Canadian magnate Peter Munk aims to turn a rusting Montenegrin naval base into the next yachting hot spot. After three years of negotiations with the Montenegrin government, local unions, and financing partners around the globe, he has just taken possession of the base and will soon begin construction on his waterfront playground.

Munk is best known for taking a small oil company called Barrick and turning it into the largest gold-mining outfit in the world. He had what he calls a "crazy dream": to transform the abandoned harbour into an international destination - the Monaco of the eastern Mediterranean - and is investing $135 million of his own metals fortune in Montenegro. Munk's business logic is quite simple: the number of large yachts under construction has more than tripled during the past ten years and existing ports with the infrastructure to service them are horribly overcrowded.

His development - to be called Porto Montenegro - is slated to have mooring space for 800 yachts, repair yards, provisioning services, and hotels, as well as 1,000 apartments where captains and crew can make their homes. There is already an airport close by, and plans are afoot for a golf course. It's located on the largest natural harbour in the eastern Mediterranean, with pristine blue water and soaring hills in every direction. George Nicholson, the chairman of Camper & Nicholson International, a leading yacht brokerage and chartering and services company, first visited the site in February. "I've never seen a greater opportunity," he said. Kotor Bay is very sheltered and you have the Dalmatian coast with all the beautiful islands off Croatia in one direction and the Albanian coast in the other. With picturesque coastline wending from charming fishing villages to discreet beaches, Nicholson calls it "the best cruising in the Mediterranean."

Porto Montenegro will signal a rebirth for Montenegro. In the 1950s and '60s, film stars like Sophia Loren and Elizabeth Taylor, as well as Communist Party leaders, populated nearby Sveti Stefan, a former fishing village transformed into a luxury getaway. Now government officials are following the lead of Croatia, whose coastline and cities swarm with hip visitors - by wooing investors. Aman Resorts has acquired Sveti Stefan and hopes to restore its lustre, while Donald Trump, Venus and Serena Williams, and the Formula 1 driver Michael Schumacher are rumoured to be investing in property.

(Fortune Magazine)