Should the Government of Montenegro decide to grant a long-term lease of Velika Plaža to an investor from the United Arab Emirates (UAE), the expropriation of surrounding land will likely encompass properties owned, directly or through associated entities, by Prva Banka, Zetagradnja, Pro-Cons, and Vile Oliva. According to BIRN’s report, this conclusion stems from their investigation.

Based on official figures from the Real Estate Administration, analyzed by BIRN, the hinterland of Velika Plaza spans approximately 2,070 hectares, with the state or state-owned enterprises holding around 22 percent of this area. The state itself possesses 360 hectares, while the state-run hotel and tourist company (HTP) “Ulcinjska rivijera” manages about 110 hectares along with around 43,000 square meters of commercial and residential structures, which includes a nudist settlement on Ada Bojana.

Private entities control roughly 54 hectares of land, equating to about three percent of the total area of Velika Plaza’s hinterland, while the remaining 75 percent of the plots are owned by numerous individuals.

On March 28, Prime Minister Milojko Spajić signed an Agreement on the Development of Tourism and Real Estate, which aims to facilitate project developments in the southern region and ski resorts in northern Montenegro through tourism and mixed-use real estate initiatives. This agreement allows for the projects to bypass public procurement regulations, prompting civil society leaders and legal experts to express concerns regarding transparency and compliance with Montenegrin law.

Prior to the agreement’s signing, Spajić revealed that the UAE is eager to invest 30 billion through Emmar Mohamed Alabar’s company to develop a tourist complex on Velika Plaza in Ulcinj, as highlighted by BIRN.

Alabar is already involved in regional projects such as Belgrade Waterfront, Sunčani Hvar in Croatia, and Yachts and Marina in Durres, Albania—all projects criticized for their opaque practices and for sidelining local communities and experts from the planning process.

Before finalizing the agreement with the UAE, Alabbar’s company Eagle Hills Montenegro secured a four-year lease on nine of Velika Plaza’s 19 beaches, with a combined bid amounting to 1.85 million euros.

Mladen Grgić, a teaching associate at the Faculty of Political Sciences, cautions that imposing a solution without consulting local authorities and landowners is likely to fail, pointing out that such an approach might lead to project delays and potential international arbitration. Grgić served as an economic advisor to Montenegrin President Jakov Milatović.

“The government’s initiation of this project reflects a significant misunderstanding of current regulations and past experiences. There are individuals within the administration who are well-versed in the implementation of such projects and the associated risks for the state. Sadly, it appears no one sought their advice,” Grgić remarked to BIRN.

Residents of Ulcinj and local government representatives have protested against the agreement, demanding transparency and environmental safeguards. Meanwhile, President Jakov Milatović and parts of the civil sector urged the Montenegrin Parliament to defer ratification of the agreement until the European Commission’s stance is clarified.

In response, European Commissioner for Enlargement Marta Koss commented to the European Newsroom that EU candidate countries are entitled to choose their investors, but the EU is closely monitoring the situation. Prime Minister Milojko Spajić subsequently asked Parliament for immediate ratification of the agreement.

The landowners include Prva Banka and the firms of Burić, Rakčević, and Radović.

Official data analyzed by BIRN reveals that the Closed Investment Fund (ZIF) Trend possesses a total of 160 square meters of land in Velika Plaza’s hinterland, categorized in property records as forests, pastures, and meadows. Financial statements submitted by ZIF Trend to the Montenegrin Tax Administration in December 2023 estimate this land’s value to be 8.93 million euros.

“The Fund’s initial future plans for its assets include investments and developments at the ‘Velika Plaza’ location in Ulcinj, pending the adoption of a state location study for the area,” states the management report.

The Central Depository Agency of Montenegro (CDA) indicates that the majority shareholder of the Trend fund is the construction firm Zetagradnja, owned by businessman Blagota Radović, who holds a 63 percent stake, while a similarly named company from Belgrade owns 5 percent. The closed-end investment fund Trend emerged from mass voucher privatization and is managed by Butterfly Finance, in which Zetagradnja holds full ownership.

The Real Estate Administration reports that the areas around Copacabana beach in Velika Plaza have plots totaling 62,701 square meters registered to the hotel tourism company (HTP) Vile Oliva, part-owned by Mirko and Žarko Rakčević. HTP Vile Olive also commands a significant share in the Dr. Simo Milošević Institute, owning 29 percent of it.

In the area surrounding Saranda beach, where Eagle Hills placed the highest bid in a Coastal Zone tender, Prva Banka, via its subsidiaries First Real Estate Management 1 and 2, owns land exceeding 23,000 square meters. Near the Bojana River in the Velika Plaza hinterland, Prva Banka holds land parcels totaling almost 48,000 square meters.

The largest stakeholder in Prva Banka is Aco Djukanovic, with 42.88 percent of shares, while the state-owned Elektroprivreda Crne Gore (EPCG) owns 19.28 percent. Notably, Aco Djukanovic is also the brother of former Prime Minister and President of Montenegro, Milo Djukanović.

Additionally, the company HoldCo East, focused on “consulting on business and other management,” possesses 57,000 square meters of land in Velika Plaza’s hinterland. The Central Register of Business Entities (CRPS) lists APS Holding Cyprus LTD as the founder of HoldCo East. This entity, with just one employee, reported revenues exceeding 2 million in 2023, alongside profits surpassing 2 million.

According to the independent daily “Vijesti,” in July 2021, HoldCo East claimed 20 square meters of land from Global Montenegro, a company co-owned by Milo Đukanović and Vuk Rajković, assuming millions of euros in debts previously held by Đukanović’s company.

The Real Estate Administration reveals that Pro-Cons, which was formerly known as Normal Company, owns construction plots totaling 76,000 square meters. In August 2022, the Government of Montenegro authorized the company to establish a tourist complex in Velika Plaza’s hinterland. Podgorica businessman Žarko Burić was recorded as the owner of the company until December 2023, when he equally transferred his shares to Žana, Balša, and Nikola Burić.

Close to Velika Plaza’s entrance, near Port Milena, the Argos company has registered 70,000 square meters of land alongside 8,036 square meters of commercial facilities, which include the Otrant hotel and associated services. Official documents indicate that this land is mortgaged to the Montenegrin Commercial Bank (CKB) due to a loan valid until 2030.

Last April, co-owners Edmond Palokaj and Rezart Mavrić laid the groundwork for the Otrant Reef Resort tourist complex, which will consist of villas, hotels, and renovations of the Otrant hotel. They did not respond to BIRN’s inquiries regarding how the leasing of Velika Plaza to a UAE investor might influence their project.

In addition to their holdings, the company Capital Estate owns 87,576 square meters and 70 commercial properties. This site is slated for the construction of the luxury Porta Rai Beachfront Hotel & Residences, collaboratively developed by Capital Estate and the international hotel chain Karisma Hotels.

The Porta Rai company informed BIRN that the main contractor selection process is nearing conclusion, with work commencement planned for the end of April.

“We’re entirely focused on our strategic objectives, and any credible investor investing in Velika Plaza would only benefit the destination’s growth. In that regard, we support all investors choosing to invest in Montenegro.”

Both the Porta Rai Beachfront Hotel & Residences and Otrant Reef Resort projects are being executed on land that once belonged to the Ulcinj Riviera Hotel and Tourism Company, which manages around 110 hectares and approximately 43 thousand square meters of commercial and residential properties, including the nudist settlement on Ada, which is not part of Velika Plaza’s hinterland.

In 2017, the Ulcinj Riviera signed a 30-year lease with the Karisma Hotels Adriatic Montenegro consortium for the Olympic and Bellevue hotels on Velika Plaza, including certain auxiliary facilities like the Bellevue Tennis Club and 122,214 square meters of state land.

Public interest constraints on property rights

Data from the Real Estate Administration indicates that nearly 75 percent of the land in Velika Plaza’s hinterland is privately owned. The state has plots amounting to 360 hectares located in the hinterlands of Tropicana, Noki Beach, Habana, Saranda, and Hill Beach, among other areas, according to BIRN.

The Law on State Property stipulates that State or municipal real estate can be leased for up to 30 years by decision of the Government or a municipal body, and up to 90 years via a resolution from Montenegro’s Parliament, proposed by the Government. Prime Minister Milojko Spajić remarked on April 10 that securing a 90-year lease “is not excessive” and “indicates a patient investor with a long-term vision.”

Article 39 of the Law on State Property permits an investor-lessee to transfer ownership of facilities constructed on leased land intended for hotel and tourism complexes. Mladen Grgić cautions that this could be viewed as an indirect sale of the land, even if officially documented as a lease.

“Further, Article 40, paragraph 4 allows for exemptions from the tender process in these scenarios, facilitating the transfer of land beneath the facility as well. While there have been attempts to expand such provisions beyond tourism, these proposals were not passed by Parliament,” Grgić added.

“The agreement with the UAE effectively permits implementation without a public tender, while the law provides sufficient latitude for the sale of residential units,” he emphasized.

Vanja Ćalović Marković, Executive Director of the Network for the Affirmation of the Non-Governmental Sector (MANS), stated during a session of the Parliamentary Legislative Committee that the Agreement with the UAE allows for the appropriation of Montenegrin citizens’ property for selected project implementations without adhering to the legally mandated process or offering judicial recourse.

“Unlike in other properly functioning nations, public interest is not defined by a particular law, but rather ascertained through a blanket agreement on these projects… The constitution stipulates that property may only be taken for public interest, with the right to compensation,” argued Ćalović Marković.

According to Article 58 of Montenegro’s Constitution, no one may be deprived of or restricted in property rights unless in the name of public interest and with just compensation, while Article 10 of the Law on Property and Legal Relations affirms that public interest must be established by law or per legal guidelines. The agreement between Montenegro and the UAE asserts that the projects will be strategic and deemed public interest initiatives.

Asked by BIRN how procedures for possible expropriation of state and private land in Velika Plaza’s hinterland will be carried out, the Ministry of Spatial Planning and State Property indicated that these matters lie with the Government, which did not reply to BIRN’s queries.

The State Property Administration informed BIRN that they were unaware of the draft law ratifying the Agreement with the UAE or any subsequent regulations that would apply in this regard.

“Should the law get passed and project implementation commence, the State Property Administration will respond as per its responsibilities and legal authority,” they stated.

Mladen Grgić warned that in certain projects, the state is additionally bound to expropriate private land, indicating that this is a lengthy process.

“These procedures can often take a decade, and in various cases, segments of the project have stalled due to difficulties in finalizing land acquisition. In certain zones, illegal constructions complicate the lease scope, to which the state has often responded sluggishly and ineffectively,” argued Grgić.

When BIRN asked Eagle Hills Group about the Velika Plaza project, they responded that they are dedicated to adhering to local regulations, guidelines, and stakeholder engagement in all territories where they operate.

The state bears substantial infrastructure costs

The agreement mandates that the state will assist the investor with infrastructure development, secure necessary permits, and ensure preparation of essential planning documents in collaboration with the prospective investor. Grgić posits that the infrastructure development costs could nearly match the investment’s value.

“To realize the proposed projects at Velika Plaza, essential infrastructure like the Podgorica-Ulcinj expressway, extensive regional water supply systems, sewage networks, and enhanced electricity network capacity must be constructed. Without local government approval, execution is unlikely, as a portion of the infrastructure falls under their jurisdiction,” Grgić concluded.

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