TIRANA, Sept. 28 – The long-ailing construction industry which has revived in the past couple of years only thanks to some major energy-related projects, has seen a boost in this electoral year as the number of permits issued by local government units almost doubled, while their investment value quadrupled.
A report published by state-run statistical institute, INSTAT, shows some 298 construction permits were issued in Albania’s 12 regions in the first half of this year when Albania held general elections on June 25, with a third of them in Tirana. The number of construction permits registered a sharp 83 percent increase compared to the same period last year and a 4-fold increase in terms of investment value estimated at 16.5 billion lek (€122 mln) for the first half of this year.
Two thirds of the permits in the first half of this year were issued for residential buildings and the remaining third on hotels, office, commercial and industrial buildings, says INSTAT.
In addition to allegations related to left-wing-run municipalities increasing the number of permits to gain a possible electoral advantage, the number of permits has also grown as a result of an electronic platform on construction permits, in place since mid-2016 making the application process easier.
Dealing with construction permits was Albania’s worst indicator in the 2016 Doing Business report when the country’s business climate suffered a major setback, losing 35 places, before regaining them a year later.
The increase also comes at a time amid tighter measures against illegal constructions and at a time when Albania is concluding a legalization process on dozens of thousands of illegal buildings in the pre-2014 period.
The number of construction permits has seen a sharp decline in the past five years dropping to a few hundreds down from more than 1,000 annually before 2011.
INSTAT data shows the number of construction permits rose to 455 in 2016, up from a mere 170 in 2015, 360 in 2013, 1,604 in 2011 and 1,492 in 2008 just before the onset of the global financial crisis when the construction industry was at its peak level.
As elsewhere in the region, construction has been the most affected sector in Albania’s economy during the past six crisis years, losing its position as one of the key drivers in the pre-crisis years and cutting thousands of jobs.
However, the construction industry has gained momentum in the past couple of years mainly thanks to some ongoing major energy-related projects. The Trans Adriatic Pipeline bringing Caspian gas to Europe and the Devoll Hydropower plant, are already in their peak construction stage, being the main source of foreign direct investment in the country which peaked at about €1 billion in 2016.
While demand for new apartments in Tirana remains satisfactory, tight lending standards and poor demand remain a key barrier in other regions where thousands of apartments remain unsold especially in Durres and Vlora.
Developers have recently shifted to building tourists resorts and villages in coastal areas as tourism rapidly grows.
