The project, still in its developmental phase, is set to extend over an area of 6,500 square metres just south of the famous 19th century Stadtpark with bisects the Wien river.
The plans include a huge hotel, luxury apartments in a high-rise tower, fitness and sports facilities, a new conference venue and a 1,000 square-metre indoor skating rink.
Open-air areas accessible to the public are also planned, which the city said will represent an architectural “improvement” in the area, giving it an “attractive” and “modern” feel.
The project, set to break ground in 2019, will also “enhance Vienna as capital of music”, the city's ruling Social Democratic and Green party coalition said.
But the World Heritage Committee (WHC) took issue with the tower's height of 66.3 metres – downsized from the original 75 metres following protests.
The Committee, which is meeting in Poland, said the project “fails to comply fully with previous Committee decisions, notably concerning the height of new constructions, which will impact adversely the outstanding universal value of the site”.
Unesco has capped the height limit for a building in the city centre at 43 metres.
The coalition argued that other post-war buildings in the area are either taller or of similar height to the proposed tower.
City officials reacted to the Committee's decision by saying they were determined to keep the city centre as a recognized World Heritage site, which Unesco designated in 2001.
The city has until next February to convince the Committee not to drop the label.
Local residents who oppose the project also worry about losing the Unesco World Heritage designation, which they say would act as an open invitation to more high-rises.
The city said there were no other such projects in the works.
“The historic centre of Vienna is rich in architectural ensembles, including Baroque castles and gardens, as well as the late-19th century Ringstrasse lined with grand buildings, monuments and parks,” Unesco said of the site, adding that it “played an essential role as a leading European music centre”.
But it has also warned that the city's “continuing development requires a very sensitive approach” that needs to keep in mind what makes the property so valuable, “including its visual qualities, particularly regarding new high-rise constructions”.
By listing sites on the UN cultural organization's World Heritage in Danger list, Unesco seeks to mobilize the international community to protect them.
It lists two categories of dangers: either “ascertained” – specific and proven imminent threats – or “potential”, when property faces threats which could negatively affect its world heritage value.
Adding a site to the list allows the allocation of immediate World Heritage Fund assistance to the endangered property and alerts the international community in the hope it will join efforts to save the endangered sites.