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FIRST QUARTER
2010
Market overview
The winter months have provided very few clues
as to the likely health of Montenegro’s property
market when it emerges from its seasonal lull. As
we’ve described previously, transaction activity
has been running at a fraction of pre-crisis levels
and fund adviser Ultimate Montenegro reports no
change in the number of enquiries and viewings
for the small number of fund properties currently
being marketed.
Against this uninspiring backdrop, the successful sale
of
the
Fund’s
industrial
land
asset
near
Tivat
airport comes as a most welcome surprise. Equally
welcome was the consideration for which the land
was sold, with the gross price exceeding the yearend
valuation
figure
from
CB
Richard
Ellis
by
a
meaningful margin.
In terms of activity elsewhere, there is evidence to suggest
a pick-up in interest for off-plan luxury development
properties. All of the apartments within phase two of Porto
Montenegro have now been sold at a price of €5,000 per
m², compared with €4,000 to €4,500 for those in stage
one, which are due to be completed in June. Phase three
sales are now underway at €6,000 per m².
Economy
Though as yet un-released, Montenegro’s full year GDP
data is already the topic of heated debate following an
IMF report suggesting that the country’s economy shrank
by 7% in 2009. If accurate, this represents the worst
performance among Balkan nations. This was denied
both swiftly and emphatically by government sources,
March saw another significant announcement of an
who reiterated the official Central Bank forecast of a
investment in the Montenegrin tourist industry, with the
4.3% decline (in line with other external agencies).
announcement that Qatari Diar had purchased the Hotel
Irrespective of that particular outcome, preliminary GDP
Plavi Horizont on the Lustica peninsula. The buyer is a
figures (+0.5%) for the first two months of 2010 suggest
subsidiary of the Qatar Investment Authority and plans
that the economy is much improved and on track to
to develop a €180m upscale tourist resort in partnership
deliver growth within the range of improved forecasts of
with Tivat-based HTP Primorje on the site of the former
0.4% (EBRD) and 0.5% (Central Bank).
Russian-owned hotel.
Official figures for Foreign Direct Investment portray a
Elsewhere, work has resumed on the part-built Mirax
somewhat distorted picture during 2009, with a 65% gain
project at Cape Zavala following a seven-month hiatus
in net inflows to €910.9m. With some 45% of the total
caused by financial difficulties at the company’s Russian
sum represented by the sale and recapitalisation of
parent.
electricity generating utility EPCG and a further 10%
According to press releases, some 60% of the
40 villas currently under construction have been pre-
by injections into foreign-owned banks, “like for
sold, while work on the two hotels scheduled for the
like” activity was far more subdued.
development’s second phase has yet to begin.
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from
www.montenegro.gg
FIRST QUARTER
2010
The one-off nature of the favourable impact from last
Meanwhile, by the end of April the government is expected
year’s sale of EPCG also leaves a question mark over the
to adopt a draft special plan that will lead to investments
need to bolster the government’s finances with a loan from
in hotel accommodation, ski infrastructure and other
the IMF. In spite of the inevitable increase in borrowing
commercial ventures totalling €800m to €1bn across
costs resulting from Standard & Poor’s downgrade of
five mountain resorts in the Bjelasica region, including
Montenegro’s long-term credit rating, in late March, from
Kolasin, where the Fund owns a number of sizeable (by
BB+ to BB, Finance Ministry officials appear to remain
area) assets.
committed to the country’s first ever Eurobond issue, at
the time of writing at least. Should this go ahead, it is
Property Portfolio
anticipated that the €150 - €200m raised from the issue
Save for the aforementioned sale of the Fund’s industrial
would significantly reduce the need for a full formal IMF
land, there were no transactions to report during
loan arrangement, with a standby facility the most likely
the quarter.
route taken.
Similarly, after the excitement generated by the consent
Finally, as if further confirmation were needed, figures
received on Budva Bay View in early January (detailed in
from the Ministry of Finance have provided a graphic
our last quarterly bulletin), there is no further news to
illustration of the downturn in Montenegro’s property
report on the planning front. Adviser Ultimate Montenegro
market, with Property Transfer Tax revenues for the three
remains confident that the Fund is on track to benefit from
main coastal regions of Kotor, Budva and Herzeg Novi
significant permissions during the remainder of the year
down 50% for 2009.
as a number of strategic assets make their way through
Tourism
the final stages of the planning process.
After an essentially flat year in 2009, as reflected in visitor
numbers (marginally up), total overnight stays (marginally
down) and overall tourism revenue (unchanged), there is
anecdotal evidence at this very early stage pointing to
an improved outlook for tourism in 2010. This includes
reports of a “significant increase” in the number of the
scheduled cruise ship visits to Kotor over the course of the
year. In a similar vein, Montenegro Airlines reported that
passenger numbers from Paris had doubled during the
first twelve weeks of this year, while the National Tourism
Organisation announced that advance booking by French
visitors were “substantially higher”.
www.montenegro.gg
FIRST QUARTER
2010
200
180
160
140
120
Apr-10
Jan-10
Jul-09
Oct-09
Jan-09
Apr-09
Jul-08
Oct-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Jan-06
Apr-06
100
Historic Prices and Performance
Year
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
2005
Dec
% YTD
% since
inception
100.99
N/A
N/A
2006
101.53
101.39
105.59
105.56
105.56
115.86
116.83
117.81
125.08
130.63
131.07
150.01
48.54
50.01
2007
151.21
151.89
159.85
160.17
162.86
164.76
165.21
166.10
168.63
186.38
187.46
187.74
25.15
87.74
2008
188.56
188.94
189.83
191.43
192.13
193.19
192.95
192.13
191.37
190.40
194.00
151.65
-19.22
51.65
2009
150.57
149.63
123.40
117.01
116.65
115.08
114.32
114.18
124.74
124.07
122.87
114.91
-24.23
14.91
2010
115.59
115.41
114.74
-0.14
14.74
MARCH 2010
Administrator:
Net Asset Value:
€ 28,247,032.63
NAV per share:
€ 114.7416
Sedol:
B0T1MF2
ISIN:
GB00B0T1MF27
(With effect: 01/11/08)
Manager:
Legis Fund Services Limited
PO Box 186
1 Le Marchant Street
St Peter Port
Guernsey, GY1 4HP
Argyll Investment Services
Limited
PO Box 354
Suite 4, Weighbridge House
Lower Pollet, St Peter Port
Guernsey, GY1 3XF
Tel: +44 1481 726034
Fax: +44 1481 712167
Tel: +44 1481 740044
Another successful investment product from
Important Information
The information contained within this report is for shareholders of Montenegro Investments Limited (“the Company”). It is not intended as an offer or solicitation to buy
or sell investments. The information provided is believed to be correct and, where applicable, was obtained from sources believed to be reliable, however accuracy or
completeness cannot be guaranteed.Neither Argyll Investment Services Limited (“Argyll”) nor the Company nor its affiliates can be held responsible for any errors or
omissions contained within this report or for any consequences arising from the use of this report or the information contained within it. The contents of this report
are subject to change without notice.
Past performance is not a guide to future performance. Quoted target returns are not guaranteed. Different funds have different levels of risk and
changes in currency exchange rates may have an adverse effect on the value, price or income of investments. The contents of this report may not
be reproduced without the permission of the directors of the Company and may not be distributed where promotion is unauthorised. Argyll and/
or its connected persons may have used some or all of the material contained in this report (including the research or analysis on which it is
based), before publication. Argyll is licensed and regulated as an investment manager by the Guernsey Financial Services Commission
under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. The Company is registered in Guernsey and
is licensed by the Guernsey Financial Services Commission under the Control of Borrowing (Bailiwick of Guernsey) Ordinance, 1959,
as amended. Company Registration Number: 36763
www.montenegro.gg