Montenegro’s Ministry of Spatial Planning, Urbanism and State Property (MDUP) has stated that Adriatic Properties has the legal right to continue construction of the partially completed hotel project in Miločer Park, reopening one of the country’s most politically sensitive investment disputes as negotiations intensify around the future of the long-closed Sveti Stefan luxury resort complex.
The ministry’s position relates specifically to the unfinished Kraljičina Plaža/Janu hotel project, part of the wider redevelopment agreement tied to the lease of the Sveti Stefan, Villa Miločer and associated coastal assets managed by Adriatic Properties under the long-term concession structure signed with the Montenegrin state. According to officials, the investor retains rights to complete construction already approved under existing permits and within previously authorized dimensions.
The clarification comes amid rising political and public pressure over construction activity in Miločer Park, one of Montenegro’s most valuable protected coastal landscapes. Environmental groups, local residents and opposition politicians have argued that additional development would permanently alter the cultural and natural character of the area surrounding Sveti Stefan.
Government officials, however, are attempting to draw a distinction between “new development” and continuation of already approved construction works. Under the draft settlement framework negotiated between the state and Adriatic Properties, authorities insist that no additional apartments or expanded construction footprints will be permitted beyond what had already been authorized through prior building permits.
The issue has become central to broader efforts to resolve the years-long arbitration dispute surrounding Sveti Stefan. The luxury island resort and Villa Miločer have remained closed for multiple tourist seasons following disputes between the government, local communities and Adriatic Properties, which operates the resort in partnership with Aman Resorts. The closure has become one of Montenegro’s highest-profile tourism and investment controversies, with both economic and reputational consequences for the country’s luxury tourism positioning.
Earlier this year, Montenegro’s government approved a settlement framework intended to reopen the Aman-operated resort complex before the peak summer season. The agreement reportedly includes withdrawal of mutual arbitration claims, revised lease conditions, increased concession payments and commitments regarding public access arrangements around beaches and pathways in the Miločer area.
The unfinished hotel development itself remains financially and politically significant because it forms part of the broader premium-tourism investment narrative Montenegro has promoted internationally for nearly two decades. The project originally envisioned redevelopment of the former Kraljičina Plaža hotel into an ultra-luxury branded hospitality complex integrated into the Aman/Sveti Stefan ecosystem.
Critics nevertheless argue that the scale and design of the development exceed what should be permitted within a protected heritage and park zone. Opposition representatives and civic groups have accused previous governments of allowing excessive construction rights within Miločer Park and have demanded full transparency regarding all contractual obligations and planning approvals associated with Adriatic Properties.
The dispute also has major financial implications for the state. Parallel legal proceedings and arbitration claims linked to the closure of Sveti Stefan reportedly involved compensation demands reaching approximately €100mn, while state-linked hotel companies simultaneously accumulated unpaid lease receivables and tax-related disputes connected to the suspended operations.
For Montenegro, the broader challenge extends beyond one hotel complex. The Miločer and Sveti Stefan case increasingly serves as a test of how the country balances foreign investment protection, heritage preservation, environmental sensitivity and political accountability within its luxury coastal-development model.
The government now appears focused on restoring tourism operations while limiting additional escalation around construction rights. Whether that balance can be maintained will likely determine not only the reopening of Sveti Stefan, but also how future international investors assess regulatory and political risk across Montenegro’s high-end tourism sector.
