Photographer: Andrej Isakovic/AFP via Getty Images

Belgraders Split on River Makeover by Abu Dhabi Developers

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In a marble exhibition hall in downtown Belgrade, investors and curious locals have been lining up to see what Serbia’s capital may look like in 2030.

Gone are the rusty train tracks, crumbling buildings and makeshift fast-food shacks that now line the Sava River. The 4-meter-wide (12-foot-wide) model of the $4 billion Belgrade Waterfront project shows high-rise homes, offices and tree-lined parks surrounding the largest Balkan indoor shopping mall and a corkscrew skyscraper to be built and paid for by Eagle Hills, an Abu Dhabi-based company established by Emaar Properties Chairman Mohamed Alabbar.

“We’re creating a new way of life,” said Belgrade Mayor Sinisa Mali, shrugging off a rising tide of discontent from local architects and residents.

Fifteen years after being bombed by NATO forces, Belgrade is heading for a new showdown over its future. City planners say revitalizing 1.8 million square meters (19 million square feet) of shabby riverside real estate will draw billions of euros and create 20,000 jobs. Opponents say the project was approved too hastily, ignores flood and groundwater risks, and threatens to sweep thousands of local residents into homelessness.

Lawmakers were due to meet in parliament this week to discuss a draft law that would allow the government to seize homes and land for the development. The meeting was delayed for about two weeks, according to a March 12 government statement, after opposition groups, architects and Transparency International questioned the legality of the planned legislation.

Economic Woes

Prime Minister Aleksandar Vucic, who is trying to get the country into the European Union by the end of the decade, is counting on the investment to help him end Serbia’s fourth recession since 2009. The economy contracted 1.8 percent last year, leaving one in five unemployed. The average monthly wage is $428.

The biggest former Yugoslav republic needs investment as the government cuts spending to narrow the budget deficit and reduce public debt to meet commitments under a three-year stand-by loan deal with the International Monetary Fund approved on Feb. 23.

“Serbia needs new infrastructure, and a development like this should be very positive for the economy, for its impact ranging from industries to tourism,” said Ivan Nikolic, a member of the central bank governor’s advisory council, by phone. “One would assume that as long as the government investment doesn’t lead to a wider budget deficit, they will get approval from the IMF.”

‘Bright Future’

Belgrade is one of four cities, along with Addis Ababa, Panama City and Yangon, “with a bright future,” Knight Frank LLP, a London-based real estate consultancy said in its 2015 Wealth Report. The city attracts young visitors “who are staying in increasing numbers, attracted by low-cost and relatively high-quality offices to develop Internet start-ups and apps,” the London-based brokerage said.

Mali, who has been Belgrade’s mayor since April 2014, declined to say how much the city itself has spent, or plans to spend, on the project. He also wouldn’t say whether he envisages any bond sales to help pay for the necessary infrastructure improvements, including sewage, road and energy works.

New City

“We need something big to make a cut-off between the past and the future and this is that big thing,” Mali said. “After that, people will stop talking about wars, about Kosovo, but about Serbia as a new place to live, to reside, to do business.”

The first phase would encompass about 300,000 square meters, with properties costing an average of 1,000 euros ($1,060) per square meter to build, Mali said.

“When you start the project, you send out a couple of messages: to potential buyers that you are really serious and to the general public that this is not just empty talk,” he said.

The Belgrade Waterfront would include 5,700 residential units, 2,200 hotel rooms and 12,700 offices, built in four phases, according to Eagle Hills’s project website. Groundbreaking is expected by September, President Tomislav Nikolic said on Feb. 11 after meeting the United Arab Emirates ambassador to Serbia.

River Promenade

Anchoring the first phase is a planned 22-story skyscraper that would sit on the eastern bank of the Sava, overshadowing a 1,800-meter-long promenade and bike path and visible from anywhere in the 600-year-old Serb capital.

The adjacent glass-domed indoor shopping mall would replace a train depot, where tracks snake between industrial buildings along the Sava before it merges with the Danube River.

Eagle Hills, which will finance and develop the project, has already renovated one well-known building in Belgrade. In 2014, the company restored a former 19th Century cooperative bank building in the rundown Savamala neighborhood. The property is currently being used to house the futuristic model of the city and the surrounding area would be razed for a second phase of luxury apartment buildings.

The Abu Dhabi company is registered as a trading company with no employees and capital of 1.5 million dirhams ($410,000). In February, it announced the construction of an $80 billion city near Cairo, including an airport, hotels and a shopping mall.

Equity, Debt

Eagle Hills said in an e-mailed statement to Bloomberg that it is a “well-capitalized” company and the makeover will be financed “along the line of most real-estate projects, though a combination of equity and debt financing.”

Still, city authorities seem bent on pushing the Belgrade Waterfront through without a proper vetting of Eagle Hills and whether it can afford to see the ambitious project through, opponents say. They also claim that opinions and suggestions by local groups during early stages of planning were largely ignored.

Most groups suggested scaling back the scope of the project and make sure more public services and buildings are available to ensure local lifestyles are preserved.

Outside the Mikser House, a converted factory-turned-bar and concert hall, creative director Maja Lalic scoffed at the dozens of flagpoles holding Belgrade Waterfront banners lining the street and launched into a defense of her bohemian neighborhood.

Social Concerns

“You need to analyze the social structure of the Savamala neighborhood,” not erect flagpoles, she said as a local radio station sponsored a battle of the bands inside Mikser House. The bar, which has become a magnet for local artists and musicians, would be leveled in the second construction phase in favor of apartments.

“You need to be respectful of what’s already here,” she said as passing residents shook her hand and encouraged her. “The city, the inhabitants, businesses, small businesses, the cultural entities -- all these things should be integrated in the new development and it should have more of a human scale.”

Eagle Hills defended the design saying it is intended as an “extension of the city, not an isolated development” that will create jobs for Belgrade.

Apartment and homeowners in the neighborhood would be bought out at market prices, which averaged 1,357 euros per square meter on March 9, 2015, according to real estate web portal

Architects’ Opposition

The Belgrade-based Academy of Architecture of Serbia urged authorities to drop the plan, claiming it’s illegal, unconstitutional and lacks democratic procedures, according to a March 5 statement. The construction of new residential, office and commercial space can’t be considered a public interest activity, a ruling needed to allow imminent domain proceedings to go ahead, the organization said.

Aleksandra Mokranjac, a Belgrade architect and member of the academy, likened the Abu Dhabi-led project to Orson Wells’s War of the Worlds, in which Earth is attacked by aliens from Mars.

“The project is a tragedy on every level: professionally, spiritually, historically,” she said in a crowded coffee bar in downtown Belgrade. “The mega-structure will forever block the way for any citizen of Belgrade, or visitor, to have free access to the river. It’s like imprisoning a very important part of the city, the historical part of the city.”

Mali disagrees. Walking slowly around the model, the mayor gave a virtual tour of the future neighborhood, pointing out swathes of grassy areas squeezed between glittering high-rise buildings and a wide riverside promenade open to all Belgradians.

“There will be a lot of greenery and of course schools and cultural centers, so it’s not only about the buildings themselves,” he said. “We’re going to have a new symbol for the city.”