Montenegro, lying adjacent to Croatia and opposite Italy on the beautiful Adriatic Sea, is the latest overseas destination wooing British buyers with tales of cheap house prices and unspoiled beauty. "Geographically, Montenegro is home to southern Europe's only fjord and much of the country is mountainous," says Stewart Andersen, editor of overseas property magazine OPTV. "Compared to Croatia, there's a distinct feeling that Montenegro is under-developed but catching up fast."

Montenegro's nearest international airport is in Dubrovnik, Croatia, for daily flights from the UK. The onward journey by road to the border is then about 30 kilometres. "It's an odd fact," says Andersen, "that while Croatia is heading rapidly into the EU, it has retained its own currency, while Montenegro, which is not a member as yet, has already adopted the Euro."

Montenegro's implementation of the common currency is a clear indication of its modernising government's desire to be seen as a progressive European country. Its policies appear to be working: it broke away from neighbour Serbia last year and has been nominated by the influential WTTC as Europe's best prospect for tourism growth. Justin Figgins, Head of Rightmove Overseas says: "Montenegro is now undergoing a time of change and economic growth after its hardship during the Balkan Conflict of the 1990s. Already receiving generous EU funding, the country is a candidate for EU accession, which is enabling it to overhaul its ailing infrastructure.

"We have already seen how EU membership can bring about a massive growth in the overseas property market with Bulgaria and Romania and Montenegro is set to follow suit. These factors have led to resurgence in tourism to the destination, which in turn has created the conditions for an emerging property market."

The most popular areas for foreign buyers currently are those such as Budva, Herceg Novi, Kotor and Sveti Stefan - the last two UNESCO World Heritage sites - stretched along the 290km-long Montenegrin littoral. Properties here are available at prices far below those found in neighbouring Croatia and other Balkan markets. An apartment can be bought for £50,000 and a three-bedroom waterfront villa from £125,000.

Currently much of the property for sale is older stock, but new developments are beginning to appear along the coast. Chris Howard of 4:Property, says: "Plans are already taking place in Montenegro for the development of marinas and associated property in the near future, with growth expected to be similar to that of Croatia. There would of course be further gains if Montenegro were to join the EU, with strong capital appreciation likely and a rapidly growing rental market."

Such is 4:Property's confidence in Montenegro's future it is offering investors the opportunity to invest directly to complete the site purchase, construction and sale of residential properties in a portfolio of small to medium sites on the coast. The portfolio expects to give investors a very healthy return of at least 35% per year on their investment over a two-year period. It's optimism is an indication that while Montenegro may be new to many foreign buyers it's set to catch on fast.

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