Konfindustria demands lift of construction ban

“The freeze of construction permits has brought a chain reaction in this sector including the construction material industry,” says the Konfindustria Association.
TIRANA, Nov. 24 – Almost one year since local government units have been banned to issue new construction permits, the Konfindustria association has called on government to review this decision which it says is taking the construction industry into collapse and endangering the country’s economic recovery. The appeal came ahead of a decision by the Constitutional Court later this week which turned down a request by the Association of Municipalities to lift the ban which it had described as unconstitutional and damaging local autonomy.
The Konfindustria Association has asked the National Territory Adjustment Council led by Prime Minister Edi Rama to revise its decision that bans local government units to issue permits even under emergency conditions such as reconstruction.
“The freeze of construction permits has brought a chain reaction in this sector including the construction material industry. Institutional inability to control legal violations with construction permits cannot be solved out with the complete ban of a very important economic activity for the country,” says the association representing some of the top manufacturing and service companies.
“The consequences of an almost complete ban on private entrepreneurship in the construction sector are being felt directly on the national economy, also posing a serious threat to the target of a 3 percent GDP growth for 2015,” adds Konfindustria.
Other business association including the American Chamber of Commerce have also denounced the situation, as a barrier to attracting foreign direct investment.
No construction permits at all were issued in eight out of Albania’s 12 regions in the third quarter of 2014, including Durres, the country’s second largest city. INSTAT data shows some 43 construction permits were issued in the region of Tirana in the first half of 2014 out of a total of 97 nationwide.
In late 2013, Prime Minister Edi Rama announced a freeze on construction permits issued by local government units, i.e municipalities and communes, until the local elections of 2015, to prevent what he called an ‘urban massacre’ in the country.
Having been one of the key drivers of Albania’s growth in the pre-crisis decade, the construction sector has been one of the hardest hit in the past five global crisis years.
The severe situation this long-ailing sector is facing is also unveiled by its 22 percent shrink in the second quarter of this year and its negative contribution by 2.8 percent to the quarterly GDP when the country’s economy suffered a slight decline.
Declining remittances, tighter lending standards on home loans and lower number of construction permits have considerably affected this sector which used to be one of the key drivers of Albania’s average growth of 6 percent annually in the pre-crisis decade.
INSTAT data shows the construction sector accounted for 12.2 percent of the GDP at the end of 2013 down from a record 18 percent in 2008 just before the onset of the global financial crisis.
The standstill in this sector is also unveiled by a recent survey conducted by the central bank, revealing that a record high of two-thirds of real estate agents reported they had failed to sell any property in 2014..
Reports show citizens are becoming more reluctant to buy new apartments because of falling revenues and especially a sharp decrease in immigrant remittances. This is confirmed even by data of the Albanian Association of Constructors which says some 4,000 apartments remain unsold because of falling purchasing power.
House and rental prices have also been on a downward trend.