Apartment prices down, rents up 16%

TIRANA, Feb. 17 – While apartment prices in Tirana registered a turning downward point for the final quarter of 2011, rental prices rose by 6.1 percent y-o-y and 16 percent compared to the third quarter of 2011. The findings are revealed in the latest Bank of Albania monetary policy report for the fourth quarter of 2011. The central bank explains the considerable increase in the rental price index as a year-end seasonal trend.
Meanwhile, apartment prices dropped by 3.8 percent in real terms during the fourth quarter of 2011, compared to an annual 10.3 percent in the third quarter of 2011.
The construction industry, once the main driver of the Albanian economy, is experiencing its worst situation in the past 20 years. Latest INSTAT data show the construction sector continued shrinking in the second quarter of 2011.
The construction sector continues suffering crisis effects since 2008 due to falling demand and tight lending standards. For the fourth quarter of 2012, confidence in the construction sector dropped by 7.2 percent, plunging into its lowest historical level of -26.2 percent. While demand and production in construction worsens, employment also fell by 3.5 percent in the final quarter of 2011.
The construction and industry sectors in Albania account for 15 percent and 10 percent of the GDP respectively, employing around 19.9 percent of the population, according to Eurostat 2009 data.
Reports show citizens are becoming more reluctant to buy new apartments because of falling revenues and especially a sharp decrease in immigrant remittances. Apartments prices in Tirana vary from 700 to 2500 euros/m2 in downtown Tirana compared to 400-650 euros/m2 in uptown areas of new ring road and Fresku.