TIRANA, March 24 – Albania’s property market is again becoming increasingly attractive after being forgotten during the half-century communist regime as well as during the Balkan wars.
However, these problems appear to be in the past. Albania is now often discussed by those seeking foreign investments.
Albania had a six per cent GDP growth in recent years. At the same time, it should be noted that it still has a relatively low cost of living.
Among Albania’s main attractions for foreigners looking for overseas property are the ease of obtaining financing; low transaction costs; no taxes on purchase, capital gains, withholding or inheritance; no value added tax on real estate purchases; no state or wealth taxes; no transfer tax; and high capital growth.
When looking at price rises, it has to be taken into consideration that before 2004 there was not really a property market. However, as of 2005, desirable units in Tirana and around the coast have been appreciating by some 30 per cent per year-on-year. Most experts predict that Tirana property values will show an annual growth of about 25 per cent in the coming years, thanks to a continued influx of expatriates, embassy staff, overseas government support and supply organizations.
New commercial buildings line the main road into the city and companies such as Citroen, Fiat, Opel, Mercedes, Coca Cola, Hewlett-Packard and Peugeot have opened distributor sites in the country. Salaries are rising and over the past six years, city-centre apartment prices have quadrupled. Land prices have registered a threefold increase over the past year alone.
Average monthly apartment rents in the capital vary from 2.5 to six euro per sq m. Renting a house starts at 5.7 euro and can reach 19 euro a sq m. There is not really an established office or retail space market, especially outside Tirana, however office rents fluctuate between 3.2 and 6.4 euro a sq m a month, reaching 25-26 euro a sq m in the capital’s centre. Commercial properties command similar rents. The cost of buying agricultural land varies between four and seven euro per sq m, but can reach 25 euro in some areas. The plots that were expropriated for public use around the upcoming high speed inter-state road, from the Albanian port of Durres to the Bulgarian port of Bourgas, may be valued as high as 70 euro a sq m.
International buyers can make a commercial investment if its value exceeds three times the cost of the land, and though agricultural land may not be purchased, it can be leased for 99 years. If a foreign investor operates through an Albanian legal entity, such as a subsidiary, the acquisition of construction land need not be subject to prior approval.
But like many countries in the Balkans, the largest problem is obtaining clean title deeds. The Albanian government is still in the process of returning property to its pre-communist owners and disputes over ownership and forged title deeds can be an issue.
There are some internationally renowned agents who sell Albanian property. Research found that the UK-based Barrasford and Bird, and Emerging Markets Understood Ltd (EMU) operate in the market; Colliers consultancy has recently opened an office; and RE/MAX real estate agents are contemplating buying a franchise and entering the market.
Albania sits on huge supplies of oil and other reserves such as chrome, which remain largely untapped. These are attracting many international companies wishing to bid for the right to drill and mine.
Less than ten per cent of sales in the capital are made to foreign investors, which means that investment in Tirana is safe and sustainable, as there is a high demand for rental accommodation. A new “luxury” end of the market is developing as more foreign nationals come to Albania for their work and many wealthy expats return.
Like the rest of the country, road infrastructure is being improved with a new ring road around Tirana which will be connected to other routes that are also under construction.
Resolving the power supply crisis would be a considerable push to this market.
