Porto Montengro in Montenegro's Bay of Kotor. Masterplanned and designed by ReardonSmith Architects, the town has been imagined as a modern version of the centuries-old villages that dot the coastline. Image courtesy of ReardonSmith Architects
Montenegro’s economy declined by 5.7% in 2009, but now things are on the turn with new investment in the Bay of Kotor and the coastal town of Tivat
Until recently, the tiny mountainous country of Montenegro on the Balkan Peninsula would not have sprung to mind as a glittering Mediterranean playground for the super rich. It is, after all, one of Europe’s more cash-strapped countries, with GDP per capita decreasing from $10,500 in 2008 to $9,900 in 2010. But this newly independent nation has pinned its hopes of economic revival on tourism. With only 650,000 inhabitants, it is already attracting 1.2 million global tourists a year.
Bordered by five countries — Serbia, Bosnia Herzegovina, Kosovo, Croatia and Albania — it has 182km of stunning Adriatic coastline. Its climate is clement, its environment largely unspoilt, and, with towns such as Kotor, it has a rich cultural heritage.
Foreign investment in tourism came with the dissolution of a loose political union between Serbia and Montenegro in 2006, and was further encouraged by the privatisation of much of Montenegro’s financial sector. Suddenly there was a near frenzy of speculative real estate development.
But in 2008, when the global financial crisis hit, much planned investment came to an abrupt halt. Montenegro’s economy declined by 5.7% in 2009 and by 1.8% in 2010.
Now things are once again on the turn. During the first half of 2011, the economy grew at a rate of 2%, with a new wave of development focused on the stretch of coastline in the south-west of the country.
The Bay of Kotor is a Unesco World Heritage Site and the largest natural harbour in the eastern Mediterranean. Further along the coastline are Tivat and the old walled town of Budva.
Recent high-profile projects in this region include Reardon Smith’s Porto Montenegro, a luxury yacht marina created from the former Yugoslav naval shipyard near Tivat. The first phase of this $780 million development was completed in the summer of 2010, with the inclusion of 185 berths and one completed residential complex. An additional 465 berths, together with a community of luxury apartments, restaurants and a hotel, are also being planned for the site.
Orascom Development Holding AG plans to build a $1.36 billion integrated resort town on Lustica Peninsula, 20km west of Tivat. It will feature a range of hotels, two marinas, 1,600 apartments, 750 villas, schools, extensive retail space and sports facilities on a 6.8 million sqm site. The first phase is scheduled to open at the end of 2013.
One of Montenegro’s most iconic locations has been renovated. In the 1950s, Sveti Stefan was the island resort for movie stars, and Amanresorts has restored the original stone buildings as luxury accommodation.
So it seems that despite the turbulence of the post-independence years, and the global recession, Montenegro is managing to steady its economy and embark on a new era as Europe’s latest holiday destination of choice.
Margreet Papamichael is a senior economist with Aecom Europe
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