Foreign investments in Montenegro have been declining for years, while an increasing share of capital is being directed into real estate, driving property prices sharply upward. Economic analyst Vasilije Kostić told Gradska TV that this trend further undermines the living standard of citizens. He sees a potential solution in the government’s plan to build more affordable housing.
Data show that the structure of foreign investments is becoming less favorable. Overall investments are falling, and most of the money goes into real estate instead of the business sector, Kostić warned.
“The level of foreign investment in Montenegro is declining. It is now clear that the structure of the investment portfolio is changing. In addition to the overall decrease, there is also a drop in net inflows, which is especially negative as it points to significant capital outflows,” Kostić explained.
According to him, investments in companies and banks have dropped by around 40 percent. At the same time, the surge in foreign purchases of apartments and houses is pushing up prices, directly affecting local citizens.
“In Montenegro’s case, real estate investment carries a special problem. We are a developing country with a relatively low standard of living, and these investments significantly raise housing prices. Foreign buyers, with far greater purchasing power and disposable income, are putting strong pressure on the market,” he said.
Rising property costs spill over into all areas of the economy, reducing living standards, with young people being hit hardest.
“Young people today can only dream of buying a home at these prices. Yet young people represent the future of every society,” Kostić stressed.
He also pointed out that chronic political instability continues to discourage investment. Still, he believes solutions are possible.
“The government’s plan to build lower-cost housing, along with proposals from other political groups, could be part of the answer. If successful, these initiatives might also help bring down existing property prices,” Kostić concluded.
How much these measures will actually impact the market remains to be seen. What is certain, he emphasized, is that the issues of foreign investment and real estate are deeply tied to Montenegro’s economic and social future and require a serious approach.
