Montenegro’s coastal municipality of Budva has increased property-tax reference values by around 19.3% for 2026, reflecting the rise in real-estate prices and expanding the municipal tax base. The reference value for residential property has risen to €2,640 per square metre, from €2,212.80. Commercial premises will be valued at €3,080 per square metre, compared with €2,581.60 previously.
Garages and auxiliary premises are assigned a reference value of €1,540 per square metre, while fixed temporary structures are valued at €1,760 per square metre. The increase does not automatically mean a 19.3% rise in individual tax bills. Final liabilities also depend on location, age, quality, use and applicable municipal tax rates.
Real Estate Supports Municipal Revenue
Budva’s adjustment follows the broader increase in Montenegro’s property market. The average price of newly built residential property nationwide rose from €1,844 per square metre in 2024 to €2,200 in 2025, or about 19%. Budva has one of Montenegro’s highest concentrations of valuable real estate, particularly in central areas, along the waterfront and in premium coastal locations.
Higher property-tax revenue could strengthen municipal funding for roads, water and wastewater systems, parking and other infrastructure, provided collection remains effective. Foreign investment has played an important role in Montenegro’s property market, particularly along the Adriatic coast. Real estate has represented a significant share of foreign direct investment while supporting construction, employment and consumption.
Pressure on Owners and Coastal Municipalities
Budva’s market has historically attracted buyers from Serbia, Russia, Turkey, Western Europe and other markets, contributing to strong demand and higher property values. The distinction between market prices and municipal reference values remains important. The €2,640-per-square-metre residential figure is an administrative input and does not mean every Budva apartment has that market value.
The higher assessment could have a greater impact on owners of second homes and investment properties, depending on applicable rules and reductions, while rapid price growth can also increase affordability pressures for permanent residents. Similar development has taken place in Tivat, Kotor and Herceg Novi, where luxury tourism, marinas and residential projects have supported property-market growth.
Wider Fiscal Differences
Montenegro has been improving cadastral records, fiscalisation and tax administration as part of its broader EU-alignment programme, while greater digitalisation could also improve local property-tax collection. Rising coastal property values may strengthen municipal tax bases but also widen the fiscal gap with northern municipalities, many of which remain dependent on transfers from the national Equalisation Fund. Budva’s 2026 adjustment therefore increases the taxable basis of its property market while bringing more of the value generated by the real-estate boom into local public finances.
