During the first quarter of this year (January-March), only 117 permits and construction applications for apartments were issued, marking the lowest figure since the onset of the coronavirus pandemic, based on data from the Statistical Office of Montenegro (Monstat).

In the same quarter last year, approvals for construction were significantly higher, with 398 apartments being sanctioned. Comparatively, the first quarter of 2023 saw 502 apartments approved, indicating an increase of four and a half times compared to this year. Since 2011, there have only been two quarters with fewer issued permits for apartment construction: the first quarter of 2020 with 97 apartments, and the first quarter of 2021 with 86 apartments. The highest record for issued apartment construction permits was observed in the third quarter (July – September) of 2017, with 1,508 apartments.

This downturn in the first quarter of this year continues a trend from the previous year, which saw a total of 1,500 apartments approved for construction, contrasting with 2,217 in 2023 and 2,156 in 2022.

The average cost per square meter for a new apartment in the first quarter of this year stood at €2,161, whereas, three years prior, this price was nearly €1,000 lower at €1,265.

Obtaining a building permit or approval for construction signifies merely the start of preparations for a residential building, meaning that permits awarded a year or two ago are currently being utilized for construction. A decline in permits issued now suggests reduced construction and fewer apartments available on the market next year.

When asked by “Vijesti” if these statistics imply that the real estate market is overheating or that investors are expecting a decline in demand and pricing, resulting in fewer applications, the Construction Committee of the Chamber of Commerce indicated that the data reflect a reduction in planned residential construction but do not signify a complete withdrawal of investors from the market.

“According to Monstat data, in the first quarter of 2025, building permits and work applications were issued for a total of 117 apartments covering 7,183 square meters. This is the lowest quarterly volume of housing construction since the pandemic, understandably raising public concern regarding a potential decrease in investment interests in this sector. An analysis of past years indicates that between 2011 and 2017, the planning of residential space construction ranged between 200,000 and 295,000 square meters annually in Montenegro. In 2023, only 148,370 square meters were planned, and in 2024, it is expected to drop to 103,028 square meters, reflecting a decline in construction volume but not an absolute exit of investors from the market,” stated the Construction Committee to “Vijesti.”

They emphasize that these figures do not necessarily portray a long-term slowdown in construction activities.

“This situation arises from a complex combination of factors, including current macroeconomic conditions, modifications in regulatory frameworks, and others. The post-pandemic phase witnessed an intensive push on projects that had been delayed for several years, resulting in a sharp rise in sector activity. Moreover, the increase in average net earnings in Montenegro allowed a larger number of citizens access to housing loans, further enhancing demand. Notably, in March 2025, two new Laws regarding Spatial Planning and Construction of Facilities were enacted, reinstating the requirement for building permits instead of the previously applicable construction applications from 2017. This regulatory modification necessitates additional adjustments within the sector, which may momentarily impact the number of formally registered projects. Conclusively, a more thorough assessment will require waiting for analyses from subsequent quarters to gain clearer insights into the construction sector’s trajectory,” asserted the Chamber of Commerce Committee.

The peak year for issued residential construction permits remains 2017, with 1,050 permits for the construction of 4,439 apartments, tripling the numbers from the prior year. In 2017, the average price per square meter for a new apartment was €1,100, while last year it was double that amount.

Furthermore, in 2014, 2015, and 2016, around 3,000 apartments were approved for construction yearly. Last year, this figure was halved, despite the price per square meter being 70 to 80 percent higher than during the 2014-2017 period.

Investors are attuned to market conditions and exercising patience.

Central Bank data indicates that foreign buyers have grown increasingly prominent in Montenegro’s real estate market. In the first quarter of this year alone, they purchased properties totaling €113.5 million.

From early 2019 to the end of March this year, foreign investments in Montenegro’s real estate reached €2 billion.

An industry insider relayed to “Vijesti” that the price increases over the past three to four years are largely attributed to the rising interest of foreigners in purchasing apartments, initially from Russians and Ukrainians, and more recently from Turkish citizens.

“It is unrealistic to anticipate that this level of interest will persist indefinitely amidst rising prices. While interest has diminished, it remains present. Investors are likely assessing the evolving situation, resulting in a slowdown of new projects until existing apartments are sold. Those involved in this sector do not aim to construct more apartments than the market can absorb,” the insider conveyed to “Vijesti”.

According to the Central Bank of Montenegro, in the first three months of this year, banks approved €49 million in housing loans, a significant increase from €26 million in the same period last year, representing an 88 percent rise. This surge may be attributable to salary increases for certain employees implemented at the end of last year through the “Europe Now 2” program.

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