A brand-new £3.3bn “tourist city” will be built in Bosnia by a Dubai-based developer, an illustration of how the former Yugoslav country has become a magnet for Gulf investors.

The city, including thousands of homes, several hotels, a shopping mall and a hospital will be built in Trnovo, south of Saravejo, in the Serb-dominated Republika Srpska region.

The town currently has a population of little more than 2,000.

Developers Buroj Property Development will start work on the 1.3 million-square metre complex at the foot of Bjelasica, one of the four mountains around Sarajevo, in April and completed by the end of 2016, the Guardian reported.

A three-bedroom villa will cost in the region of £170,000 (Buroj Property Dubai)

According to plans released by the developers, the shopping mall will be the biggest in eastern Europe, with a lavish “dancing fountain” at its centre.

A three-bedroom villa at Trnovo will cost in the region of £170,000, according to reports.

Ismail Ahmed, Buroj president, said: "This is my life project and I hope that we will finish it without delay.

Trnovo currently has a population of little more than 2,000 (Buroj Property Dubai)

"I sincerely believe in this because I am convinced that Bosnia is an important global tourist destination that has yet to be discovered."

A surge in visitors from Gulf states, including the United Arab Emirates, Qatar and Saudi Arabia, to Bosnia – where four in 10 inhabitants is Muslim - has been recorded in recent years.