Exploring the pros and cons of building your own villa versus buying a ready home in Montenegro’s 2025 market.

· 7–9 min read · by Eco-Build Montenegro

Build or Buy? What’s Better for a Foreign Investor in Montenegro

For many foreign investors, Montenegro remains one of the most dynamic real estate markets in Southern Europe. But the big question is still the same — is it smarter to build a new villa or buy an existing one in 2025?

1) Buying Ready Property

Buying an existing home or apartment offers immediate access and far fewer variables. You avoid construction delays, get predictable costs, and can move in or start renting right away. Legal frameworks for ownership transfers are well-defined, and foreigners can freely own property.

  • Pros: Immediate use, low risk, clear legal process, rental income from day one.
  • Cons: Limited choice, higher € per m², occasional older standards or documentation issues.

In 2025, sea-view apartments in Tivat or Budva average €3,800 – 5,500/m². Modern villas with pools range from €5,000 – 8,000/m², depending on the location and view.

2) Building a New Villa

Building allows you to design exactly what you want and often enter the market at a lower base cost. In 2025, turnkey construction averages €1,400 – 1,900/m² for modern villas with solid quality and finishes.

  • Pros: Custom design, lower cost, potential 25–30 % equity gain on completion.
  • Cons: Requires local expertise, patience with permits and utilities, 12-18 months timeline.

Plots with approved UTU (Urbanistic-Technical Conditions) are essential — without them, permitting can take additional months.

3) Timeline Comparison

  • Buying: 2 – 4 weeks → search, notary, ownership transfer.
  • Building: 12 – 18 months → permits, design, construction.

4) Investment & Rental ROI

Montenegro’s rental market continues to grow in 2025. Sea-view apartments and villas in Tivat, Lustica and Kotor show net yields of 6 – 9 % per year under competent management.

Example: A 2-bedroom apartment near Tivat marina rented six months per year at € 220 – 260/night can generate € 28 000 – 32 000 net annually.

New villas with private pools and flexible layouts often achieve break-even within 8–10 years.

5) Legal & Tax Framework in 2025

Foreign citizens can own property directly in their name. Below are the current purchase-related taxes and fees valid for 2025:

Real Estate Transfer Tax (RETT) — applies to resale properties:
  • Up to €150 000 → 3 % of purchase value.
  • €150 001 – €500 000 → fixed €4 500 + 5 % on amount above €150 000.
  • Over €500 000 → fixed €22 000 + 6 % on amount above €500 000.

For new-build properties sold directly by developers, RETT does not apply — VAT 21 % is already included in the listed price.

  • Annual property tax: approx. 0.25 – 1.0 % of official value (higher in tourist zones).
  • Notary & legal fees: € 400 – 1 000 depending on property value and translation needs.
  • Registration & municipal fees: typically 1 – 1.5 % of the transaction value.

These updated rates replace the old flat 3 % system and make high-value deals progressively taxed. Always confirm final numbers with a local lawyer or tax advisor before signing the contract.

6) When Buying Makes More Sense

If you want a residence or income property ready to use this season, buying is the more efficient route — especially when purchasing from reputable developers with all permits and occupancy certificates.

7) When Building Makes More Sense

If your goal is a custom villa, long-term value growth, or a branded rental project, construction remains highly viable in 2025 — particularly in the Lustica and Tivat areas.

Typical 2025 Build Flow:
  1. Land purchase & due diligence (1–2 months)
  2. Design & permits (3–5 months)
  3. Construction (9–12 months)
  4. Finishing & landscaping (1–2 months)

8) Final Thoughts

Both options — buying and building — remain attractive in Montenegro’s 2025 market. The key is understanding your timeline, risk tolerance, and target return.

Our team at Eco-Build Montenegro works with investors on both sides of this equation — helping clients identify the right plot or ready property, handle all documentation, and manage construction to completion.

Eco-Build Montenegro — developers of The Cube Residence in Krašići.

Real 2025 numbers for land, permits, materials, labor and finishing — plus a sample budget for a sea-view villa on Luštica.

The Short Answer

In 2025, the typical construction cost for a quality villa in Montenegro is €1,200–2,000 per m². That excludes land and soft costs; once you add land + permits + design + infrastructure, total budgets increase by roughly 25–40 %.

1) Land Cost & Location

  • Prime coastal (Lustica, Tivat, Budva): €250–600/m²
  • Hillside with sea view / near-coastal: €100–250/m²
  • Rural / inland: €30–80/m²

Plots with a valid UTU (Urbanistic-Technical Conditions) are far more valuable — you can start quicker and reduce regulatory risk. If UTU is missing, plan for extra months and architectural work.

2) Permits & Legal

You’ll need municipality approvals, geodetic surveys, utility connections and a compliant project. Professional handling of checks and UTU alignment typically costs €3 000–6 000.

3) Build Cost per m² (2025)

  • Basic structure + minimal finish: €1 000–1 200/m²
  • Mid-range (good windows/tiles, neat façade): €1 400–1 700/m²
  • Premium (designer finishes, smart home, luxury façade): €1 800–2 200/m²

4) Infrastructure & External Works

Don’t underestimate externals: driveways, retaining walls, drainage, pool and landscaping can add 15–20 % to total spend.
  • Access / driveway: €10 000–30 000
  • Retaining & drainage: €5 000–25 000
  • Pool: €25 000–60 000
  • Landscaping & lighting: €5 000–15 000

5) Labor & Materials in 2025

Prices stabilized after 2023, but Montenegro imports many materials (Serbia, Italy, Turkey). Skilled labor averages €250–350/m² for structural works.

6) Design & Supervision

Architectural project with 3D and technical docs costs €40–60/m². Supervision adds €1 500–2 500 — and often saves more by preventing errors during finishing.

7) Sample Budget — 250 m² Sea-View Villa (Luštica)

Cost Breakdown

  • Land: €150 000
  • Construction: €400 000
  • Externals (pool/landscape): €70 000
  • Permits/design/supervision: €25 000
  • Total: ~€645 000 (~€2 580/m² incl. land)

Buy vs Build Snapshot

Comparable ready villas near Tivat often list for €900 000–1.2 M — a well-managed build can save 20–30 % and deliver custom design.

8) Build or Buy in 2025?

If you want customization and better entry pricing → Build. If you value time and turnkey comfort → Buy in a managed residence with rental program.

Final Thoughts

Building in Montenegro is not “cheap”, but still competitive vs Western Europe. The difference is smart planning — clean UTU, reliable contractors and transparent budgeting.

If you’re exploring Luštica or the Bay of Kotor, our team can share real budgets and ROI scenarios — just message us for a quick call or visit.

Eco-Build Montenegro — developers of The Cube Residence in Krašići.

Planning to build a house in Montenegro or buy land by the sea? The first thing you need to check is the UTU (Urban-Technical Conditions).

Without UTU, it is impossible to obtain a building permit, which means the land may turn out to be useless for your plans. This document defines exactly what can be built: a spacious house, a villa, or only a small auxiliary structure.

What Is UTU in Montenegro?

UTU (Urbanističko-tehnički uslovi) are the official planning rules for a specific plot of land, issued by the local municipality.

The document defines:

  • the land designation (residential, tourist, commercial, etc.);
  • what exactly can be built — a house, villa, apartments;
  • maximum allowed size and number of floors;
  • building coefficients (how many square meters can be constructed);
  • minimum setbacks from plot boundaries and roads;
  • conditions for connecting to utilities (electricity, water, sewage).

Why UTU Matters for Building in Montenegro

  • Without UTU, you cannot apply for a building permit (građevinska dozvola).
  • UTU shows the real potential of the land: it may allow only 120 m² instead of the 500 m² promised by the seller.
  • Checking UTU before buying land helps you avoid costly mistakes.

Real-Life Example

A client contacted us to evaluate a plot on the Luštica Peninsula.
The seller claimed: “You can build three floors here — perfect for a large villa.”

We checked the documents and ordered the UTU. It turned out that the plot allowed only P+1 construction (two levels) with a maximum size of 120 m².

Thanks to this verification, the client understood the real possibilities of the land and made the right decision. Instead of investing in a restricted plot, he chose another option that matched his building plans.

How to Get UTU in Montenegro (Step by Step)

  1. Submit a request to the municipality where the land is located.
  2. Pay the administrative fee (usually a few dozen euros).
  3. Wait — typically 15–30 days, sometimes longer depending on the municipality’s workload.

Building Rules in Montenegro: What to Pay Attention To

  • Height limits: most areas allow P+2 (three levels).
  • Building coefficients: determine the maximum square meters you can construct.
  • Coastal zone (within 100 m of the sea): strict rules apply, and approval from Morsko Dobro is required.
  • Land category: agricultural land cannot be used for housing unless its designation is changed.

How to Build by the Sea in Montenegro?

Building near the coast is subject to strict regulations:

  • Within 100 meters of the shoreline, construction is heavily restricted.
  • Unauthorized extensions or additional floors are prohibited.
  • Many older buildings can only be renovated, not rebuilt.

FAQ: Common Questions About UTU in Montenegro

Can I build without UTU?
No. Without this document, construction is impossible.

How long are UTU valid?
Usually 6–12 months, depending on the municipality.

Should I buy land without UTU?
It is risky. It’s always better to request the UTU in advance or include a clause in the contract: “transaction subject to obtaining UTU.”

Conclusion

UTU is not a formality — it is the key document for building in Montenegro.
It shows what can be built, how much, and under what conditions.

By checking UTU in advance, you protect yourself from unnecessary costs and choose land that truly fits your plans.

Montenegro remains one of the most attractive destinations on the Adriatic for those seeking a seaside home or a profitable rental property. The nature, mild climate, growing tourist flow, and relatively affordable prices make the market very appealing. At the same time, the country has its own specifics that buyers should consider.

1. Documents and the Cadastre

The main property document in Montenegro is the List nepokretnosti (title deed). It shows all the essential data: owner, size, land category, and permits.

⚠️ Registering ownership in the cadastre can take from 2 weeks to 3–6 months, depending on the municipality. This doesn’t mean the purchase is invalid — the procedure just requires time.

Sometimes small mistakes occur, such as in the property size or the owner’s name. These are usually corrected quickly and without major issues, but it is better to check everything in advance.

Pay special attention to notes such as:

  • „nema dozvolu“ — no construction permit;
  • „prekoracenje“ — exceeded building parameters;
  • absence of upotrebna dozvola — usage permit.

Always have the documents checked before signing the contract.

2. Taxes and Fees When Buying

Secondary market (purchase from a private seller):
Since January 1, 2024, a progressive transfer tax applies:

  • Up to 150,000 € — 3% of the property price.
  • From 150,001 € to 500,000 € — fixed 4,500 € + 5% of the amount above 150,000 €.
  • Over 500,000 € — fixed 22,000 € + 6% of the amount above 500,000 €.

⚠️ Note: the tax is based not only on the contract price. If the tax office considers the market value higher, they may recalculate it.

Examples:

  • Apartment for 200,000 € → 4,500 € + 5% × (200,000 − 150,000) = 7,000 €.
  • Villa for 600,000 € → 22,000 € + 6% × (600,000 − 500,000) = 28,000 €.

New build from a developer:

  • No transfer tax applies.
  • Instead, VAT of 21% is charged (usually included in the price).

Annual property tax:

  • Paid after purchase, once a year.
  • Set by municipalities, usually 0.25–1% of the cadastral value.
  • For a seaside apartment, this may be a few hundred euros; for a villa — several thousand.

Other costs:

  • Notary fees: ~250–1000 €, depending on price.
  • Translator: 50–200 €.
  • Registration in the cadastre: several dozen euros.

3. Transaction Process

  • Deposit usually 5–10%, sometimes more for new builds.
  • Payments may be made in installments (e.g., 30% on signing, balance later, 10% on completion).
  • Contract is signed at a notary, then ownership is transferred. Registration takes time.

4. Restrictions for Foreigners

  • Agricultural land cannot be purchased directly — only via a company or after rezoning.
  • In the coastal zone (within 100 m from the sea), works require approval from Morsko Dobro, often limiting reconstruction.

5. Practical Tips

  • Check for Urban-Technical Conditions (UTU) before buying land — without them, you cannot build.
  • Confirm connections to utilities (electricity, water). Sometimes this is resolved only after purchase.
  • Cash transactions: banks increasingly require proof of funds and detailed documents.

6. Rental and ROI

  • To rent legally, the property must be registered with the tourist board and receive a category (stars).
  • Renting without registration can result in fines.
  • Property management companies take 20–30% of income but handle all operations.

Conclusion

Buying property in Montenegro is a real opportunity to invest in a fast-developing market. The key is to understand the nuances, check the documents carefully, and take local specifics into account. This way, your deal will be both safe and profitable.