is a lot more seasonal, though there are flights all year round to Istanbul, for example, and Belgrade. If you want more flights to Europe, Podgorica is a better option for all year round.
KSENIJA: And also the international schools. Again, Bar, I would say, it’s the most authentic city in terms of also the cultural background, because we have even parts Old Town of Bar, which also is very rich with cultural history, going all the way back to Illyrian times. It is kind of a blend of different as well cultures. It’s also very interesting from the point of view of many activities, because it’s not only about the seaside, and you have also very nice canyons. Five canyons, actually, for those who like adventures, where you can also go for canyoning tours, or just in the summertime to refresh yourself.
Ten kilometers from here, there is also the Long Beach, one of the biggest and longest beaches in Montenegro, 13-kilometer beach in Ulcinj, which is very famous because of the wind and open sea for kitesurfing. A lot of people come specifically for that purposes here.
LADISLAS MAURICE: Yeah. And there is apparently there are plans, the Pullman. Five-star resorts are looking at building a five-star resort around Bar. This is a nice catalyst for the whole area as well.
Property expenses in Bar, Montenegro
LADISLAS MAURICE: Cool. Now let’s go in terms of the expenses.
KSENIJA: Yeah. We have here for the management of the whole complex, you are paying €1 per square meter. It’s monthly price, we put €100.
LADISLAS MAURICE: That’s really cheap. That’s €1 per square meter for HOA, that’s incredibly cheap.
KSENIJA: Especially for all these amenities, and you can see the property is really well maintained.
LADISLAS MAURICE: Which is not always the case in Montenegro, to be fair. A lot of properties look good when you first buy them, and then, after 10 years, they start to look not so good. This one’s very well maintained.
KSENIJA: Then we have the electricity bills, which goes up to €48, approximately. I mean, you know that, in Montenegro, it’s one of the cheapest electricities in this part of the Europe. Water consumption, around €20, internet, €35, and property tax, which you pay annually, is around, let’s say, €700.
LADISLAS MAURICE: Cool.
KSENIJA: And we put here the maintenance budget in case that something breaks, you have to change something. It’s, again, just in case additional expense.
LADISLAS MAURICE: Ksenija, tell us about your property management fees and as well the booking fees.
KSENIJA: We charge 30% for taking care of the property, from promotion on the Airbnb booking, Expedia, using our sources as well, doing the check-in, check-out of the guests, and cleaning after them. And then there are the additional expenses for booking that we add on top of the price, 15%. Here you can see after all the costs deducted, the net income is around 4.5% for the annual rental yield.
LADISLAS MAURICE: Cool. That’s pre local income tax, which is generally very low. But essentially, those are realistic numbers for Montenegro, 4.5% net-net-net, once you take everything into account pretax, and then you get to benefit from the property two months of the year. The numbers are fairly conservative, to be clear. They could be a little higher as well.
KSENIJA: This is Bar area again, so we have to take this into account as well.
LADISLAS MAURICE: Yeah. And if you ask me, I think there’s potential for capital gains, especially something that’s frontline. If we’re talking about Bar area, kind of like behind in the mountains, etc., maybe. But this here, frontline, there’s only so much frontline you can do in Montenegro, which has a small coastline. I think this is a very decent investment for people who have a long-term outlook on Montenegro and want a nice property with some decent yield, and a property that they could use themselves and enjoy. It’s actually very enjoyable. And so you have, is it easy to find properties like this? Because, I mean, we’re not selling this property. By the time this video gets published, it’ll probably be sold already.
KSENIJA: Yeah, but I would say that there’s not many properties, as you said, on the first line. It’s something that is very limited. I would say that we can work on it, but it’s not going to be that many of them, I have to say.
Pre-construction developments in Montenegro
LADISLAS MAURICE: Cool. Okay, great. Ksenija, can you also tell us about pre-construction, because you’re involved in a few pre-construction projects? Can you say a few words about that?
KSENIJA: Yeah. Our company is now working on actually developing two more projects. It’s in Budva area, Budva and Becici, actually. And it’s something where we are now selling actually offplan properties. It’s residential complexes but with all the infrastructure like a hotel. It’s five stars spa resorts, which heavily really now a good option of investing in the initial stages, where the price appreciation can be really high as the construction goes, so two-and-a-half years, approximately. In some properties, you can gain even up to 40% of price appreciation.
LADISLAS MAURICE: I mean, that’s, obviously, just a speculation, but yeah.
KSENIJA: It’s actually something that we did in our previous project, we can see and compare. Because it’s not the first project we are doing, it’s fourth one in Becici and the first one of this kind in Budva area. It’s something that is focused mostly on higher rental yields as well because of all the amenities. And I have to point out, it’s still freehold property, it’s not a condo, therefore, you can rent it out, you can use it, or you can just resell it easily even during the construction.
LADISLAS MAURICE: Cool. Okay, fantastic. Ksenija, look, thank you. Look, I wrote a whole article on the real estate market here in Montenegro, the pros, the cons, some of the catalysts, things you should be aware of when you come here and invest.
Get in touch with Ksenija
LADISLAS MAURICE: There’s a link below. And also, if you want to get in touch with Ksenija, Ksenija can help you find property on the secondary market, on the primary market as well, pre-construction deals, and also rental management, the whole deal, it’s a one-stop shop.
KSENIJA: Yeah.
LADISLAS MAURICE: Okay, fantastic.
KSENIJA: Thank you.
LADISLAS MAURICE: Ksenija, thank you very much.
KSENIJA: Thank you. Nice seeing you again. Bye.
