Nov. 3 (Bloomberg) -- Real estate developer Donald Trump won approval from the Scottish government to build a 1 billion-pound ($1.62 billion) golf and housing resort in northeast Scotland after fending off opposition from environmentalists.

The resort on the 1,400-acre (597-hectare) Menie Estate at Balmedie, Aberdeenshire, will include two 18-hole courses, a 450- room hotel and 500 homes. The 62-year-old entrepreneur's proposal was opposed by environmentalists because it encroaches onto a protected nature reserve. Trump has the support of local businesses and politicians who say it's vital to the economy.

The development was the subject of a three-week public inquiry in June and July in Aberdeen after the government stepped in when the application was rejected by a committee of the municipality. The inspectors attached 40 conditions to approval, which the government accepted, and Trump and the municipality will have to reach a legal agreement on those before he can go ahead.

There are ``significant economic and social benefits'' to the project, Finance and Sustainable Growth Minister John Swinney said in an e-mailed statement today.

Trump, the New York-based developer whose name adorns casinos and luxury apartment buildings in the U.S., said the global decline in lending would not affect the golf course. ``We should be able to start as soon as practicable,'' he said in a telephone interview. ``We are in a very strong cash position, we don't have problems like other people have problems.''

Environmentalists' Opposition

Opponents faulted Trump's plans to build part of the course on a stretch of sand dunes that government environmental advisers say should be protected, and noted the land is not zoned for new housing. The conditional approval includes the provision of 98 affordable homes. It also lets Trump encroach on a nature reserve.

Trump won't start building the houses until the two courses are complete, he said. The championship course will take two years to construct, he said.

Swinney said the finding by planning inspectors that the project will have economic and social benefits was a major consideration in deciding to grant permission.

``This has been a complex planning application in which there has been a wide range of issues to consider,'' said Swinney.

The decision disclosed today is subject to a detailed agreement between Trump and Aberdeenshire Council.

The approval will boost jobs and tourism, Anne Robertson, leader of the municipality, said on the council's Web site. Full details of the proposals will still have to be submitted to and approved by the council, said Robertson.

Moving Dunes

The dunes, in an area designated a site of special scientific interest, represent an unusual form of geomorphology. They move northwards at an average of a few yards each year.

Trump will plant a stretch of sand with marram grass to keep the dunes from moving onto the course.

``It appears that the desires of one high-profile overseas investor who refused to compromise one inch have been allowed to override the legal protection of this important site,'' the Royal Society for the Protection of Birds, one of the U.K.'s largest charities with more than 1 million members, said in an e-mailed statement. ``We and thousands of other objectors consider this is too high a price to pay for the claimed economic benefits from this development.''

`Billionaire's Vanity'

The government's environmental advisers also opposed the development.

``A billionaire's vanity has been protected at the expense of Scotland's natural heritage,'' Aberdeenshire councilor Martin Ford said in an interview. ``The decision amounts to wanton vandalism.'' Ford was chairman of the council's infrastructure committee that rejected the proposal Nov. 29 last year, after which Ford was voted out of his post.

The Balmedie estate is in the constituency of Alex Salmond, Scotland's first minister, who delegated the decision to Swinney.

Approval for Trump's plans have come as U.K. real estate prices slump. House prices dropped 14.6 percent in the 12 months to end of October, the biggest drop in 17 years, according to Nationwide Building Society, Britain's largest customer-owned mortgage lender.

The golf courses, which will cost about 90 million pounds, will go ahead even if economic conditions delay the housing element, Trump told the inquiry June 10.

Building the golf courses was dependent on planning consent for the housing as the return on investment on the golf courses alone would not be high enough, he said.

Chicago Loan

Trump wants to extend a $640 million loan he took out in 2005 from Deutsche Bank AG to finance the 92-story Trump International Hotel & Tower Chicago, which is due to be completed next year.

Golf-related real estate is now worth more in Europe, the Middle East and Africa than the income generated from greens fees and golf club memberships, KPMG said in a report published in September. Buyers are willing to pay a premium of as much as 30 percent to buy a property located at a golf resort, it said.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

Last Updated: November 3, 2008 13:52 EST