Montenegro Property Market will Benefit From Better Serbian Ties

Relations between Montenegro and Serbia seem to warming up again after they fell out when Montenegro recognised Kosovo's independence. Montenegro President Filip Vujanovic is currently on a three day visit to Belgrade, the first since the pair split from a loose union in 2006.

Serbia was furious when Montenegro declared indepdence in 2006, though they accepted the declaration. Kosovo's independence however is a different story; Serbia says Kosovo is a southern state of Serbia, and is fighting it every step of the way.

Relations, which had warmed slightly, were torn again when Montenegro recognised Kosovo's independence seven months ago.

Now Serbia has hinted that the Montenegro ambassador will be allowed to take back his office in Serbia. It is unclear whether Serbia is expecting Montenegro to revoke its recognition of the breakaway Kosovo state.

The fact that relations are warming up again can only be good for Montenegro's economy, because of a new export market, and the Montenegrin property market because of a new tourism market.

From an overseas investors perspective, Montenegro's property market is primarily fuelled by tourism. Serbia is a landlocked country, with Montenegro on its southern side, whereas Montenegro has some of the world's most beautiful coastlines.

Good relations between the two mean large tourism numbers visiting Montenegro from Serbia. This then translates to increased occupancy and higher rental yields for foreign Montenegro property owners. Inter-regional tourism like that is very healthy for an economy like Montenegro, because it is more reliable; less fragile than that of international tourism which can easily dwindle say during a credit crunch, or flu scare.

Let's hope the new found good relations materialise to the benefit of both economies.