Good value on the coast in Montenegro

Investing in the Balkans: Rents are modest but capital growth good in a place where land is cheap and the views stunning - Connemara without the damp, says Kevin O'Connor

MANY in the property game think that Montenegro will see capital appreciation of around 20 per cent per annum. The country is reaping the benefits of having played the waiting game during the Balkan civil wars of the 1990s which devastated neighbouring territories.

While Serbia, Croatia and other enclaves paid a high price for their involvement, Montenegro became the Switzerland of the conflict, providing haven for both peacekeepers and warring factions.

If you believe local rumour, it also provided, not far from the Croatian border, a hotel where the secret negotiators of the Great Powers met the warring generals in corridors which today carry no plaques to the haggling and threatening which brought peace - and the beginnings of stability - to the region.

Out of the stability came , gradually, the beginnings of prosperity.

By consent of the Great Powers and in response to its own desires, Montenegro is being rewarded with EU approval for membership.

The euro is already the cash currency, tourism is growing at a faster rate than in most former Communist satellites and the pristine fjords and lakes are being surveyed by international hotel and leisure groups .

By Irish standards, land is cheap, the climate healthier, the views stunning . Think Connemara without the damp.

Never mind that its system of laws is - on paper - chaotic. Never mind that its border posts with Albania and Croatia smack of the comic, veering away from the tragic. Montenegro works.

And because it works as a civic community, the property developers are moving in, zoning their plans and buying their plots

For instance, above Tivat Bay, about 5 km from the Kotor Old Town, building plots are available from about €85,000 on land sufficient to construct a villa, pool and terrace. Building costs are about €450 per sq m (€42 per sq ft), about a fifth of Irish costs.

Kotor Old Town is a UNESCO-protected structure, which means, in theory at least, that its medieval houses and flagged streets and squares will stay at they are.

That's the view of a Dublin family I met, Brian and Rita Anderson from Raheny, who came on holiday to Croatia two years ago and were smitten by the region.

They fell in love with a village in Montenegro, got to know the people and now use their house outside Kotor as a holiday home, travelling out four or five times a year with their teenage girls.

" We paid €78,000 for an old stone house with two storeys and an attic," recalls Brian Anderson. Rita reckons the prices have "zoomed up" since their two years of ownership.

They feel the unease of the villagers at the rapid pace of prices and change. "This was a very settled community and the older people are fearful - but it's happening everywhere."

The unease may - or may not be - justified. As a place to live and to bring up families or to have holidays, Montenegro is among the most safe and most pleasant of the Balkan states.

As a traveller with instincts for the dark side, I feel safer in a late night stroll through the squares of Kotor than I do around the streets of Dublin or Limerick.

In those cities, I watch my back, avoid the boozy horseplay of youths that can so easily turn psychotic. Here on an October evening, I stroll through squares of open-air restaurants, dawdle by family groupings, safe in mellow evenings of conviviality.

Of course, the mild climate helps (20 degrees in October), as does the cleanliness of the urban scene.

Walking on granite flags half a millennium old, under façades left by Italian colonisers who ramparted their solidly-blocked buildings over water, one feels a little, well, Venice without the smells. Mostly though, one feels that out of conflict comes peace.

Yes - it has a touch of fairyland. The classically baroque apartments in Kotor Old Town are out of Balkan fairytales, with their stone friezes outside and long high windows looking onto the main square.

One second-hand apartment for sale through Simple Overseas Properties has eight large rooms, divided by a corridor. Though modernised to meet the market, it's not up to Irish standards of interior finish. But the old plank flooring is intact, as are the high ceilings.

At 139sq m (1,500sq ft) of living space, it's about twice the size of the typical two-bedroom apartment here and selling for €360,000. At that price, one would have to go and live there - not a bad idea for someone who does not care about costs and wants only change and atmosphere.

Or seeks unknowingly, a place to die in Mittel Europe, surrounded by ghosts and water.

For water is the key here to property sales. The fjords and estuaries bite deep into the tiny land mass that is Montenegro, the vast and deep lakes make for stupendous views.

These - and the civic life and cheap sites - have brought Irish and British property enterepeneurs.

Karl Morris's company, Simple Overseas Properties, is selling the properties already mentioned, and has several other developments on offer: seven apartments in a development called Dobrota, overlooking the fjord in Boka Kotoska, on Kotor Bay and ranging in size from 50 to 120sq m (538-1,291sq ft) cost from €110,000.

Three-bedroom apartments in a scheme in Prcanj on the fjord of Kotor are 102sq m (1,100sq ft) plus 56sq m (600sq ft) of terrace cost about €230,000. They come with an outdoor Jacuzzi, which in this climate seems redundant.

Why sit in a tub on your terrace, when you can swim in the Adriatic a few metres away?

Maybe its just another fetish of modernity, like the casinos in the hotels and the beginning of a property boom.

• Property laws in Montenegro are not clear, in the Irish/British sense of a legal, clear title whose provenance is traceable, largely because of the country's Communist past. But the government is composing a system of new title and laws. Stamp duty is 2 per cent

• There are regular flights from Dublin and London to Tivat airport near Kotor from May to September; alternatively there are daily flights from Ireland to Dubrovnik (a €75 taxi drive away from Kotor).

• www.simpleoverseas.com