Russians Drop Out of Montenegro’s Top 5 Investors

Photo: Bankar.me

The volume of foreign direct investment in Montenegro reached €595.58 million in the first eight months of 2025, which is 3.46% more than during the same period in 2024, reports Bankar.me, citing data from the Central Bank of Montenegro. At the same time, net inflows decreased by 4.75% to €314.39 million due to a rise in the amount of capital withdrawn from the country. Russia fell to seventh place, dropping out of the top five largest investors.

Overall Investment Volumes

Over the eight-month period, equity investments dominated the structure of foreign direct investment, totalling €376.83 million or 63.27% of all inflows. Funds directed to the corporate sector fell by 5.07% to €67.97 million, while investments in real estate increased by 8.40% to €308.86 million.

Intercompany loans amounted to €197.05 million, or 33.09% of total inflows, which is 0.69% lower than during the same period last year. Another €21.71 million was attributed to other investments, including the repatriation of capital from abroad. Total foreign direct investment outflows between January and August reached €281.19 million, 14.49% more than during the same period in 2024. Of this amount, €67.92 million represented investments by residents abroad, while €213.27 million reflected capital withdrawn by foreign investors from Montenegro.

Investment Inflows by Country

Among individual countries, Turkey ranked first with €92.19 million, including €51.8 million in intercompany loans, around €35.5 million in real estate transactions, and €4.8 million in investments in local companies and banks. Serbia took second place with €91.84 million, of which €60.9 million went into residential and commercial property. This segment was also a priority for German investors, who allocated €28.63 million of their €43.48 million total to real estate.

The United States ranked third with €41.56 million, dominated again by real estate investments at €31.89 million. Cyprus came fourth (€40 million), with most funds directed to Montenegrin companies and banks (€24.4 million). The UAE invested €30.65 million, with the two segments nearly evenly distributed at €14.4 million and €13.84 million. Russia, once among Montenegro’s largest investors, dropped to seventh place. Over the first eight months, Russian citizens invested about €25.6 million, of which roughly €13 million went into real estate.

New Rules for Foreigners

The decline in investment volumes is linked to the tightening of rules for foreigners, discussed for several years. In recent months, it became clear that conditions would change sharply in anticipation of Montenegro’s expected EU accession. In autumn, the parliament indeed approved several amendments. In particular, the requirements for obtaining a Montenegrin residence permit became more stringent. A financial threshold for property owners was introduced — €200,000. The amount is substantial, especially given that earlier there were no requirements regarding the value of the property. Foreigners who previously obtained status through property ownership are given one year to bring their documents into compliance. In essence, they must make additional investments or lose their status.

Criteria for business owners have also been updated. A company director or majority owner (over 51%) must employ at least three people, two of whom must be Montenegrin citizens employed full time and with valid insurance. The transition period for fulfilling these requirements is 180 days. The new rules significantly increase the financial burden. For small projects, startups, and remote workers, these conditions may be unfeasible, making the extension of residence permits through business grounds practically unattainable.

Outlook and Returns

According to official data, around 230,000 Russians visited Montenegro annually for tourism. They also lead in the number of residence permits: 18,427 out of a total of 70,000. This figure is likely to decline significantly within a year. Many entrepreneurs will have to change the basis for obtaining a residence permit or choose another country for relocation. The investment threshold for real estate is likely to be too high for a significant share of foreign owners. Montenegro has also announced it will introduce a visa regime for Russian citizens in September 2026. This could negatively affect the tourism sector, but the government has decided to fully align with EU policy.

Analysts at International Investment note that the absence of financial requirements was previously one of the most attractive factors. According to Global Property Guide, the average gross rental yield in the country stands at 5.62%. In Podgorica it reaches 6.39%, in Budva 5.85%, and in Tivat 4.64%. After deducting taxes, maintenance, utilities, and marketing expenses, net returns drop by about two percentage points. As a result, the country average is slightly above 3.5%, and city returns range from 2.5% to 4.3%. Rental apartments often experience vacancy periods when they cannot be leased, further reducing income. There is also a risk of purchasing property that is not officially registered — a longstanding issue in Montenegro, where a significant share of the housing stock consists of unauthorized construction. Meanwhile, further tightening of regulations is expected. Montenegro aims to join the EU by 2028 and plans to align all sectors with EU standards.