Real estate market recovers from crisis

TIRANA, August 2 – Last year, the real estate market in Tirana signaled the first signs of recovery from the economic crisis in 2009. Both office and retail markets experienced a moderate drop in vacancy rates while maintaining stable rents, says Colliers International in its 2011 Albanian real estate review.
For 2011, Colliers International anticipates stability accompanied by stable vacancy and rental rates in the office market. Growth is expected in the retail sector with the entrance of the newest and largest shopping mall in Tirana, Tirana East Gate. Completion is expected in the second half of 2011.
In contrast to the first half of 2010, where prices marked a slight decrease in rental rates, during the second half of 2010, rental rates in most office buildings in Tirana were kept constant and this is estimated to continue in the first half of 2011.
Rental rates continue to average at about Euro 19.5/Sqm, Euro15/Sqm and Euro 13/Sqm in overall grade A, B+ and B office buildings respectively.
Due to the economic downturn, which had a direct impact on the demand for office space, the Tirana market witnessed an increase in vacancy rates in H1 2010. Demand for office space picked up during the second half of 2010, however, leading to a decrease in the overall vacancy rate.
Overall, tenants have become more price sensitive, requiring good locations at lower prices, says the report. Demand is continuously increasing towards office space in the suburban areas due to affordable rental rates and parking availability, which lacks in almost all grade B+ and B office buildings.
In contrast to the office sector, which has been steadily growing over the last 10 years, the retail market is much younger. New supply activity only really started after 2005, and has been active ever since except for a lull in activity during 2006 and 2010.
In contrast to previous shopping trends, where the high street and central shopping centers dominated the market, today many Albanian consumers shop at retail stores and malls such as City Park, QTU, Casa Italia, Megatek and Praktiker, all located in the outskirts of Tirana.