Montenegro’s Luštica and Herceg Novi areas are being presented as real estate development opportunities where investors may be able to buy land, build villas or apartments, and sell at a profit within roughly 18 to 24 months. The transcript focuses on two projects: a villa-development plot in Luštica and a riverside plot near Herceg Novi with potential for a small apartment building.
Luštica is described as less famous than Budva, Tivat, Kotor, or Herceg Novi, but as one of the faster-growing areas in Montenegro. Its growth is linked partly to Luštica Bay, a large Orascom-backed development nearby. The area is expected to include more hotels and a Gary Player championship golf course. Existing hotels include Chedi properties, with more expected over time.
The area’s appeal is based on sea views, olive groves, cypress trees, beaches, small villages, stone houses, and a quieter lifestyle. It is around 20 minutes from Luštica Bay, around 30 to 35 minutes from Tivat or Porto Montenegro, and around two hours from skiing. It also offers access to beaches such as Žanjic and Mirišta, restaurants, and marinas.
The typical buyer described for Luštica is higher-end, often someone who wants a private villa, sea views, and a more exclusive location rather than a town-center apartment. Traditional stone houses have largely sold out, so the market is shifting toward new villas in either classical or contemporary style.
Luštica villa development plot
The first plot discussed is in Luštica, close to the beach and restaurants. It measures 3,800 square meters and is priced at €295,000.
The current planning status includes two urban parcels with existing concrete foundations for two buildings of 157 square meters each, plus a larger planned building of 370 square meters. Another possible interpretation mentioned is the ability to build an additional 200-square-meter house on two levels plus a 200-square-meter auxiliary building on one level.
The more investment-focused scenario is to divide the whole plot into five parcels of roughly 700 square meters each and build five villas. Each villa would have a gross build area of about 250 square meters, enough for a four-bedroom, four-bathroom rental-style villa with a pool.
Estimated numbers for this scenario:
| Item | Estimate |
|---|---|
| Total land price | €295,000 |
| Land cost per villa parcel | under €60,000 |
| Villa size | 250 m² |
| Construction cost | €1,000–€1,100/m² |
| Conservative construction estimate per villa | €275,000 |
| Total estimated cost per villa | about €335,000 |
| Conservative resale estimate | €500,000 |
| Lower resale case | €450,000 |
| Stronger resale case | €550,000–€600,000 |
Using the €335,000 cost base and resale values of €500,000 to €550,000, the gross gain is estimated at roughly 50% to 64%. After agency fees, the net gain before capital gains tax is estimated at roughly 41% to 55%.
Capital gains tax in Montenegro is described as modest at 15%, though the transcript explicitly says this is not tax advice.
The projected development timeline is:
- two to three months for architect and planning work,
- around 12 months for construction,
- roughly 18 to 24 months from start to finished product.
The transcript suggests that a buyer entering within the next few months could potentially have villas ready for the spring or summer 2025 season, depending on timing and execution.
Infrastructure in Luštica
Infrastructure is presented as both a drawback and an improving factor.
Road access is expected to improve through a new road across Luštica at a higher elevation, which should offer faster routes and better sea views than the existing lower road.
Electricity is already available on the plot because the current investor reportedly paid to bring power to the land, including a small substation.
Water is more limited for now. Current homes often use rainwater harvesting and water tanks, but city water is expected to reach much of Luštica within two to three years.
Garbage collection is available through shared containers placed around residential areas. Recycling is described as limited but improving.
Luštica investment risks
The main risk discussed is a global economic downturn, which could slow sales. However, Montenegro is described as a market where downturns often pause activity rather than quickly pushing prices down.
One reason given is that Montenegro is largely a cash real estate market. Buyers are often purchasing a third, fourth, or fifth property overseas and may not be forced sellers. This can reduce downside pressure compared with more mortgage-driven markets in Western Europe, North America, or Australia.
Other risks mentioned include:
- broader economic weakness in Europe,
- reduced peak-season tourism if Europeans spend less on holidays,
- possible issues with the euro, which Montenegro uses,
- geopolitical instability in Europe.
At the same time, the transcript argues that Montenegro has benefited from migration linked to war and political dissatisfaction elsewhere. It states that many Russians and Ukrainians moved to Montenegro, increasing the full-time population by around 10% in 18 months. This reduced seasonality and supported the economy through year-round spending.
The transcript also says more Western Europeans are moving to Montenegro permanently for lower costs, more personal freedom, and frustration with politics at home. Americans and Canadians are also described as spending time in Montenegro to reset Schengen days, especially during the low season.
Hotel and luxury-market catalysts
Montenegro’s higher-end tourism market is described as increasingly strong. Major hotel brands already present or mentioned include:
- Aman,
- Chedi,
- One&Only,
- Regent,
- Hyatt Regency.
The transcript says overall tourism may be quieter in some periods, but upper-end tourism is booming, with four- and five-star hotels described as fully booked.
This matters for villa and apartment investors because luxury hospitality can support demand for high-end real estate, rentals, restaurants, services, and lifestyle infrastructure.
Herceg Novi riverside plot
The second project is a plot in Sutorina, near Herceg Novi, at the mouth of the Sutorina River where it enters the Herceg Novi Bay. The plot reaches the water and has an existing building that would likely be demolished and redeveloped.
The land measures 620 square meters and is priced at €300,000. The price may rise to €350,000 if the market continues to move upward. At €300,000, the land price is about €480 per square meter.
The plot is close to the sea and could allow boat access. The transcript suggests that someone with a yacht in a marina could potentially use a tender to reach the property.
Flooding is raised as a concern because of the riverfront position. The response given is that neighbors have built up their plots and reportedly have not had flooding issues. Building up is also described as preferable to building down, with the possibility of creating an infinity pool or elevated waterfront edge.
Herceg Novi location appeal
Herceg Novi is described as an attractive town that is sometimes overlooked compared with Kotor, Tivat, Budva, Luštica, and Porto Montenegro.
It is presented as more open and sunny than parts of the Bay of Kotor because there are no high mountains immediately blocking the light. The plot is south-facing and positioned for all-day sun.
Herceg Novi is also close to Croatia, about five minutes from the border, and around 40 minutes from Dubrovnik Airport. The transcript says Dubrovnik Airport is effectively the main airport for this area and may be as convenient as it is for Dubrovnik itself.
Herceg Novi is described as trading at roughly a 30% discount to Kotor Bay, or possibly more. Montenegro’s potential future EU accession is presented as a possible upside catalyst, especially for Herceg Novi. The transcript suggests prices could rise by around 50% if accession happens, though this is presented as an opinion.
Herceg Novi apartment development numbers
The plot has an 80% gross buildable area, giving just under 500 square meters of gross build area.
A premium but not ultra-luxury build is estimated at around €1,200 per square meter. Because the location is close to Bosnia, construction can potentially be cheaper than in more remote Luštica, where builders and materials may cost more to bring in.
Estimated numbers:
| Item | Estimate |
|---|---|
| Plot size | 620 m² |
| Land price | €300,000 |
| Gross build area | about 500 m² |
| Construction cost | about €1,200/m² |
| Construction total | about €600,000 |
| Total base cost | about €900,000 |
| Livable space estimate | about 420 m² |
| Common areas | about 15% |
| Livable ratio | about 85% |
The proposed configuration is six apartments of about 70 square meters each. Each 70-square-meter unit could contain two bedrooms, two bathrooms, and two balconies.
The two top-floor units could be sold as penthouses. With a flat-roof design, the penthouses could receive exclusive rooftop terrace rights, potentially adding 70 to 80 square meters of terrace space each. These terraces could include pergolas, outdoor kitchens, or jacuzzis, with panoramic views toward Luštica, the open sea, Tivat, Porto Novi, Lovćen mountain, and the Croatian border area.
Conservative selling assumptions:
| Unit type | Sale estimate |
|---|---|
| Standard apartments | €3,000/m² |
| Penthouse apartments | €4,000/m² |
Using those assumptions, the total resale value is estimated at about €1.4 million against a base cost of about €900,000, implying a gross profit of roughly 56%.
The transcript notes that the true cost could be higher because the existing structure would need to be demolished and the investor may want to add a pool, waterfront improvements, pontoons, or other amenities. However, those improvements could also raise the sale price.
A more lifestyle-focused investor could also keep the building rather than sell immediately. Possible strategies include:
- renting all six apartments long term,
- using Airbnb or short-term rentals,
- living in one penthouse and renting the other five units,
- selling some units and keeping one or more for personal use,
- selling enough units to recover capital and keeping a penthouse.
Practical takeaway
The two Montenegro projects are presented as higher-risk, higher-effort development plays rather than passive real estate purchases. The Luštica plot is focused on building and flipping five sea-view villas, while the Herceg Novi plot is focused on creating a small waterfront apartment building with possible penthouse premiums.
The main attraction is the potential gross return of around 50% to 60% over an estimated 18- to 24-month period, supported by Montenegro’s growing luxury market, reduced seasonality, cash-buyer dynamics, and future infrastructure or EU-accession upside.
The main risks are execution, permitting, construction costs, sales timing, tourism demand, broader European economic weakness, currency exposure through the euro, and geopolitical uncertainty. These projects may suit investors who understand development risk and want either resale profit, rental income, or a mix of both.
