Adverts for the estate call Bosnia a Muslim country “gifted with beautiful nature by Allah.”
The complex is reportedly surrounded by heavy security, gates and high walls.
It was also reported that the women who live there stay there all year round, raising their children there as well while the men they are married to are only occasional visitors.
One estate worker told local media: “The owners do not want to mix with the local population.
“They have their own traditions when it comes to clothing, behaviour and prayer, and do not want people staring at them.”
Now developers are planning to double the size of the private village.
Local media have complained to regional officials that it is unlawful for a foreign power to be able to buy up parts of the country and ban locals from entering it.
Some locals have begun a protest campaign with leaflets featuring women in burqas with the message “Go Away.”
One local pharmacist agreed: “We are Muslim, but we are praying at home and in mosques, and we are a secular state. They are different from us.”
The news of the Arabic village follows on from revelations last year that Islamic State militants had established a stronghold in a picturesque village in mainland Europe where everyone is “ready to respond to the summons to jihad.”
Land in Osve, Bosnia and Herzegovina, was being bought by ISIS fighters and security services who believe the area is used to train terrorists, according to reports.
The discovery comes after the mountain village of Gornja Maoca in the country, where residents fly the notorious ISIS flag, was raided by police.
Militant Islam was all but unknown to Bosnia’s mostly secular Muslim population until the Balkans wars in the 1990s when Arab mercenaries turned up to help the outgunned Bosnian Muslims fend off Serb attacks.
These fighters, many of whom settled in Bosnia, embraced a radical version of Islam that Bosnia’s official Islamic community opposes.