The development of rental prices in Montenegro: from seasonal business to long-term rentals

Until a few years ago, the concept of long-term rentals was virtually unknown in Montenegro. Most locals traditionally live in property and the rental of real estate was primarily a seasonal business. During the peak tourist season, apartments and houses were rented out by the day or week. After the end of the season, many of these rental properties were empty, as it was unusual to use them for renting out out of season. However, the demand for long-term rental properties in Montenegro has increased considerably in recent years, which has led to a significant change in the market. More and more people, including foreigners and digital nomads, are looking for permanent accommodation in the country. This change has led to the development of a stable market for long-term rentals.

The traditional housing situation in Montenegro

Montenegro has a long tradition of home ownership. Many families own their houses or apartments, which are often passed down through generations. There are historical and cultural reasons for this, as real estate ownership is seen as a safe investment and an expression of prosperity and stability. This tradition meant that the rental market remained underdeveloped for a long time. Rental apartments were mainly rented out to tourists who visited the country’s picturesque coastal towns and historic cities during the summer months.

The changing rental market

The change began a few years ago when Montenegro began to attract more international attention. The unspoiled nature, the mild climate and the comparatively low cost of living attracted more and more foreigners. Especially digital nomads and retirees looking for a quiet and affordable lifestyle found an ideal destination in Montenegro.

As the demand for permanent housing increased, the supply also began to change. Landlords recognized the potential of long-term rental contracts and began to offer their properties not just seasonally, but all year round. This development was supported by the government’s introduction of incentives and a legal framework aimed at stabilizing the housing market and encouraging foreign investment.

Rent increases in recent years

As demand has risen, so have rental prices. Five years ago, rents in Montenegro were still very moderate. A two-room apartment in the capital Podgorica, for example, could be rented for around 300 euros a month. Today, prices for comparable properties are around 500 to 600 euros per month. Prices have also risen dramatically in popular coastal towns such as Budva and Kotor. A few years ago, people were still paying around 400 euros a month for a small apartment, whereas today it is often 700 euros or more.

An interesting development can be observed along the coast. In the past, rental prices from Herceg Novi towards Ulcinj were getting cheaper and cheaper. While Herceg Novi and Budva were traditionally more expensive rental markets, you could find significantly cheaper rental properties in towns such as Bar or Ulcinj. However, this has since changed. Rental prices along the coast from Herceg Novi to Bar are now largely identical and are at a high level. This shows that demand for housing has also increased sharply in these areas and prices have risen accordingly.

Influences and effects

However, rising rents also have their downsides. It is becoming increasingly difficult for locals to find affordable housing. Many Montenegrins who used to live in cheaper rental apartments now have to accept higher prices or move further away from the sought-after city centers. Young families and single people are particularly affected by this development.

The real estate markets in rural areas and less touristy cities are also undergoing a change. While these regions were previously hardly in demand from tenants, prices are now rising here too. This is partly due to the fact that people who can no longer afford the rents in the expensive coastal cities are moving to these areas.

Comparison of rental prices

To better illustrate the rent increases, it is worth taking a look at specific figures. Five years ago, the average rent for a one-bedroom apartment in Podgorica was around 200 euros per month. Today, you pay around 350 to 400 euros for a comparable apartment. In coastal towns such as Budva and Kotor, prices have risen even more sharply. Five years ago, you could rent a one-room apartment here for around 300 euros, whereas today prices are between 500 and 600 euros.

This development shows that rents have risen by around 50 to 100 percent in the last five years. Particularly hard hit are sought-after locations with good infrastructure and tourist appeal.

Special legal requirements for rental agreements

One key aspect that distinguishes the rental market in Montenegro from other European countries is the notarization of rental contracts. In Montenegro, it is customary for all important documents, including long-term rental agreements, to be signed and notarized by a notary. This may seem unusual for foreigners, but it is a firmly established practice in the Montenegrin legal system. This notarization provides legal certainty and ensures that all contracting parties fully understand and accept the terms of the tenancy agreement.

Future prospects

It remains to be seen how the market will develop in the future and what measures may be taken to improve the housing situation for locals. For example, government intervention in the form of rent controls or subsidies for the construction of affordable housing are conceivable. Greater regulation of the rental market could also help to get rising prices under control.

Another important aspect is the promotion of rural areas. Investment in infrastructure and jobs could make these regions more attractive, which could help to reduce the pressure on urban rental markets.

Conclusion

In summary, it can be said that the rental market in Montenegro has changed considerably in recent years. What used to be a purely seasonal business has developed into a stable market for long-term rental contracts. This development is also reflected in the rise in rents, which have almost doubled in the last five years. Especially along the coast from Herceg Novi to Bar, rental prices have converged and are at a high level.

It will be interesting to see how rental prices develop in the future and what measures will be taken to improve the housing situation for everyone involved. Montenegro faces the challenge of creating a balanced rental market that meets the needs of both locals and the growing number of international tenants.