Why Montenegro is the next Monaco for yacht charters
by Claire Wrathall
Even before the €60 million reinvention of Sveti Stefan that Aman Resorts revealed in 2011, the tiny island off the coast of Montenegro was an idyllic place for a luxury yacht charter on the Adriatic coast.
On my first visit, in 2003, I dined with Branko “Diki” Kazanegra, who had worked at the Sveti Stefan hotel as general manager during its glory days in the 1950s and 1960s. As the wine flowed he began to drop the names of the guests he’d looked after at this fortified islet of fisherman’s cottages turned jet-set hotel. There was the Hollywood contingent: Kirk Douglas, Elizabeth Taylor, Sidney Poitier, Richard Widmark; the British royal family: Princesses Margaret and Anne and, once, the Queen; assorted Russians: Yuri Gagarin and the Bolshoi ballerina Maya Plisetskaya; and many Italians, who would bring their yachts over the water: Monica Vitti, Alberto Moravia, Sophia Loren and her husband Carlo Ponti… In 1968 Paris Match judged Sveti Stefan one of the top 10 hotels in the world.
It is still easy to see why Montenegro proved such a draw. Despite unregulated development along its 180 miles of rocky coastline, Montenegro remains a country of remarkable natural beauty: a land of fjords, canyons – it has five national parks – and the largest lake in southern Europe, Skadar, shared with Albania and which teems with pelicans and flamingos. Then there is the hinterland of maquis-clad white karst mountains – “If you ironed Montenegro, it would be as big as Russia,” Diki memorably said at one point – where you can ski if you don’t mind an infrastructure best described as unsophisticated.
If Montenegro’s reputation as a glamorous yachting destination survived the Cold War, however, the break-up of Yugoslavia in the 1990s rather did for tourism. But since the early 2000s and through Montenegro’s 2006 declaration of independence, the country and Sveti Stefan in particular have been enjoying a second golden age. In 2002 Jeremy Irons stayed at Sveti Stefan while shooting a film called Mathilde and rescued its precarious finances by racking up a bill of £65,000. Claudia Schiffer and Sylvester Stallone followed and a couple of years later Michael Douglas and Catherine Zeta-Jones stopped by when scouting for property in Perast. And last summer Novak Đjoković, from nearby Belgrade and the world’s No.1 men’s tennis player, married Jelena Ristić here. Montenegro has indeed been an A-list magnet ever since Lord Byron came here in 1809 and judged its rugged coastline “the most beautiful encounter between the land and the sea”.
A large part of this magnetism is down to Aman Resorts, which transformed Sveti Stefan into an ultra high-end resort during this period. In 2003 Adrian Zecha, then chairman and founder of the Singapore company, stayed at Sveti Stefan and “decided I would love to do something” with it. A meeting with Milo Đjukanović – Prime Minister then and now – was convened. The resort re-opened in 2009.
This was the spark. The year after the Aman project began, Đjukanović resolved to revive the near-derelict former headquarters of the Imperial Navy of the Austro-Hungarian Empire and then the Yugoslav Navy on the Gulf of Kotor. He approached Hungarian-born Canadian mining magnate Peter Munk, founder and former chairman of Barrick Gold, the world’s biggest gold-mining company, with the idea of developing what has become Porto Montenegro.
“I’d barely heard of Montenegro,” Munk says. “I thought it was in Italy. But I came down to take a look. We took a helicopter out over the Gulf of Kotor, and it was magnificent. To see those phenomenal docks, twice as wide as Monte Carlo’s main dock, or the ones in Nice or Cannes, in that setting – it is as great as any natural harbour I have ever seen. Đjukanović said he had this dream [to] create in the Adriatic what Monte Carlo has become in the Med. I really liked the idea of building a port on the Gulf of Kotor.”
Munk formed a company, Adriatic Marinas, and put together a consortium of investors, among them the British financier Lord Rothschild and his son Nat; Bernard Arnault, president and CEO of LVMH; the Russian aluminium oligarch Oleg Deripaska; and Munk’s son Anthony. Then he hired Australian Oliver Corlette, fresh out of the Harvard Business School’s MBA programme, to get the place built.
Yet Đjukanović’s enthusiasm to create more holiday developments shows no sign of waning and international companies continue to make landmark investments.
“These include the resort developments of Luštica Bay,” Đjukanović wrote in a blog on the Financial Times’s website, “where Orascom, the Egyptian telecom and construction conglomerate, will invest €1.1 billion by 2018; Porto Montenegro, where a Peter Munk-led consortium has already invested over €280 million; and Aman Sveti Stefan Resort, where Singapore’s Aman Resorts has a €55 million expansion phase on top of an initial €60 million investment.”
In addition, Kerzner International has signed a contract to operate a €500 million resort, One&Only Portonovi, currently being built by Azmont Investments, a Montenegrin subsidiary of SOCAR, the Azerbaijani oil and gas company, on the site of another former military facility, Orjen Battalion at Kumbor. “Ten years ago I couldn’t have told you where Montenegro was,” said Sol Kerzner, the founder and former chairman of Kerzner International, at the project’s launch event. “Now I’ve chosen this place for the first One&Only experience in Europe.”
Then there’s Dukley Gardens on the Budva Riviera, the liveliest stretch of coast, where the majority of visitors and investors are Russian. This is a development of 36 three- to five-storey buildings containing 202 apartments as well as a 13-storey tower in the town itself with an additional 36 flats.
Yacht facilities are an important part of the new developments. There’ll be a marina with room for up to 250 yachts at the One&Only, as well as a tennis academy and Henri Chenot spa. Stratex, Dukley Gardens’ parent company, has acquired an existing marina with 330 moorings, in which it plans to invest €45 million “to make it the most luxurious in the entire Adriatic”. Luštica Bay will have slips for 226 yachts and by summer 2015 Porto Montenegro will have 454 berths for yachts from 12 to 180 metres, 159 for superyachts. Serious superyachting events are also starting to arrive, including the Superyacht Rendezvous Montenegro, 2-5 July 2015.
It’s not hard to see why Montenegro, and especially Porto Montenegro, appeals to charter yachts. Where once was a derelict dockyard, there’s now a state-of-the-art marina with fuelling and 24-hour assistance. The port has become essentially its own town, with streets and piazzas, homes and shops, a hotel and restaurants initially designed to cater not so much for the world’s wealthiest and most discerning have-yachts as the captains and crews they employ.
In addition to the yacht club, lido and 64 metre infinity pool (where Nat Rothschild celebrated his 40th birthday in 2011), there’s a bilingual English-Montenegrin school, a customs and immigration office and a museum to showcase an array of extraordinary Cold War-era vessels, which have been pulled from the harbour. There’s also a Crew Club entertainment programme and a sports club. Indeed it is perhaps the only marina in the world that rents its own ski chalet – in Kolašin, a 100-mile drive away, which crew can use for free when they winter here.
“Having captains onside is essential,” says Charlie Birkett, co-founder and CEO of Y.CO. “Oliver Corlette made a wise decision in concluding that entertaining crew is as important as the more obvious logistical requirements. They took time to talk to people in every aspect of the industry, something new-development ports often overlook. And they were clever to recognise that, though they’ll never replace Saint-Tropez or Monaco, they can offer something missing elsewhere. Porto Montenegro will grow to become the significant yachting destination in the Adriatic.”
Corlette is cool about the competition. “We’re very much encouraging new marinas. It’s all about critical mass,” he says. “The more yachts, the more berths we can have in and around Montenegro, the more attractive it becomes to the key players in the industry and the more likely they will be to relocate here. It makes it easier and ultimately more cost-effective for the customer, and we want to attract as many customers – yacht charter customers that is, not anyone – as we can. After all they’re promoting Montenegro, they’re encouraging more airlines to fly in here. So overall growing the pie like this is a great thing.”
There’s also the very real attraction of Montenegro’s favourable tax regime. No duty on fuel, for example, and no VAT on yacht charters. In neighbouring Croatia (Dubrovnik is four hours’ sailing to the north), VAT, at 25 per cent on all yachts above 40 metres, is levied, as it is throughout the EU. At which point it’s worth noting that yachts in Montenegro may not remain exempt ever after. The country entered into accession negotiations to join the EU in 2012 and is already ahead of the other four candidate countries. Still, as one still-buoyant senior player in the Montenegrin marina industry quipped at last year’s Monaco Yacht Show: “Just because you’re engaged doesn’t mean you have to go through with the marriage.”
But then tax advantages or not, it’s still a beautiful, exceptionally located, well-connected place to keep a yacht.