International Information Centre for Balkan Studies

Emirates Scrap Luxury Resort Plan in Montenegro




A major UAE investor has pulled out of deal worth 300 million euro to build a luxury resort near Budva, dealing a serious blow to the Montenegrin government

The UAE-based company Royal Group has pulled out of a project to build a luxury resort in the Dubovica bay in the coastal towns of Budva and Bar after failing to reach a deal on a long-term lease of a beach.

The project was due to start in June and envisaged the construction of a five-star hotel in a cove on the sandy "Queen's Beach" ("Kraljičina plaže"), and was worth about 300 million euro. 

The Tourism Ministry confirmed on Wednesday that the company had dropped out of the deal, adding that the government still hoped to convince the investors to change their minds.

'We will see what else can be done. The ministry and the government will try to keep them in Montenegro to avoid huge financial losses," spokesman Marko Canovic told the daily Dnevne novine.

Reports said the company, linked to the United Arab Emirates' royal family, pulled out of the deal after failing to agree on a price for the lease of the Queen's beach.

Royal Group was the only bidder for the 423,700-square-metre site between the coastal towns of Budva and Bar offered in a government tender in early 2013.

The company offered 21.2 million euro for the 90-year lease to one of the most exclusive locations on the Montenegrin coast, planning to complete the project in eight years.

Although the government led by the Prime Minister Milo Djukanovic presented the project as a priority for the economy, the junior ruling party, the Social Democratic Party,SDP, demanded better conditions than those offered by investors from the emirates.

The dispute over the beach caused sharp conflicts within the ruling coalition in recent months, including allegations of corruption.

Montenegrin MPs were to vote on the government's proposal this spring. As the opposition had also voiced opposition to the plan to lease the famous beach, it was far from certain that the government's proposal would get a majority.

On Tuesday, the mayors of Budva and Bar, Lazar Radjenovic and Zoran Srzentic, said it would do great damage to the country if the Abu Dhabi company were to scrap the investment. "This is also a very bad message for other investors," Srzentic said.

Economic analysts agreed that Royal Group's decision will have consequences for the economy. Predrag Drecun said it would negatively affect both GDP and jobs.

However, the watchdog organisation MANS on Wednesday welcomed the decision of the foreign investors, saying it had prevented a "harmful" deal, "bearing in mind that the contract had all the characteristics of classic corrupt agreement".

Dusica Tomovic

Source: http://www.balkaninsight.com/en/article/arabs-scraps-luxury-resort-plan-in-montenegro





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