Budva

Investment summary

Budva's residential market recorded approximately 23% year-on-year coastal price growth in 2023–2024 (MONSTAT official data), driven by suppressed supply — building permits fell 32% in 2024 — against sustained foreign demand that now accounts for more than 96% of overnight stays. The baseline gross yield for a well-located coastal apartment sits at 5–6% annually, with net yields of around 3.5–4.5% after Montenegro's flat 15% rental income tax (offset by a 30–70% tourism-purpose cost deduction). Upside lies in three compounding factors: Montenegro's EU accession candidacy, which structurally lifts institutional confidence and buyer demand; the progressive property transfer tax (capped at 6% for resale, with no transfer tax on new-build VAT-inclusive purchases) that still leaves acquisition costs competitive versus EU coastal peers; and residency-by-investment eligibility from €150,000, broadening the buyer pool. Investors should calibrate against a strongly seasonal occupancy profile — peak July–August can reach 85–90%, while the annual average is ~57% — and factor in the marked property-crime note from the Organised Crime Index (extortion in the hospitality sector), prudently mitigated by professional property management.