The Montenegrin Ministry of Spatial Planning, Urbanism and State Property (MDUP) has reaffirmed that Adriatic Properties is legally entitled to proceed with the construction of the Kraljičina Plaža/Janu hotel project in Miločer Park. This development is part of a contentious investment scenario linked to the long-closed Sveti Stefan luxury resort complex, which has become a focal point in ongoing negotiations regarding its future.
This clarification highlights the unfinished hotel project as part of a broader redevelopment agreement associated with the lease of Sveti Stefan, Villa Miločer, and other coastal assets managed by Adriatic Properties under a long-term concession with the Montenegrin government. Officials assert that the investor retains rights to complete construction that has already received approval through existing permits and adheres to previously authorized dimensions.
The ministry’s position comes amid heightened political and public scrutiny concerning construction activities in Miločer Park, recognized as one of Montenegro’s most valuable protected coastal landscapes. Environmental advocates, local residents, and opposition politicians have voiced concerns that further development could irreversibly alter the cultural and natural integrity of the area surrounding Sveti Stefan.
In response, government officials are making a distinction between “new development” and the continuation of previously approved construction activities. Under a draft settlement framework negotiated between the state and Adriatic Properties, authorities maintain that no additional apartments or expanded construction areas will be allowed beyond what was authorized through earlier building permits.
This issue is pivotal in addressing a protracted arbitration dispute related to Sveti Stefan. The luxury island resort and Villa Miločer have remained closed for several tourist seasons due to conflicts among the government, local communities, and Adriatic Properties, which operates in partnership with Aman Resorts. The ongoing closure has emerged as one of Montenegro’s most significant tourism and investment controversies, impacting both economic performance and the country’s reputation in luxury tourism.
Earlier this year, Montenegro’s government approved a settlement framework aimed at reopening the Aman-operated resort complex before the peak summer season. This agreement reportedly encompasses the withdrawal of mutual arbitration claims, revised lease conditions, increased concession payments, and commitments regarding public access to beaches and pathways in the Miločer area.
The unfinished hotel project holds substantial financial and political importance as it forms part of Montenegro’s broader narrative promoting premium tourism investments internationally. Originally intended to redevelop the former Kraljičina Plaža hotel into an ultra-luxury hospitality complex integrated within the Aman/Sveti Stefan ecosystem, it reflects Montenegro’s ambitions in high-end tourism.
However, critics argue that both the scale and design of this development exceed what should be permissible within a protected heritage zone. Opposition representatives and civic groups have accused past governments of granting excessive construction rights within Miločer Park while demanding full transparency regarding all contractual obligations and planning approvals associated with Adriatic Properties.
The dispute carries significant financial implications for Montenegro. Ongoing legal proceedings and arbitration claims related to Sveti Stefan’s closure reportedly involve compensation demands nearing €100 million. Concurrently, state-linked hotel companies are facing unpaid lease receivables and tax disputes tied to suspended operations.
For Montenegro, this situation transcends a single hotel complex; it serves as a critical test of how effectively the country can balance foreign investment protection with heritage preservation, environmental considerations, and political accountability within its luxury coastal development framework.
The government’s current focus appears to be on reinstating tourism operations while managing tensions surrounding construction rights. Successfully navigating this balance will likely influence not only the reopening of Sveti Stefan but also shape how future international investors perceive regulatory and political risks across Montenegro’s high-end tourism sector.
