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Difficult choice

01.01.2011
Author: Marina SHONIA
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Prices on the secondary real estate in Montenegro during the crisis have returned to the level of 2004-2005 gg. For the buyer, it sounds very tempting, but choosing an apartment or house, you must take into account the peculiarities of the local secondary market in order to avoid possible problems in the future.
The main thing that attracted the first real estate buyers to Montenegro was prices. Six or seven years ago, even before the state gained independence, a house on the coast could be bought for only 1,000 euros per 1 sq. m. However, there was practically no new construction at that time, and in the secondary market they offered mainly objects of very poor quality. Most of all, apartments from the time of socialism with outdated layouts and old village houses in need of repair, but this did not stop fans of cheapness. The main thing that interested the Russian buyer was the proximity to the sea, the sought–after area (Budva Riviera and Kotor Bay) and the low price.
In response to the demand, the number of offers on the market of new buildings increased sharply, and the quality of construction and infrastructure gradually improved. Prices quickly went up, and by the summer of 2008, the average cost of 1 sq. m. The cost of housing in the Budva area was already about 3,500 euros. Moreover, in the secondary market, a significant part of the offers were newly built, but already resold apartments.
However, for Montenegro, with the existing level of infrastructure and service, this price is clearly too high: not only in Bulgaria, but also in developed Spain, and in popular Cyprus, high-quality housing can be bought for less money. Due to the correction that occurred in the Montenegrin real estate market under the influence of the global financial crisis in 2009, the cost has become more consistent with the quality.
It is important to note that many attractive and modern projects in Montenegro are currently at different stages of construction. Therefore, those buyers who are not ready to wait months or even years before the completion of construction, in fact, have only one choice – the secondary market. And there is no way to make a mistake!

Changing landmarks
Mikhail Travkin, Deputy General Director of ADS Montenegro, talks about the advantages of the current situation for customers: "Prices have decreased to the level of 2004-2005, while the buyer today receives much better and more convenient facilities for the same money."
"Currently, the market offers are quite differentiated, due to the development of this sector over the past few years,– adds Ivan Barada, Senior Manager at Sagio Residence. – Nevertheless, most of the offers relate to the secondary market. Mostly, secondary real estate is inferior in price to ready-made objects on the primary market, especially when it comes to complexes with developed internal infrastructure."
The spread of prices in the secondary market is very large, because the offers are very heterogeneous. The cost depends on many factors, such as location, distance from the sea, area of the house and plot, year of construction, quality of construction, availability of infrastructure, etc.
"Today, the minimum price threshold for secondary housing is 1,500 euros, prices for new properties start at 2,000 euros," says Ksenia Khokhryakova, Head of Sales and Marketing at Montenegro Venture Partners.
Such a situation in the real estate market, according to Sergey Kotler, director of the Kotler Consult agency, will attract buyers with a budget of up to 100,000 euros – despite the fact that until recently they could not consider Montenegro as a possible destination for buying a holiday home.

New secondary
The desire to buy according to the principle of "what is cheaper" is always fraught with risks. When purchasing off-plan real estate, this is the risk of delaying deadlines and the developer's refusal from obligations. The risks in the secondary market are not so obvious and require the buyer to have a good knowledge of local legislation and technical aspects of construction.
In Montenegro, until recently, construction was conducted chaotically, plans for the urbanization of the territory in most communities were approved only last year. Even now, due to bureaucratic delays, developers need at least a year to go through numerous instances and obtain a construction permit, and more recently this period could have been longer! Therefore, some developers started work without permission, and hoped to legalize the construction after the fact.
Houses were often built on agricultural land or in protected areas. Restrictions on the height and area of buildings were also often violated. In most cases, the problem with the documents was solved, but there is a risk that the necessary papers have not yet been brought into line with the urbanization plan, and utilities (taxes on built-up areas) have not been paid. This means that the object retains the status of illegal and can be demolished. Several such demonstrative demolitions have already occurred.
"According to the new law, it is impossible to obtain a construction permit without paying for utilities," says Ksenia Khokhryakova. – Previously, utilities could be paid after the house was built, and some unscrupulous developers used this, shifting the payment to buyers." The tariffs in each community are different and range from 10 to 20% of the construction cost – a significant amount, and of course it is better to know in advance about the need for such an "additional payment".
"The process of bringing building codes and regulations into the legislative framework in Montenegro is at an early stage," explains Sergey Kotler. – Every year there are new acts, sub-laws, additions aimed at combating unauthorized construction. Without proper training, it is difficult to navigate them independently. Therefore, the buyer, in order to protect himself, it is best to resort to the help of professional lawyers or realtors."

Houses with a history
The most significant drop in prices affected the houses of the old housing stock. "A nice old house near the sea, which used to cost about 1 million euros, can now be bought for 400,000-600,000 euros. Houses that require serious reconstruction are even cheaper," says Ksenia Khokhryakova.
Secondary suburban real estate in Montenegro has a number of technological features. Many houses are built without foundations, walls are built directly on the ground, there is no additional waterproofing and often ventilation systems, since indigenous people traditionally prefer to keep windows open. "Many Montenegrins built housing for themselves, as they say, "at home", from improvised materials, without a clear thought-out plan, documentation, and the bulk of such houses are of low quality," says Mikhail Travkin. - There may be some hidden defects, which require construction experience or the participation of a specialist in the assessment."
Despite all this, the main factor influencing the decision to buy a second home is still the good location of the house, proximity to the sea. Some are ready to buy a dilapidated house, demolish it and build a new one. But in this case, it is necessary to know for sure that such a decision is economically justified. It should also be remembered that foreign individuals have the right to purchase a house in Montenegro with a plot of no more than 5,000 sq. m
. The choice of secondary housing in any country, and especially in Montenegro (due to the fact that this is a young and not fully regulated market) must be approached with great care: check the documents for ownership, availability permits for construction and payment of taxes, do not limit yourself to evaluating the quality of construction "by eye" and do not save on the services of a lawyer. At the same time, a low price does not always mean that the house necessarily has some hidden flaws. Ksenia Khokhryakova recalls that the goal may be an urgent sale – and therefore the owner makes price concessions. For example, many Serbs are now seeking to sell their homes in Montenegro and move to Serbia.

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