Since regaining its independence in 2006, Montenegro – once an overlooked jewel of the Adriatic – has become a magnet for foreign investment. Its dramatic and varied landscapes, business-focused economic system and low corporate tax rate have made it a hotspot for tourism in recent years, piquing the interest of investors from around the globe.
The tourism sector alone accounts for almost 25% of Montenegro’s GDP, and total foreign investment inflow in Montenegro reached USD 546 million in 2017, up a staggering 41% compared to 2016. As a result, foreign investment stock currently represents over 130% of the country’s entire GDP, according to the UNCTAD World Investment Report.
“With over 300 kilometres of stunning Adriatic coastline and rugged mountainous landscapes in the north, Montenegro has always been primed for tourism – it’s just taken a little longer to manifest itself than in neighbouring countries such as Croatia,” says Petros Stathis, owner of the five star Aman Sveti Stefan hotel.
“The government has been instrumental in driving growth in the sector by opening up the economy to foreign investors and removing any impediments to doing business here,” he adds.
Montenegro currently ranks 50thout of 190 economies in ease of doing business, according to the 2019 World Bank Doing Business Report. The government has made a number of major reforms to help attract foreign investors, including offering them equal treatment to their foreign counterparts. Foreign companies can own 100% of a domestic company, and their profits and dividends can be repatriated without limitations or restrictions.
In addition, government sales of formerly state-owned land have spurred a wave of foreign investment in large-scale hotels and resorts. The market has traditionally been focused on development along Montenegro’s coast, but the government is working to promote a more diverse tourism industry in areas such as ecotourism, cultural tourism and rural tourism in more geographically diverse locations.
Focus on the luxe
In recent years Montenegrin tourism authorities have made a particular effort to shift the tourist trade away from low-budget package holidays into high-end luxurious projects that attract wealthy visitors. This has made the market more attractive to foreign investors with an appetite for high returns.
Two massive yacht ports were recently completed, both including luxury residences, hotels, shopping and space to dock hundreds of superyachts, giving rise to comparisons with other luxury tourist destinations such as Monaco.
“It’s not just the unspoiled terrain, ample sunlight, and hospitable locals that have made Montenegro an exciting travel destination but also a bevy of newly renovated and built luxury hotels and restaurants, which have caused some to call Montenegro the next French Riviera,” says Architectural Digest’s Nick Mafi.
A major project raising awareness of Montenegro on the global luxury tourism map is Lustica Bay, a development that will eventually include seven luxury hotels, two marinas, a shopping village and a golf course. It has cost more than $1 billion, making it the largest tourist investment in the history of Montenegro, with much of the funding coming from foreign investors.
The Aman Sveti Stefan hotel, which was built on the existing foundation of a 16th-century village and opened in 2011, was referred to as “the first signal of Montenegro’s revival on the high-end scene” by the Financial Times. The 80-acre hotel has become a haven for celebrities other wealthy foreign visitors.
Seizing the opportunity
Despite its rising reputation as a luxury destination, prices are still comparatively low in Montenegro compared to other tourist markets in Europe, making it an attractive investment opportunity for those seeking to maximise ROI.
Luxury apartments are available to buy for a fraction of the cost of similar properties in the French Riviera or Spain, and hotel and resort projects can be completed with a much lower budget than in other countries vying for the attention of foreign investors.
A recent report in the New York Times claimed that as much as 80-90% of real-estate sales in Montenegro are made by foreign buyers, many of which are purchasing the property to run as a vacation rental business.
“For the last few years, we’ve seen a steady interest in properties, without the excitement of a bubble, and good value apartments and houses are selling well,” said Ivana Vukicevic, head of the property portfolio at Montenegro Prospects.
For foreign investors eyeing up opportunities in Montenegro, the time to act is now. All signs point to the country becoming one of Europe’s leading tourist destinations, not only in the wealthy popular coastal towns, but increasingly in the lesser-known inland areas with their beautiful mountains, lakes and forests.