Podgorica recorded an estimated 4.5 per cent gross residential rental yield in the second quarter of 2026, exceeding the returns calculated for Kotor, Tivat and Herceg Novi under a standard 12-month tenancy model. The capital also had the lowest average advertised rent among Montenegro’s six principal housing markets. The national average gross residential yield stood at 4.4 per cent, with city-level estimates ranging from 4.1 to 5.1 per cent. Only Budva, at 5.1 per cent, recorded a higher estimated return than Podgorica.
The difference between the capital and coastal markets is primarily reflected in property acquisition prices. Apartments in Podgorica were advertised at an average of approximately €2,672 per square metre, compared with €3,701 in Kotor and €4,391 in Tivat. The yield calculations cover conventional year-round leases and exclude nightly tourist rentals. Podgorica’s rental market is supported by employment, government institutions, universities and business activity throughout the year, while coastal markets have stronger exposure to seasonal tourism, winter vacancies and short-term rental management costs.
Podgorica apartment generates €6,960 in annual rent
The calculation for Podgorica is based on an average monthly rent of approximately €10 per square metre and an average apartment size of 58 square metres. That produces monthly rental income of €580 and annual income of €6,960. The corresponding estimated purchase price is €154,976, producing a gross yield of approximately 4.5 per cent when annual rent is divided by the purchase price.
The calculation assumes continuous occupancy and excludes acquisition taxes, notary and legal costs, agency commissions, property tax, income tax, insurance, maintenance, repairs and replacement of furnishings. One vacant month would reduce annual rental income from €6,960 to €6,380, cutting the yield against the advertised purchase price to approximately 4.1 per cent. Transaction and ownership costs would reduce the effective return further.
Podgorica also has Montenegro’s largest advertised residential supply, with 5,067 active listings, almost one-third of the national total. Budva had 4,129 listings, followed by Tivat with 2,616, Herceg Novi with 1,343, Bar with 1,179 and Kotor with 1,070. The larger inventory provides buyers with a wider selection of apartments and greater scope to compare properties based on parking, lifts, heating systems, maintenance requirements and other building characteristics. Continued construction could also affect capital appreciation if housing supply expands faster than household formation.
Budva posts the highest estimated yield
Budva led the six markets with an estimated 5.1 per cent gross yield. Average advertised rent stood at approximately €14 per square metre, while the average sale price was €3,309 per square metre. The city’s rental market has the strongest connection with tourism among the compared markets. Budva recorded 710,257 tourist nights in the second quarter, accounting for 54.5 per cent of tourist nights across the five coastal municipalities included in the comparison.
Monthly tourist nights increased from 121,796 in April to 234,315 in May and 354,146 in June. Short-term rentals can produce higher peak-season income than a 12-month lease, but the two models require separate calculations. Tourist accommodation involves nightly rates, occupancy, platform commissions, cleaning, utilities, guest management and winter demand.
Professional management can also represent a percentage of rental revenue, while utilities and frequent cleaning create costs that would normally be borne by a long-term tenant. Intensive turnover can increase depreciation of furniture and appliances. The 5.1 per cent Budva figure therefore represents the return from a year-round tenant paying the advertised monthly rent rather than the performance of a tourist apartment.
Tivat combines Montenegro’s highest rents and sale prices
Tivat recorded the country’s highest average advertised rent, at approximately €16 per square metre, alongside the highest residential sale price of €4,391 per square metre. Its estimated long-term gross yield was 4.4 per cent, slightly below Podgorica’s 4.5 per cent. Property prices in Tivat reflect limited supply, proximity to the airport and demand connected with Porto Montenegro, Luštica Bay and the wider luxury-property market around the Bay of Kotor.
Some purchases are associated with lifestyle use, marina access and potential capital appreciation rather than maximum current rental income. Premium developments can also involve homeowners’ association fees, concierge services, reserve-fund contributions and branded-management costs, none of which are reflected in the gross yield. Tourist nights in Tivat increased 61 per cent between April and May, highlighting the city’s seasonal demand pattern. Property owners therefore face a choice between maintaining a year-round tenant and using the apartment for potentially higher but less predictable seasonal rental income.
Kotor yield reaches 4.2 per cent
Kotor’s estimated gross long-term yield was 4.2 per cent, based on monthly rent of approximately €13 per square metre and an average sale price of €3,701 per square metre. The city recorded the fastest annual residential-price increase among the six markets, with prices rising 14.8 per cent. Higher property values benefit existing owners but reduce the income yield available to new buyers unless rents increase at a comparable pace.
Across Montenegro, average advertised residential prices rose by approximately 1 per cent over the preceding 12 months, while rental yields declined, indicating that rents did not keep pace with the increase in property values. Kotor’s Unesco-protected historic centre, cruise traffic and limited development space support its short-term rental market. Heritage properties can also involve higher maintenance requirements, limited parking and lift availability, and restrictions on alterations.
Annual long-term rental income for an average Kotor apartment was estimated at €10,608. A seasonal rental would have to generate at least that amount in gross income during a shorter period before exceeding the revenue from a full-year tenancy, while also covering marketing, cleaning, utilities and management costs. Tourist nights in Kotor increased 87 per cent from April to May. Tourist activity in the city includes hotel stays, cruise passengers, private accommodation and day trips, while occupied nights vary by neighbourhood and property type.
Herceg Novi records 4.1% gross return
Herceg Novi had the lowest estimated gross rental yield among the six cities, at 4.1 per cent, or 0.4 percentage points below Podgorica. On a property valued at €200,000, a 0.4 percentage-point difference represents €800 in gross annual income before costs. Over ten years, the difference would amount to €8,000 without accounting for reinvestment or rental growth.
Herceg Novi’s overall return can also be affected by property-price appreciation and tourist rental performance. The city contains several distinct markets, including urban apartments, properties around Portonovi and smaller settlements around the Bay. Tourist nights increased 38 per cent between April and May, the smallest monthly increase among the five coastal municipalities included in the comparison.
Bar records 4.3% yield
Bar’s estimated gross residential yield was 4.3 per cent, based on average rent of €10 per square metre and an average sale price of approximately €2,797 per square metre. The city’s pricing and rental profile is closer to Podgorica than to Tivat. Bar combines permanent residential demand with tourism and maritime employment associated with the Port of Bar. Tourist nights increased 135 per cent between April and May, rising from 9,872 to 23,211, before reaching more than ten times the April level by June.
For investors using annual leases, Bar’s 4.3 per cent yield is 0.2 percentage points below Podgorica. For short-term operators, the shorter period of elevated seasonal demand makes occupancy and rental pricing important factors.
One- and two-bedroom homes dominate listings
Montenegro’s advertised housing stock is concentrated in one- and two-bedroom apartments. Of 14,645 listings included in the size breakdown, 6,213 were one-bedroom units and 5,283 had two bedrooms. The market contained 998 studios, while 1,947 listings had three bedrooms and 204 had four bedrooms.
Studios have lower total acquisition costs and can command higher rents per square metre, while also being suitable for short-term rentals. Limited supply can support prices, although a high purchase premium can reduce their yield advantage. One-bedroom apartments represent the largest segment and serve single professionals, couples, students, expatriates and tourists. Larger apartments can generate lower rent per square metre while supporting longer tenancies and less frequent tenant turnover. A three-bedroom property in Podgorica close to schools, government institutions or business districts therefore serves a different rental market from a coastal studio.
Purchase costs reduce effective rental returns
The published gross yields do not include the costs of purchasing and owning residential property. For resale properties, Montenegro applies a 3 per cent transfer tax on values up to €150,000, with higher progressive rates above that threshold. Notary costs can range from €400 to €700, while cadastral registration may cost €50 to €200.
Agency commissions can range from 3 to 6 per cent, although buyers do not necessarily pay the commission in every transaction. Legal review can also be required where ownership, construction permits or inherited property rights involve additional complexity.
New apartments sold within the VAT system are generally subject to VAT instead of the resale transfer tax. Buyers must establish whether advertised prices include VAT and whether parking spaces, storage areas or furnishings are charged separately. Annual ownership expenses include property tax, building maintenance, insurance, repairs and income tax. Coastal developments can additionally carry service charges for pools, security, landscaping, lifts and reception services.
The gross yield calculation uses the advertised purchase price as its denominator, while the investor’s actual capital commitment also includes transaction costs and initial furnishing or refurbishment. Negotiated purchase prices can improve the resulting yield. Advertised prices may exceed completed transaction values by 5 to 10 per cent. For the Podgorica example, a 7 per cent discount would reduce the purchase price from €154,976 to approximately €144,128. Annual rent of €6,960 would then correspond to a gross property-level yield of approximately 4.8 per cent, before acquisition and operating costs.
Podgorica rental demand is less seasonal
Year-round rental demand in Podgorica is supported by government ministries, banks, retailers, telecommunications companies, universities and service businesses. Average gross wages in the capital increased 3.8 per cent year on year during the second quarter, while housing costs can increase faster than household income. Landlords remain exposed to vacancies, tenant defaults, additional residential construction and changes in mortgage conditions. The capital’s large stock of available properties also gives tenants more choice and can constrain rent increases in areas with substantial new development.
The estimated 4.5 per cent gross yield does not represent a guaranteed cash return. Vacancy, ownership expenses and taxes can reduce the effective return below 4 per cent. Estitor’s base scenario assigns a 55 per cent probability to Montenegro’s average asking price reaching approximately €3,000 per square metre by the end of 2026, compared with a starting level of €2,970. The optimistic scenario reaches €3,148, while the conservative scenario gives €2,985. A separate five-year model values an average €190,080 apartment at €210,894, representing estimated capital appreciation of approximately 2.1 per cent annually.
The six-city comparison places Podgorica at €2,672 per square metre and a 4.5 per cent gross rental yield, with 5,067 active property advertisements. Budva records a 5.1 per cent yield, while Bar stands at 4.3 per cent, Kotor at 4.2 per cent, and Herceg Novi at 4.1 per cent. Tivat combines the highest average rent, at €16 per square metre, with a 4.4 per cent gross yield and the country’s highest average sale price of €4,391 per square metre.
