Montenegro says Adriatic Properties can continue Miločer Park hotel works as Sveti Stefan dispute nears settlement

Montenegro is pressing ahead with a legal and regulatory position that could shape how investors view risk in the country’s most prominent luxury tourism dispute. The Ministry of Spatial Planning, Urbanism and State Property (MDUP) said Adriatic Properties has the legal right to continue construction of a partially completed hotel project in Miločer Park, reopening one of Montenegro’s most politically sensitive investment fights as talks around the long-closed Sveti Stefan complex move forward.

What Montenegro says Adriatic Properties can build

The ministry’s stance relates specifically to the unfinished Kraljičina Plaža/Janu hotel project, which is part of a wider redevelopment arrangement linked to the lease of Sveti Stefan, Villa Miločer and associated coastal assets managed by Adriatic Properties under a long-term concession structure signed with the Montenegrin state.

According to government officials, the investor retains rights to complete construction that was already approved under existing permits and within previously authorized dimensions. The MDUP position is intended to clarify that ongoing activity in Miločer Park should not be treated as fresh development.

Continuation versus “new development” amid public pressure

The ministry’s clarification arrives amid growing political and public scrutiny over construction activity in Miločer Park, described as one of Montenegro’s most valuable protected coastal landscapes. Environmental groups, local residents and opposition politicians have argued that additional development would permanently change the cultural and natural character of the area around Sveti Stefan.

Government officials are attempting to distinguish between “new development” and continuation of already approved works. Under a draft settlement framework negotiated between the state and Adriatic Properties, authorities say no additional apartments or expanded construction footprints would be permitted beyond what was authorized through prior building permits.

Central issue in years-long arbitration over Aman-operated resorts

The dispute has become central to efforts to resolve a years-long arbitration surrounding Sveti Stefan. The luxury island resort and Villa Miločer have remained closed for multiple tourist seasons following disagreements involving the government, local communities and Adriatic Properties, which operates the resort in partnership with [[PRRS_LINK_2]].

The closure has turned into one of Montenegro’s highest-profile tourism and investment controversies, carrying both economic consequences for its luxury tourism positioning and reputational stakes for how foreign capital is handled.

Settlement framework approved earlier this year

Earlier this year, Montenegro’s government approved a settlement framework aimed at reopening the Aman-operated resort complex before peak summer season. The agreement reportedly includes withdrawal of mutual arbitration claims, revised lease conditions, increased concession payments, and commitments related to public access arrangements around beaches and pathways in the Miločer area.

Financial stakes tied to compensation claims and unpaid receivables

The unfinished hotel development remains financially and politically significant because it forms part of Montenegro’s premium-tourism narrative promoted internationally for nearly two decades. The original plan involved redeveloping the former Kraljičina Plaža hotel into an ultra-luxury branded hospitality complex integrated into the Aman/Sveti Stefan ecosystem.

Critics argue that the scale and design exceed what should be allowed within a protected heritage and park zone. Opposition representatives and civic groups have accused previous governments of granting excessive construction rights within Miločer Park and have demanded transparency about contractual obligations and planning approvals connected to Adriatic Properties.

The broader dispute also carries major financial implications for the state. Parallel legal proceedings and arbitration claims linked to Sveti Stefan closure reportedly involved compensation demands reaching approximately €100mn. At the same time, state-linked hotel companies reportedly accumulated unpaid lease receivables and tax-related disputes connected to suspended operations.

A test case for balancing investment protection with environmental sensitivity

For Montenegro, the challenge extends beyond one resort complex. The Miločer Park–Sveti Stefan case is increasingly seen as a test of how the country balances foreign investment protection with heritage preservation, environmental sensitivity, and political accountability within its luxury coastal-development model.

With officials focused on restoring tourism operations while limiting further escalation around construction rights, investors will be watching whether Montenegro can maintain that balance—particularly as it seeks to reopen Sveti Stefan. How this is handled may influence how future international investors assess regulatory and political risk across Montenegro’s high-end tourism sector.