New Montenegro article from The Times

12th July 2019

The Times have published the new article on Montenegro. You can read the full text below.

The Egyptian developer Samih Sawiris has big dreams — and deep pockets. He builds towns in places that others won’t, from El Gouna near Hurghada on the coast of the Red Sea to Andermatt in the Swiss Alps.

His latest project, Lustica Bay, is in the small Balkan country of Montenegro. Perched on steep slopes, between the Adriatic and the Bay of Kotor, his development company, Orascom, is building 1,500 homes, eight hotels, two marinas, a school, hospital and the country’s first 18-hole golf course.

The first stage of the €1.1 billion development, backed by the government of Montenegro, is almost complete. The five-star Chedi hotel opened in July last year and the main marina is already filled with swanky yachts, and residents and holidaymakers are moving in to the homes in the marina village.

Ahmed Zaki, the director of sales and marketing, is bullish. “We have had leads from potential buyers in 84 countries, including clients who have invested in other Orascom projects and like the brand. They also like that Montenegro is an easy place to do business, with corporate tax at 9 per cent and tourism set to grow to 2.3 million visitors this year from 450,000 in 2014.”

“Montenegro could join the EU in five years: when [neighbouring] Croatia joined property prices went up and up. Prices here have doubled since we started and maybe they will end up 15 times higher. Prices per square metre are still lower here than in France or Spain, and the rental yield can be up to 7.5 per cent gross, one of the highest in Europe,” he says. The first homes sold for €2,800 a square metre in 2012, but now sell for €7,500 a square metre.

Montenegro has announced a limited citizenship by investment programme open to 2,000 non-EU citizens over the next three years. Applicants will need to donate €100,000 to the government and spend €450,000 in an approved property project in the south of the country (where Lustica Bay is located) or €250,000 in the less developed north.

A passport from Montenegro allows citizens visa-free travel to 117 countries, although this will expand substantially if the country is successful in its bid to join the EU. However, details of which properties will qualify remain vague, according to those in the industry.

The government said at the launch: “The programme aims to further accelerate Montenegro’s economic development by creating new tourist, agricultural and processing capacities and creating new jobs.”

It is money that the tiny country, with a population of about 622,000, desperately needs, according to Darren Gibson, the chief executive of Lustica Bay. “The government’s vision is bold in tourism terms — bold and expensive. It is a small country with a low taxation base, which means the ability to pay for the vision is limited. Infrastructure — airport and roads — are crucial and we would like to see that moving a little more quickly.”

There are plans to expand the airports in the capital city of Podgorica and the coastal resort of Tivat, possibly through a public-private partnership. The number of passengers landing in Tivat has risen by up to 15 per cent annually for the past three years. However, almost all airlines, including Easyjet from Gatwick and Manchester, fly only in the summer season during daylight hours. This means that a large number of Montenegro’s visitors fly to Dubrovnik and drive over the border.

Lustica Bay is not the only large-scale development in the country. Porto Montenegro on Kotor Bay, near Tivat, which opened in 2009, was the first luxury development and is a
well-established super-yacht marina. Meanwhile, Porto Novi, which will be home to the first One & Only resort and branded residences in Europe, is under construction.

Kieran Kelleher, the managing director of Savills Croatia and Montenegro, says: “These are the top three special-interest projects in the country for the government and they complement each other. In different locations, with different themes and drivers, and different price points.”

Porto Montenegro, set around a former navy base, “set the pace in terms of pricing” for the country’s prime property market, Kelleher says, with homes selling for €7,500 a square metre — a one-bedroom flat costs €600,000. Despite appearing complete, only 250 out of a planned 1,000 homes have been built. Nonetheless, the development has led to an uplift in nearby non-prime property prices from €1,000 a square metre ten years ago to €3,000 a square metre today, Kelleher says.

Two-bedroom flats in the Centrale district of Lustica Bay start at €225,000
Two-bedroom flats in the Centrale district of Lustica Bay start at €225,000
There are hopes that Porto Novi, a resort and large marina on the site of a former military base at the mouth of Kotor Bay, will create a similar uplift in price when it is completed next year for the neighbouring village of Kumbor. It will include 214 homes (with one-bedroom apartments from €400,000) plus a One & Only hotel and spa with ten branded villas costing between €10 million and €15 million.

Lustica Bay tends to appeal to buyers who want to get away from it all and enjoy golf (although the course is yet to be built) as well as a marina, according to Kelleher. The project is large enough to have different price points in different neighbourhoods and to become home to a mixture of local residents and second-home owners.

Marina Village on the coast is the most upmarket and is almost complete, although there are five two-bedroom townhouses with private pools still available, from €845,000. Centrale, the town centre district at the top of the hill, is more urban and will have two-bedroom flats starting at €225,000; 300 properties have been sold in the development.

Although sales tend to dominate the property market at the top end, for those who would prefer not to live in a new-build the medieval town of Kotor is attracting British and Irish buyers with its “good-value properties and attractive rental yields”, Kelleher says. “It is three times cheaper than Dubrovnik.” A two-bedroom apartment in the old town centre costs about €130,000, which after about €15,000 of renovation, rent for €200 a night in the summer season.

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