FEATURE: Eastern Adriatic becomes playground for the world's jet set

FEATURE: Eastern Adriatic becomes playground for the world's jet set

By Boris Babic, dpa

Podgorica/Zagreb (dpa) - It is a relatively short drive from Podgorica airport to the centre of town. But the road from the Montenegrin capital airport is jam-packed with real estate ads - Russian first, then English, followed by German or French - as foreign buyers flood in to try to grab a piece of the nation's thriving, throbbing coast. "Before the concrete for the foundation is mixed, the place is sold," said the director of the Senzal brokerage in Podgorica, Bojica Boskovic. "It doesn't matter if it's on the sandy southern coast, the urbanized Boka fiord, on the mountain or in the city, it just goes," he said. In the central coastal resort of Budva, 86 people became millionaires overnight by selling their homes - that is one out of every 80 residents or about one in every 20 families - as the formerly Communist eastern Adriatic coast emerges as a playground for the world's jet set. Among those snapping up properties in Montenegro are reportedly Formula 1 driver Ralph Schumacher, along with young Russian tycoons Roman Abramovich and Oleg Deripaska. The land and home prices are rising so rapidly that property analysts say the seller must immediately buy something else, or risk being cut out of the market. Money from property deals has also been heating up the stock market, but the rate of growth on the real estate market has been more robust than on the stock exchange, analysts say. Indeed, the Podgorica stock market boomed in 2006 as prices in the property market in the tiny former Yugoslav republic exploded. The rapid growth of Montenegro's property market means that the nation's real-estate turnover of 560 million dollars in 2006 was almost equal to the budget of the whole country, which is home to just 650,000 people. Prices soared in the past few years - in particular in the build- up to Montenegro's independence from Serbia last June. Despite the steep incline, however, they are still much lower than average prices in established western European markets, indicating further likely steep rises in property values in Montenegro's choice real estate areas, especially along its pristine coastline. However, prices also tend to vary wildly, with homes in so-called development areas at the bottom end and those in the protected, mediaeval ports and the nation's remarkable network of fortresses on the market for millions of dollars. Cashed up after the property boom in countries such as Britain, Spain and Ireland, real estate buyers have been turning their attention to former communist countries in search of bargains. Buyers from Britain, Ireland, Germany and Belgium have been taking the plunge into Montenegro's burgeoning second-home market. Real- estate firms from those countries have been rushing to open offices in Montenegro and its northern neighbour, Croatia. Western Europeans' new-found interest in the Adriatic has also been fuelled by the boom in budget airline with cheap flights to the nearby Croatian resort of Dubrovnik and no-frill carriers planning to add Montenegro this year to their flight plans. But the top buyers in Montenegro have been the Russians. With their incomes buoyed by the global commodity boom, Russians have been picking up regular homes as well as targeting upmarket homes and land for capital investments, to be turned into hotels and resorts along the 220-kilometre coast. Local legend has it that the Russians - who by now have growing colonies along the coast - do not argue the price and pay in cash from suitcases when they find something they want. The situation is similar in Croatia. With a 1,100 kilometre-coast and a massive amount of real estate on offer, foreign interest has been very strong in Croatia, although property agents say price rises have been more moderate than in places such as Montenegro. Nonetheless, some records are being set. Former Austrian tennis star Thomas Muster bought a villa near Dubrovnik for a record 1.2 million euros (1.58 million dollars), or 16,400 dollars per square metre. With Croatia hoping to join the EU membership in a few years and its infrastructure rapidly improving, the country is fast becoming a property investment target particularly for Austrians, Germans and other western Europeans. As a result, many Croatians are growing concerned - with rightist politicians further fuelling such anxieties - that foreigners will buy up the best homes and the best land. However, according to official figures, so far only 3,553 foreigners, mostly Germans and Austrians, have managed to secure the necessary approval to buy real estate Croatia. Even with a legal loophole, allowing property sales to foreigners with locally registered firms, the overall number of homes owned by foreigners is steady rather than staggering. This is not because Croatia's Adriatic coast lacks beauty, but because some owners put unrealistic price tags on their properties, in the hope of cashing in on rich foreigners, an agent says. For instance, there is an array of 50 homes on the stunning island Vis, outrageously valued at around a quarter million dollars each. They have been on the market for years, the agent says. "It happens all the time, people just ask too much and stubbornly stick to their asking price. Maybe the wait will be worth it, maybe not," he adds.