In 2023, Albania outpaced Germany, France, and the United Kingdom in the rankings compiled by Prian for the most sought-after countries for real estate investment. The nation has shed its label of obscurity, attracting international buyers to the vibrant cities of Durres, Vlora, Saranda, and many other seaside locations. In this article we are going to delve into the costs of properties within this emerging hotspots and explore the factors driving the prices upward.
Price fluctuations for apartments in Albania
Real estate prices in Albania have been consistently rising for the past seven years, with a notable 24.5% increase recorded from 2020 to 2023, as reported by the national Central Bank. Yet, the capital and sought-after resort areas have witnessed an even more pronounced upward trend.
Saranda is a striking example. This city is a jewel of the Albanian Riviera located in the country's south. Here, in 2023 alone, the price of apartments surged by 25–45%, depending on the quality of the development and its location, with premium prices commanded by new constructions boasting sea views.
Shengjin, a tourist-favored village nestled on the northwest coast of Albania near Lezha, is experiencing this trend as well, experiencing a 20–30% increase in property prices within a year.
Durres, Albania's largest coastal port city, also has experienced a 20% rise in prices for apartments in 2023.
The post-pandemic era has seen an acceleration in these price hikes across Albanian real estate, and there are no prospects for a sharp change in course in the near future. Let's explore the reasons behind the escalating costs of apartments.
In countries where foreigners account for more than 5% of real estate transactions, the market is deemed to have international appeal. When overseas investors account for more than 20% of property purchases, it signifies a buying spree that fundamentally alters market dynamics, often leading to an increase in prices.
In Albania, according to data from the Central Bank, a foreigner purchases one out of every three properties.
It's essential to note that this classification includes ethnic Albanians residing abroad, who represent a significant diaspora in Italy, Germany, and other European Union nations. A considerable number of these expatriates are now channeling investments back into their country of origin.
Recent years have seen a surge in property acquisitions by Russian and Ukrainian nationals, partly due to Albania's offer of a residence permit through the purchase of real estate of any cost. Additionally, Italians, Germans, Scandinavians, and citizens from neighboring Balkan states have been consistently active in the market.
In the first nine months of 2023 alone, international buyers invested €222 million in Albanian real estate, underscoring the country's growing appeal on the global stage.
Reason 2: Short-term Rentals
Albania is currently riding a wave of unprecedented tourism growth. In 2023, the nation hosted more than 10 million visitors (+34%), achieving its most impressive performance to date.
The influx of tourists leads to an increase in demand for daily rental housing. There are more than 20 thousand apartments rented through Booking, Airbnb and other similar services throughout the country. And their number is increasing every month.
By September 2023, the inventory of properties listed for short-term rental on Airbnb in Albania saw a year-on-year increase of 25% and surged by 120% when compared to September of the pre-pandemic year 2019.
With the sector generating revenue in the tens of millions of euros, it's no surprise that new property owners are seizing the chance to profit from this booming market.
Reason 3: Escalating Construction Costs
Albania, along with numerous European nations, encountered a spike in inflation after pandemic. This compelled the Central Bank to implement stricter lending policies, which, in turn, escalated the borrowing expenses for developers.
As a result, the cost of construction materials and the wages of industry workers surged.
Consequently, this led to an uptick in the prices of new constructions, prompting an upward adjustment in the secondary market as well.
Reason 4: Implementation of New Taxes
Albania is in the midst of overhauling its real estate market to enhance transparency for all stakeholders. The most significant reforms are:
Platforms like Airbnb will serve as tax agents for property owners profiting from short-term rentals, aiming to legitimize this business segment.
The government is crafting a reference price map for properties to eliminate the underreporting of asset values in contracts for tax reduction purposes.
Developer fees, including infrastructure taxes, are on the rise with the objective of boosting municipal funds.
These initiatives, while fostering a more comprehensible and regulated market in the long run, are likely to induce further price increases in the near future. And the reason is because property owners and developers are expected to offset these additional expenses by passing them on to purchasers.
Reason 5: Infrastructure Developments
Albania is a developing country. Much has not yet been built here, and there is an array of large-scale infrastructure projects underway. These developments are not only transformative for the landscape but also serve as a catalyst for appreciating real estate values in their vicinity.
Key development projects include:
The yacht port in Durres is undergoing a comprehensive renovation. This ambitious project extends beyond a marina, encompassing a variety of tourist amenities, with an overall investment of $2 billion.
Vlora's marina is experiencing a similar uplift. This extensive, multi-purpose project boasts a $380 million budget, signaling a significant enhancement to the area's appeal.
An Olympic Park is being built in the capita. This expansive project will feature a stadium, hotels, and offices, with a budget of $800 million. In addition, Tirana is witnessing the construction of several striking skyscrapers and the expansion of its airport.
For up to €1,000 per square meter, buyers can find properties on the secondary market. These are typically apartments in urban buildings constructed between five and ten years ago. While these units might not boast sea views and are generally in average condition, often necessitating cosmetic updates, they represent an accessible entry point into the market.
For those looking at a budget ranging from €1,000 to €2,000 per square meter, Albania offers new or recently renovated apartments with beautiful views. The pricing within this range is influenced by several factors, including the property's proximity to the sea and beaches, the scenery afforded by its windows, the quality of its finishes, and the availability of amenities within the complex, such as elevators, which add value to the property.
At the higher end of the market, premium offerings are available for between €2,000 and €4,000 per square meter. These are typically found in integrated resort complexes, which feature branded properties under professional management, offering a luxury living experience in Albania's picturesque resort locations.
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