Hungary signed an economic cooperation agreement with the United Arab Emirates on March 14 that paves the way for a €5bn rehabilitation project in Budapest, creating a massive new quarter in the capital.

The agreement was signed by Minister of Foreign Affairs and Trade Peter Szijjarto and the UAE's Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi in Budapest.

At a joint press conference after the signing, Szijjarto said the "flagship" project by UAE developer Eagle Hills would give new impetus to the countries' economic cooperation.

Hungary has been courting Asian and Middle East investors to drive its economic development, a policy which has extra importance now that it has been cut off from European Union funds because of the radical rightwing government's violations of the rule of law.

The project dubbed by the press as mini-Dubai would transform a 130-hectare area at the location of a less frequented local train station yard in a northern part of the capital into a new city quarter with tourism, economic, business and sports functions.

According to the government, the investment will elevate Budapest to the ranks of modern global cities, which could bring millions of new tourists, Lazar said.

The investor would have a 60-hectare area to build new offices and residential and commercial properties and is obliged to build 20-25 hectares of green area, the largest contiguous green area in Budapest. Infrastructure development would cover around 30-35 hectares.

A fast railway link would be established between Budapest centre and Liszt Ferenc International Airport.

The government on its own part will carry out €1bn worth of infrastructure investments, which include the reconstruction transport hubs in the area and the extension of Europe’s second-oldest metro in Budapest.

Critics warned that the government gave a free hand to the investors to build skyscrapers in the area lying a few kilometers north of the iconic Heroes Square, which would completely transform the city’s skyline.

At the press conference, Szijjarto said enhanced cooperation between Hungary and the UAE could pave the way for investments in other branches of the economy

Bilateral trade between Hungary and the UAE had climbed over $1bn a year and pointed to the presence there of Hungarian companies in the food industry and ICT sector.

Mr Al Zeyoudi called the agreement a "milestone" for economic relations with Hungary and said there was potential for further cooperation in the food industry and energy sector, including nuclear and renewables.