By Vesna Peric Zimonjic
BELGRADE, Dec 21 2006 (IPS)

People speak in Montenegro these days of the new “homeless” along the coast – those who sold their houses to foreigners.

Homeless they may be, but only for a while, and only in a way; most are using some of the hundreds of thousands of dollars earned from sale of their homes to buy smaller apartments in their hometowns.

Tiny Montenegro with a population of 650,000, has seen an unprecedented property boom, with thousands of homes, apartments and hotels for sale, mostly to rich or well to do foreigners.

“The price of real estate has risen between 50 and 100 percent in Montenegro in the past year,” Dragan Nikolic, owner of Imperija (Empire) company in the popular holiday resort Budva told IPS over the phone.

Budva sits along the 290 km Montenegrin Adriatic coast, well known for its wild beauty and clear seas. The tiny country became the last former Yugoslav nation to become independent after a referendum brought separation from Serbia in May this year.

“The biggest interest is in properties close to the coast, and most of them have already been sold,” Nikolic says.

A square metre of apartment space in Budva fetches 4,400 dollars now; only a year ago it was less than 2,000 dollars. The price of land has risen on average 50 percent, with the price rise higher close to the sea. A square metre of land costs between 50 dollars in the hills overlooking Budva to 700 dollars close to the coast.

Most buyers are wealthy Russians, according to Nikolic and other agents. Montenegrins and Russians share the same Orthodox religion and common Slavic language roots, and many locals are happy to sell to Russians, considering them “kind of next of kin”, Nikolic added.

Russian investors have also bought two abandoned villages above the Montenegrin island Sveti Stefan, with plans to build luxurious rental apartments.

In the restaurants along the coast, menus now are printed in Russian as well.

Russians mostly do not bargain, and pay the asking price, property agents say. Some critics said that Russian businessmen are laundering their money in Montenegro. Officials strongly deny this.

“We are open to all, the sale goes to the one with the best offer,” Veselin Vukotic, head of the Montenegrin Privatisation Agency told IPS. “If something is done irregularly, there are laws that can take care of it.”

So far, there has been no legal action over property transactions.

In Budva, a sleepy place of 3,000 people which comes to life only in summer, young Russian mothers with their babies in prams are now a common sight. New residents have begun to enrol their children in local schools.

In Boka Bay, considered the most beautiful part of the Montenegrin coast, real estate prices have skyrocketed. Three-bedroom apartments in the otherwise shabby town of Tivat now sell for more than 130,000 dollars.

In Kotor, the main town of this unique fjord, the square foot cost of apartments has reached 4,400 dollars. Old stone houses built around a typical Mediterranean square can fetch 500,000 dollars or more.

“Russians like to be next to the sea, but British like old stone houses in the hills overlooking Boka Bay,” Danijela Vukovic from the British-owned real estate company ‘Somewhere Else’ told IPS. “There is now a growing demand for hills surrounding the bay and even the mountains.”

The British come second as new property owners in Montenegro, after the Russians. Most do not care about infrastructure around their new homes. Several British real estate companies have opened in Kotor this year.

The property boom has come also to capital Podgorica, a town of 150,000. The square metre price of property has risen from 800 dollars a year back to 2,000 dollars and more. The price of land has shot up; one local businessman paid seven million dollars for a 2,100 square metre plot on the banks of the curvy Moraca river criss-crossing the capital.

Economists say that this represents an investment boom in Montenegro. Foreign investment is expected to top 508 million dollars this year, Vukotic said. “In 2001, they were only 221 million.”

This cash injection, combined with government investment in infrastructure, should enable Montenegro to improve its tourist industry, the country’s main source of income.

The 2006 tourist season is considered to have been one of the most successful in the last 15 years, with revenues up 20 percent compared to 2005.

But critics object to large-scale sale of property and also industry. The state recently sold two telecom providers to Norway’s Telenor for 114 million dollars.

“After all this, there will be no more stuff for sale,” said Nebojsa Medojevic, an economist who leads Montenegro’s main opposition party. “What is still left is some land on the coastline, the electric distribution company and the main seaport.”

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