In the event that the Government of Montenegro grants a long-term lease of Velika Plaža to an investor from the United Arab Emirates (UAE), the expropriation of land in its hinterland would also include plots owned, directly or through related companies, by Prva Banka, Zetagradnja, Pro-Cons and Vile Oliva. BIRN reports, stating that this is what their research has shown.
According to official data from the Real Estate Administration, analyzed by BIRN, the hinterland of Velika Plaza covers an area of 2,07 thousand hectares, of which the state or state-owned companies own about 22 percent of the total area. The state owns 360 hectares of land, while the state-owned hotel and tourist company (HTP) "Ulcinjska rivijera" manages about 110 hectares of land and about 43 thousand square meters of business and residential buildings, including a nudist settlement on Ada Bojana.
Private companies own about 54 hectares of land, which is about three percent of the total area of the Velika Plaza hinterland, while the remaining 75 percent of the plots in that area belong to dozens of individuals.
Prime Minister Milojko Spajić signed the Agreement on the Development of Tourism and Real Estate on March 28, which envisages the development of projects in the south and ski resorts in the north of Montenegro through the development of tourism and mixed-use real estate. The agreement stipulates that the implementation of the projects will be exempt from public procurement legislation, which has led civil society representatives and legal experts to warn of lack of transparency and inconsistency with Montenegrin legislation.
On the eve of the signing of the agreement, Spajić stated that the UAE is willing to invest 30 billion through the company of Emmar Mohamed Alabar in the construction of a tourist complex on Velika Plaza in Ulcinj, BIRN reports.
Alabar is present in the region with the projects Belgrade on the Water, Sunčani Hvar in Croatia, and Yachts and Marina in the port of Durres in Albania - projects that have been criticized for their lack of transparency and exclusion of citizens and the professional public from the planning process.
Before signing the agreement with the UAE, Alabbar's company Eagle Hills Montenegro received a four-year lease on nine of the 19 beaches on Velika Plaza, for a total bid of 1,85 million euros.
Mladen Grgić, a teaching associate at the Faculty of Political Sciences, believes that imposing a solution without considering local governments and landowners is doomed to failure, warning that such an approach leads to the project being blocked and possible international arbitration. Grgić is a former economic advisor to Montenegrin President Jakov Milatović.
"The way the government launched this initiative shows a serious misunderstanding of the current regulations and previous experiences. There are people in the administration who know very well how such projects should be implemented and what the potential risks are for the state. The problem is that, apparently, no one asked them anything," Grgić told BIRN.
Citizens of Ulcinj and the local government organized protests in that city over the agreement and called for transparency and environmental protection, while the President of Montenegro Jakov Milatović and part of the civil sector called on the Parliament of Montenegro to postpone the ratification of the agreement between the Government of Montenegro and the UAE and to await the position of the European Commission.
European Commissioner for Enlargement Marta Koss then told the European Newsroom that EU candidate countries “can choose their investors, but we are closely monitoring developments.” Prime Minister Milojko Spajić yesterday asked the Parliament to ratify the agreement at today's parliamentary session.
The owners of the land are Prva Banka and the companies of Burić, Rakčević and Radović.
Official data, analyzed by BIRN, showed that the Closed Investment Fund (ZIF) Trend owns a total of 160 square meters of land in the hinterland of Velika Plaza, which is registered in the property registers as forests, pastures and meadows. The notes to the financial statements submitted by ZIF Trend to the Tax Administration of Montenegro in December 2023 state that the value of this land was 8,93 million euros.
"The Fund's initial future plans for the assets it owns include (...) investments and development of the 'Velika plaza' location in Ulcinj, after the adoption of a state location study for the said area," the management report states.
According to the Central Depository Agency of Montenegro (CDA), the largest shareholder in the Trend fund is the construction company Zetagradnja, owned by businessman Blagota Radović. Zetagradnja has a 63 percent stake in the fund, while a company of the same name registered in Belgrade has a 5 percent stake. The closed-end investment fund Trend, which was created in the process of mass voucher privatization, is managed by the Butterfly Finance fund, in which Zetagradnja is the sole shareholder.
According to data from the Real Estate Administration, in the hinterland of the Copacabana beach on Velika Plaza, there are plots with a total area of 62.701 square meters registered to the hotel tourism company (HTP) Vile Oliva, co-owned by Mirko and Žarko Rakčević. HTP Vile Olive is the largest shareholder in the Dr Simo Milošević Institute with 29 percent.
In the hinterland of the Saranda beach, for which Eagle Hills submitted the highest bid in the Coastal Zone tender, Prva Banka, through its companies First Real Estate Management 1 and 2, owns over 23 thousand square meters of land. In the hinterland of Velika Plaza by the Bojana River in the cadastral municipalities of Gornji Štoj and Reč, Prva Banka has registered plots of almost 48 thousand square meters.
The largest shareholder of Prva Banka is Aco Djukanovic, who owns 42,88 percent of the shares, while the state-owned company Elektroprivreda Crne Gore (EPCG) owns 19,28 percent of the shares. Aco Djukanovic is the brother of former Prime Minister and President of Montenegro Milo Djukanovic.
The company HoldCo East, whose activity code is “consulting activities related to business and other management”, owns 57 thousand square meters of land in the hinterland of Velika Plaza. According to the Central Register of Business Entities (CRPS), the founder of the company HoldCo East is the company APS Holding Cyprus LTD. The company with only one registered employee had revenues of over 2023 million in 10 with a profit of over two million.
The independent daily "Vijesti" reported last July that in September 2021, HoldCo East registered ownership of 20 square meters of land at the foot of Košljun Hill in Budva from Global Montenegro, co-owned by Milo Đukanović and Vuk Rajković. HoldCo East then took over the millions of euros in credit obligations that Đukanović's company had.
According to the Real Estate Administration, the company Pro-Cons, formerly Normal Company, owns construction plots with a total area of 76 thousand square meters. In August 2022, the company received approval from the Government of Montenegro to build a tourist complex in the hinterland of Velika Plaza. Podgorica businessman Žarko Burić was listed as the owner of the company until December 2023, after which he transferred the entire share in equal parts to Žana, Balša and Nikola Burić.
At the very beginning of Velika Plaza, near Port Milena, the Argos company has registered 70 thousand square meters of land and 8.036 square meters of business premises, which includes the Otrant hotel with associated facilities. According to official data, the land is mortgaged by the Montenegrin Commercial Bank (CKB) due to a million-dollar loan valid until 2030.
Argos co-owners Edmond Palokaj and Rezart Mavrić laid the foundation stone for the construction of the Otrant Reef Rosort tourist complex last April, which would include the construction of villas, hotels and the reconstruction of the Otrant hotel. Palokaj and Mavrić did not respond to BIRN's question about how leasing Velika Plaza to an investor from the UAE might affect their project.
In addition to their plots, 87.576 square meters of land and 70 business buildings are owned by the company Capital Estate, which is owned by the Cypriot company Felixport Enterprises Limited. The construction of the luxury resort Porta Rai Beachfront Hotel & Residences is planned on that location, which is being jointly developed by Kapital Estate and the international hotel group Karisma Hotels.
The Porta Rai company told BIRN that the tender process for selecting the main contractor is in its final stages, and that the start of work is planned for the end of April.
"We are focused exclusively on our strategic goals and every new credible investor who decides to invest in Velika Plaza would only be a benefit for the development of the destination, and in that sense, we support all those investors who decide to invest in Montenegro."
Both the Porta Rai Beachfront Hotel & Residences and Otrant Reef Resort projects are being implemented on property that once belonged to the Ulcinj Riviera Hotel and Tourism Company. The Ulcinj Riviera includes approximately 110 hectares of land and approximately 43 square meters of commercial and residential buildings. This includes the nudist settlement on Ada, which is not located in the hinterland of Velika Plaza.
In 2017, the Ulcinj Riviera signed a 30-year long-term lease agreement with the Carisma Hotels Adriatic Montenegro consortium for the Olympic and Bellevue hotels on Velika Plaza, and certain supporting facilities such as the Bellevue Tennis Club, as well as 122.214 square meters of state-owned land, were also leased.
Public interest limits property rights
According to data from the Real Estate Administration, about 75 percent of the land in the hinterland of Velika Plaza is owned by individuals. The state owns plots with a total area of 360 hectares, which are located in the hinterland of the Tropicana, Noki Beach, Habana, Saranda and Hill Beach beaches, among others, BIRN reports.
The Law on State Property stipulates that real estate owned by the state or a municipality can be leased for up to 30 years by decision of the Government, or a municipal body, and up to 90 years by decision of the Parliament of Montenegro, at the proposal of the Government. Prime Minister Milojko Spajić stated on 10 April that granting a 90-year lease “is not too much” and “represents a patient investor with a long-term vision”.
Article 39 of the Law on State Property allows an investor-lessee to alienate a facility built on leased land intended for a hotel-tourist complex. Mladen Grgić warns that this means an indirect sale of the land, even though it is formally registered as a lease.
"Article 40, paragraph 4, additionally allows for the exemption of the tender procedure in these cases, in order to also alienate the land beneath the facility. Although there have been attempts to extend such provisions to sectors other than tourism, these proposals have not been adopted by the Parliament," claims Grgić.
"The agreement with the UAE de facto allows for implementation without a public tender, while the law allows sufficient latitude to sell residential units," he added.
Executive Director of the Network for the Affirmation of the Non-Governmental Sector (MANS), Vanja Ćalović Marković, said at a session of the Parliamentary Legislative Committee that the Agreement with the UAE provides for the seizure of property from citizens of Montenegro for the implementation of selected projects, without implementing the legally prescribed procedure and without the possibility of judicial protection.
"You do not determine the public interest with a special law, as is provided for in other normal countries, but rather you determine the public interest for these projects in a lump sum by agreement... The constitution says that when something is of public interest, you can take property and it has the right to compensation," said Ćalović Marković.
Article 58 of the Constitution of Montenegro stipulates that no one may be deprived or restricted of the right to property, unless required by public interest, with fair compensation, while Article 10 of the Law on Property and Legal Relations stipulates that public interest must be determined by law, or on the basis of law. The agreement between Montenegro and the UAE states, among other things, that the projects are considered strategic and represent projects of public interest.
When asked by BIRN how the procedures for the possible expropriation of state and private land in the hinterland of Velika Plaza would be implemented, the Ministry of Spatial Planning and State Property said that these were matters for the Government, while the Government did not respond to BIRN's inquiry.
The State Property Administration told BIRN that they were not familiar with the draft law on the ratification of the Agreement with the UAE and any by-laws that would regulate this area.
"If the law is adopted and if the implementation of these projects begins, the State Property Administration will, in accordance with its jurisdiction, determine itself in accordance with legal authorizations," the Property Administration said.
Mladen Grgić warns that in certain projects the state has additionally committed to the expropriation of private land, stating that it is a long-term process.
"These processes sometimes last for a decade and in several cases parts of the project have been stopped precisely due to the inability to complete the land plot. In some zones, an additional problem is illegally constructed facilities within the scope of the lease, to which the state has often reacted slowly and inefficiently," said Grgić.
When asked about the Velika Plaza project, the Eagle Hills Group told BIRN that they are committed to respecting and adhering to local regulations, guidelines, and stakeholder engagement processes in all countries.
The state is taking on the huge cost of infrastructure
The agreement stipulates that the state will provide the investor with infrastructure development, obtain the necessary permits and ensure that all necessary planning documents are prepared in cooperation with the future investor. Grgić believes that the cost of building the necessary infrastructure could be almost equal to the value of the investment itself.
"To implement the announced projects on Velika Plaza, it would be necessary to build the Podgorica-Ulcinj expressway, expand the regional water supply system, build a sewage system, and provide additional electricity network capacity. Without the consent of the local government, implementation is practically impossible, since part of the infrastructure is under their jurisdiction," said Grgić.
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