Story by Claire Wrathall

In terms of natural wonders, there is little in the southern Mediterranean to rival the Gulf of Kotor on the coast of Montenegro, one of Europe’s smallest, youngest independent nations. Steep mountains shelve sharply into placid blue water, the glassy surface of which is broken by two tiny islands, one with a Benedictine monastery, the other home to a picture-perfect chapel and campanile. It is a dazzling landscape. No wonder Lord Byron judged this coast “the most beautiful encounter between land and sea.”

I first came here in 2003 and was charmed by little towns such as Kotor, a Dubrovnik writ small on the southern extreme of the gulf, with star-shaped fortifications zigzagging up the mountain that looms behind it and Budva, with its ancient walled citadel—a place George Nicholson, international chairman of the yacht brokerage Camper & Nicholsons has described as looking just like St Tropez in the 1930s. Despite some development, not least the opening of an Amanresort down the coast at Sveti Stefan, this idyllic 45-mile coast remains a place of unsophisticated pleasures It is somewhere to bask in the sun, swim in unusually clear seawater and dine on wholesome Italianate cooking—a plate of melon and the prosciutto-like ham they call prsut, then an inky risotti di mare or grilled amberjack, a relative of tuna, washed down with earthy local wine.

Even a decade ago it would have been a stretch to imagine this as the setting for the “premier marina destination in the Mediterranean,” but that is how Porto Montenegro, the first phase of which opened in 2009 and which continues to grow apace, is styling itself. And not without cause.

The development of what was until the break up of Yugoslavia, the nation’s principal naval base, Porto Montenegro is essentially its own town—a place of streets and piazzas, homes and shops, newly built, but contrived and constructed to look authentically Montenegrin and sufficiently luxurious to cater to the most discerning yacht-owners and the captains and crews they employ.

There are already apartments and residences, restaurants, a lido, a bilingual English-Montenegrin school, a customs and immigration office and a museum to showcase an array of extraordinary Cold War-era vessels. The collection includes an underwater scooter, a small-scale “wet” submarine driven by a diver because it filled with water, and a full-size nuclear sub, all of which were pulled from the harbor as part of an epic clean-up operation.

But the heart of the project—its raison d’etre—is a marina on a magnificent scale: six jetties paved in local Ardia Grigio stone and lined in mature Uruguayan palms; 650 berths, at least 130 of them for vessels 100 feet or more in length; a yacht club; a chandlery; and a state-of-the-art boatyard, where yachts can be repair and refitted. The tax applied to marina services has been capped at 7 percent and there is no duty on fuel. There is also an international airport, Tivat, which has substantial parking for private jets, just five miles away. In time there will be a hotel and a golf course.

That Porto Montenegro exists at all is essentially thanks to two men. The first is Montenegro’s former prime minister, Milo Djukanovic, who identified the potential for upscale tourism in this small (population 660,000) independent (since 2006) nation. The other is the octogenarian, Hungarian-born Canadian entrepreneur Peter Munk.

“Djukanovic told me he had this dream [to] create in the Adriatic what Monte Carlo has become in the Med,” Munk says of their first meeting in 2004. “And as an idea, that really turned me on. I really liked the idea of building a port on the Gulf of Kotor,” not least because much of the infrastructure was already in place.

In the late 19th century, the Imperial and Royal Navy of the Austro-Hungarian empire had been based here (in those days Kotor went by its Italian name, Cattaro), and it had remained a military facility ever since. Munk saw its potential immediately.

“When I flew down there the first time, I thought it was magnificent. I was stunned to see those phenomenal docks, twice as wide as Monte Carlo’s main dock, or the ones in Nice or Cannes, in that setting,” he says. “In terms of protection, it is as great as any harbor I have ever seen in my whole life. There is nowhere like it.”

The downside was the water, he says, which was “full of rusting missile launchers, half-sunk boats and submarines that belonged to the Warsaw Pact era. It was filthy, polluted, an impossible Soviet-era horror story.”

But as founder and chairman of Barrick Gold, the world’s biggest gold-mining company, Munk is no stranger to challenges. He formed a company, Adriatic Marinas, and put together a consortium of investors, who include the British financier Lord Rothschild and his son Nat; Bernard Arnault, the president of LVMH; the Russian aluminium magnate Oleg Deripaska; the Hungarian property tycoon Sandor Demjan; and one of Munk’s five children, Anthony, a managing director of the private equity company Onex.

“Finding investors is easy if you have friends who have yachts,” Munk says. He himself owns the 140-foot Golden Eagle. Groupe Arnault controls the motorboat manufacturer Princess Yachts International and Deripaska owns the 238-foot Queen K. “They know how impossible it is to get into ports,” he adds nonchalantly, shrugging off enquiries as to the total cost of the project, which the Montenegrin tourism agency Visit Montenegro puts at €600 million ($792 million).

The first phase the marina—85 secure berths and 30 waterfront apartments and residences—was completed in June 2009, no mean feat given the financial crisis of 2008 and the recession that followed. Though, as the port’s youthful Australian-born managing director Oliver Corlette points out counter-intuitively, the financial crisis was in a way “a blessing in disguise” because “people suddenly became price sensitive. That crisis really channeled everyone’s focus on to price and value for money.” And compared with Porto Cervo or Monte Carlo’s Porte Hercule, a berth at Porto Montenegro began to look something of a bargain.

By summer 2011, a further 99 berths and 100 homes (owners include Formula 1 team owner Eddie Jordan and world number-one tennis champion Novak Djokovic) were ready and mostly sold. As were a couple of restaurants, a dozen or so shops, ranging from a chandlery, a bookstore and a wine shop to various modish pop-up fashion outlets, including Heidi Klein and Vilebrequin. There is also a stunning lido with a 64-meter infinity pool with a huge installation by the Catalan artist Jaume Plensa, and a clubhouse by the British architect Richard Hywel Evans that owes something to the America’s Cup Pavilion in Valencia—an intentional reference, one can’t help sensing, given that it’s surely only a matter of time until Porto Montenegro becomes a focal point for significant sailing competitions.

Better yet, says Corlette, “The marina was operating at more than 100 percent capacity because we were able to double-sell some berths.” Visiting vessels have included 245-foot Leander G, 257-foot Eminence, 285-foot Cakewalk and Barry Diller and Diane von Furstenberg’s 305-foot, three-masted Bermuda-rigged sailing yacht Eos, which moored there last summer.

The most attractive aspect of Porto Montenegro, however, is the way it’s established itself as part of the local community, 200 of whom are now employed by the marina. Already, people come in from neighboring Tivat for the korzo, as the passeggiatta or evening stroll is known in this part of Mediterranean, or to eat or drink at its modish, yet inexpensive main café-restaurant, One, where a good two-course dinner of octopus salad followed by steamed local mussels and clams, costs about $25 a head.

Not that it isn’t a popular place with yacht owners and crew too. Indeed, what sets it apart from other pleasure ports is that it’s the first purpose-built marina to be marketed as much at skippers and crew as their employers.

“You learn very quickly that it’s the captain and crew who decide where a yacht spends the winter,” Corlette explains. “An owner doesn’t really care as long as the berth is safe, secure and doesn’t cost too much, but he does know that the real issue of owing a yacht is managing your captain and crew and keeping them happy.”

It’s therefore perhaps the only marina in the world with its own ski chalet in the mountains in Kolasin, a two-and-a-half-hour drive away, which crew can use gratis. Closer to the water, there’s a Crew Club with squash and tennis courts, a bowling alley and gym, which lays on parties and regattas, takes them canyoning and kite-surfing and on complimentary weekend breaks to Budapest, Rome and other European cities.

Such additional benefits may go some way toward explaining the speed with which it has established itself.

“Having captains onside is essential,” says Charlie Birkett, group CEO of the Monaco-based yacht brokerage 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 recognize that, though they’ll never replace St Tropez or Monaco, they can offer something that’s missing elsewhere. Porto Montenegro will without doubt grow to become the significant yachting destination in the Adriatic. Word spreads quickly in a small industry like ours.”