NIS, Serbia — Piles of prefabricated concrete panels are stacked neatly on a construction site in this small city of about 260,000 in southern Serbia. A handful of cranes move the pieces up and down, back and forth. Assembling apartment units looks as easy as playing with Lego blocks and as graceful as synchronized dancing.
This site is a former military base, Bubanjski Heroji, that dates to the Ottoman Empire. But it was decommissioned years ago and, until recently, was sitting empty. The site, in the central part of Nis, is now bustling with activity as the former army barracks is being transformed into a new housing and commercial center, spread over 37 acres.
After winning a public bidding process, the company in 2011 acquired the property, which covers more than 2.6 million square feet, but can be expanded to twice that size.
The plans call for the site to include a technical university, a hospital and a regional art center. As part of the company’s contract with the City of Nis, the developer is obliged to build 226,042 square feet of housing, which the local authorities will transfer to the army.
“This is the first military base in Serbia which was sold in a public auction for military-civilian conversion,” said Philip H. Bay, the founder and chief executive of Clean Earth Capital, who has more than 20 years of experience in the real estate industry.
After the breakup of Yugoslavia and the end of the region’s wars in the early 1990s, the transition to peace and economic change led to the closings of many military facilities across Eastern Europe, including in Serbia. Technological advancements and military spending cuts made conventional weapons redundant and forced governments to reduce troop levels. As a result, many military sites across the region sat idle and crumbling.
Novi Nis is likely to be the first project involving a military base redevelopment in Serbia, but the Balkan country is far from being a pioneer in trying to repurpose its military facilities.
In the heart of the Latvian capital, Riga, a former Soviet military base was turned into a vibrant cultural and recreational space, with cobblestone walkways, playgrounds and a skate park, as well as a number of festivals. A military facility in the Estonian town of Tartu was turned into a spectacular glass-and-steel museum.
Military site conversions are also taking place in some Western European countries.
A housing shortage in southern Germany prompted officials in Tübingen and Freiburg to transform former barracks into living spaces. Some former military bases house asylum-seekers who have come to Germany in droves, escaping the Syrian crisis.
In Serbia, the Novi Nis project is still in its early stages. It took the company several months to demolish 28 of the 32 military buildings and clean up the site.
“You couldn’t see five meters in front of you,” said Mr. Bay, because the overgrowth was so thick. Once the workers cleared away the dirt and the grass, they discovered cobblestone walkways.
So far, Clean Earth Capital has spent close to 8.5 million euros and is planning to spend €10 million more in the coming year. The company will need more funding, as the cost of the project might reach €140 million to €180 million, depending on the level of finish.
Clean Earth Capital is taking a risk by funneling so much money into this little-known part of the world, particularly given that Serbia is not a member of the European Union, which could discourage foreign investors.
But Mr. Bay believes these challenges give his company a competitive advantage, providing it with cheaper labor and investing costs, something that is no longer true for other Balkan countries like Bulgaria and Romania, where the price of real estate is higher.
Mr. Bay is not the only entrepreneur who can see the advantages. Nis has attracted around €220 million in foreign investment in the past six years, according to statistics provided by the city.
The airport was severely damaged in the bombings during the Kosovo War in the late 1990s and did not have any passenger traffic for years. In 2015, the Hungarian low-cost carrier Wizz Air started flying from Nis to Malmo, Sweden, and Basel, Switzerland. A year later, Ryanair followed suit.
The airport now operates flights to 11 destinations in Europe, making travel to and from the city easier. Last year, around 350,000 passengers went through the airport, double the number in 2016.
Mr. Bay believes Nis could be “the new urban center” of southern Serbia because of its strategic location. “It’s a secondary city which is a two-hour drive from four capital cities — Sofia, Belgrade, Skopje and Pristina,” he said.
Moreover, he hopes that the success of Novi Nis will kick-start other development projects in the area.
And he has the backing of Darko Bulatovic, the mayor of Nis. “We need more projects like Novi Nis, as the town needs more recreational and commercial areas,” Mr. Bulatovic said. “It will modernize the look of the neighborhood and improve the infrastructure.”
For Clean Earth Capital, sustainable and carbon-neutral development is a priority. The Novi Nis project is no exception, as it will seek LEED for Neighborhood Development certification, a ranking system for sustainable and green building. Moreover, the company has let nature guide its development and construction approach.
The company said it had preserved 1,200 of the trees on the site, each numbered, measured and registered. It planned to save 80 percent of the remaining trees.
According to the company, green development is good for profit. “By allowing most of the trees to stay and having a good green space, that will ensure that the long-term value of the project continues to go up,” Mr. Bay said, sitting at his desk in his office in downtown Nis, decorated with dozens of paintings of seahorses, which the company chose for the project’s logo.
“Seahorses only live in environmentally clean areas; if you have seahorses in your water, you know that everything will be O.K.,” Mr. Bay said. “It’s a sign of good health.”
The company intends to use locally sourced materials or import from neighboring countries if the supply does not meet its quality standards.
For example, all the concrete panels are manufactured in a factory near the border with Hungary, and are tested, numbered and brought to the site, with piping and electrical cabling already in place.
Clean Earth Capital also says it is committed to helping local disadvantaged communities. So far, 90 percent of the leftover materials from the demolition at the site were donated to civil organizations that work with Roma. Since the start of the project, the company has hired dozens of Roma workers to help with gardening and landscaping.
Mr. Bay plans to develop a rehabilitation project called Prison Break for inmates from the local jail. The idea is for prisoners to make furniture from the leftover wooden planks, sell the pieces online and establish a fund that would help prisoners who have served their sentences integrate back into society. The inmates have already made the wooden desks the company is using in its office.
“Next fall, we will have several apartment blocks with a classic 1930s Bauhaus design,” said Mr. Bay, gesturing at the bustling construction site, where not long ago, soldiers used to practice their drills.