Bay watch: Montenegro

The development is for the most part unfinished. Driving through its empty wastes is haunting: rusty girders, derelict warehouses and a couple of decommissioned submarines blight the vast site. It was formerly the headquarters of the Imperial and Royal Navy of the Austro-Hungarian empire and remained a military base until the war in the 1990s (sunken missile launchers and warships litter the sea bed – a vestige of the Soviet era).

Having had our fill of brownfields, we journeyed further inland. On the other side of the fjord is Kotor Bay, a UNESCO World Heritage Site with plenty of pretty waterfront towns set against a backdrop of jagged cliffs. It's part alpine lake, part playground of the erstwhile Venetian Republic. The best way around the bay is by speedboat and it is easy to find a local pot-bellied captain to take you out for an afternoon spin for 50. Our first stop was the beautifully restored 15th-century hamlet of Perast. While Dragan, our skipper, smoked a cigarette, we explored the winding stone corridors and intricate façades of the local townhouses, one of which belongs to Michael Douglas and Catherine Zeta Jones. Pamela Anderson also has a spa hotel in the offing nearby, and Jay Z and Beyoncé rocked up in a yacht last summer, sending a wave of excitement around the bay, eclipsing interest in gas, fertiliser and steel-pipe billionaire Andrey Melnichenko, who had dropped anchor in his Philippe Starck-designed yacht, A, named after his model wife Aleksandra, a cover girl for Russian Tatler.

After a dip in the bay's clear warm water, Dragan dropped us off at its centrepiece: two churches, each on its own island. The first, Sveti Djordje, is a private island and a former cemetery for Perast nobility, later taken under the cassocks of Benedictine monks. Unofficially, it's available for hire and, periodically, twenty-somethings from Moscow storm in and take it over for decadent, champagne-fuelled all-night parties, causing much grumbling among the locals.

But no trip to Kotor Bay is complete without a visit to the second island, Gospa od Skrpjela, whose chapel's azure dome sits like a jewel over the gulf. Kotor's eponymous capital is a Venice in miniature, minus the canals, but big on crumbling exteriors held together with cast-iron rods and staples. You enter through a medieval city gate, whose walls climb up to the mountain fortress from which you get the best views of the bay (at night the walls are lit up, a beacon for Hermès-clad seadogs). After 45 minutes spent scaling the walls in the midday sun, one of the bustling piazzas is the best spot for a cool limonata. The winding, shady streets of the Old Town charm with their grand old houses and delicately carved coats of arms next to shops selling antique clocks and war memorabilia.

Thankfully, this is still one of the few places in Europe where local tourists form the majority and you can go all day without hearing a British, Italian or American voice. Anna, the owner of Palazzo Radomiri, a converted network of stone houses where we stayed, is of Russian extraction and spent ten years in London before settling here to restore the monastic iron gates and
balustraded balconies of her hotel. Hers is one of the few good hotels in the region, but with a Four Seasons, a Banyan Tree and the resurrection of the Sveti Stefan hotel (which Paris Match named as one of the top ten in the world in 1968, in spite of Carbonara-gate) under way it won't be long before the Jolie-Pitts and the Beckhams make the Montenegrin coast their playground of choice.

WHERE TO STAY
Located in Dobrota, near Kotor, Palazzo Radomiri's sumptuous rooms are named after battleships such as Glorioso and Speranza. There are sea views, Etro products in the bathrooms and a 20m mooring if you prefer to arrive by sea.
From 60 per night (palazzoradomiri.com).

GETTING THERE
The Ultimate Travel Company can tailor-make
a four-night stay at the Palazzo Radomiri from £750pp including flights and five days' car hire (020 7386 4646; theultimatetravelcompany.co.uk).

TOP TIP
Flights to Tivat are less frequent and more expensive than flights to nearby Dubrovnik. If you fly to the Croatian airport, you'll be in Kotor Bay within an hour and a half. Alternatively, arrive in style aboard a superyacht such as Andrey Melnichenko's Philippe Starck-designed A.

RENT A CAR
From Main Gate Rent-a-car in Tivat, next to the airport. From Volkswagen runabouts to Toyota 4x4s, a car is essential for getting to know every last belltower in the bay (00 382 69 366 422).

WHERE TO EAT
The Stari Mlini (The Old Mill) is a converted watermill fed by the River Ljuta which babbles down the mountain into the bay. Trout swim through the restaurant's shady gardens, and fresh mussels and octopus are delivered daily by fishing boat (starimlini.com).

WHERE TO SPLURGE
At Queen Marija's, and later President Tito's, former summer residence, the Villa Milocer, where you can dine under the pergola, looking over the stone cottages and terracotta-tiled roofs of Sveti Stefan, once a 15th-century fortified fishing village. Amanjunkies – fans of the ultra-luxury hotel brand – will be pleased to hear
that it will soon be turning the villa's six suites into the Aman Sveti Stefan, with an extensive library, bakery and fleet of speedboats (amanresorts.com).

LAST MINUTE
Visa required? No
Flight time 2½ hours
Time difference +1 hour
Currency £1 = 1.12