Real Estate Market in Albania
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REAL ESTATE MARKET IN ALBANIA FEBRUARY 2011 1 Contents REAL ESTATE MARKET IN ALBANIA ..........................................................................3 Industry Overview .......................................................................................................3 Economy Overview .......................................................................................................3 Geography .......................................................................................................................3 MAJOR DEVELOPMENTS ...............................................................................................3 Regulations .....................................................................................................................3 Leading Companies .......................................................................................................3 SUPPLY ...............................................................................................................................4 Residential Real Estate ................................................................................................4 Office Real Estate ..........................................................................................................4 Retail Real Estate ..........................................................................................................5 Industrial Real Estate ...................................................................................................5 DEMAND ............................................................................................................................5 Residential Real Estate ................................................................................................5 Office Real Estate ..........................................................................................................6 Retail Real Estate ..........................................................................................................6 Land Market ...................................................................................................................6 INVESTMENTS .................................................................................................................. 7 Residential Real Estate ................................................................................................ 7 ASSOCIATED INDUSTRIES AND FACTORS ................................................................ 7 Factors .............................................................................................................................8 FORECASTS .......................................................................................................................8 Residential Real Estate ................................................................................................8 Retail Real Estate ..........................................................................................................8 Office Real Estate ..........................................................................................................8 Land Market ...................................................................................................................8 INDUSTRY REFERENCES ...............................................................................................8 DISCLAIMER ......................................................................................................................9 2 REAL ESTATE MARKET IN ALBANIA Intense government investment spending, amounting to 9.9% Industry Overview of GDP, was the main reason behind the stable aggregate demand in the economy. In the first quarter of 2010 FDI The recently booming Albanian real estate market, mainly pro- amounted to EUR 155.3 mln, compared to EUR 123.4 mln in pelled by low rices, strong demand and high yields, faced a the same period of 2009. slowdown in 2009 and the beginning of 2010 under the effect of the global economic crisis and the restrictive regime for issu- In 2008 Foreign Direct Investment (FDI) accounted for 6.8% ing of building permits in the capital Tirana. In 2010 the market of GDP, but according to projections of Bank of Albania in revived, driven by the residential segment and the efforts of the 2010 the level of FDI should rise to 23.7% of GDP. Government to attract foreign investors. The office and retail real estate markets however experienced a standstill with lack MAIN ECONOMIC INDICATORS of new supply and fall in rental rates. Q3 2010 2009 2008 2007 2006 GDP (in bln ALL) - 1,144 1,088 967.7 882.2 GDP (real, yoy %) 4.9 3.3 7.7 5.9 5.4 Economy Overview Inflation (yoy %) 3.4 3.7 2.2 3.1 2.5 Unemployment (in %) 13.5 13.8 13 13.5 13.8 Albania was among the few European countries to maintain positive GDP growth in 2009. Following several years of rap- FDI (mln EUR) - 700 682 452 260 id GDP growth, between 5.0% and 7.7%, Albanian economy Source: INSTAT; Bank of Albania slowed down to 3.3% in 2009. The World Bank predicts that GDP of Albania will grow by an Geography annual 3.0% in 2010 and 4.5% in 2011, while the International Monetary Fund (IMF) forecasts annual growth of Albanian In 2009 real estate market in Albania was concentrated in economy by 2.6% in 2010 and 5.0% by 2015. IMF expects the capital Tirana and in major coastal towns and seaside consumer prices to increase at a steady rate of 3.0% on the resorts, such as Fier and Vlore in southwestern Albania and year in the long term. The unemployment rate is estimated to Durres in northwestern Albania. drop to less than 11% by 2015, down from 13.5% in the third quarter of 2010. MAJOR DEVELOPMENTS estate cannot be transferred. All issues concerning real es- Regulations tate registration are managed by the Central Office of Real Estate Registration. Companies operating on the real estate market and engaged in property evaluation need a permit issued by the national Acquisition of real estate in Albania is not subject to approval licensing authority Qendra Kombetare e Licencimit (QKL). from any authority, except in cases of non-Albanian citizens or companies buying land for construction. The Law on Sale The most important legislative acts that arrange real estate and Purchase of Land Plots states that foreign individuals issues in Albania include: and entities can buy land plots for investing purposes or land • Law 7850/29.07.1994 Civil Code of Republic of Albania plots already used for such purposes, on the condition that (amended); the overall value of their investment exceeds three times the • Law 7843/13.07.1994 on Registration of Immovable Prop- value of the land plot. erty (amended); • Law 7980/27.07.1995 on Acquisition of Land for Con- According to Law 8337/30.04.1998 on Transfer of Ownership struction (amended); Title of Agricultural Land, Forest, Pastures and Meadows and • Law 8337/30.04.1998 on Transfer of Ownership Title of Law 7980/27.07.1995 on Acquisition of Land for Construc- Agricultural Land, Forest, Pastures and Meadows; tion foreign individuals and legal entities cannot acquire • Law 9235/29.07.2004 on Restitution and Compensation ownership over agricultural land, forests, pastures and mead- of Property (amended); ows. They are only allowed to lease these types of land from • Law 8743/22.02.2001 on State Immovable Property the state for a period of 99 years, provided that they meet (amended); the compulsory requirements in the Civil Code. To avoid this • Law 8744/22.02.2001 on Transfer of Public-owned Prop- prohibition, foreign persons can register as Albanian legal erties to Local Government Units (amended). entities in accordance with Law 7764/02.11.1993 on Foreign Investments. In accordance with the Civil Code and Law No. 7843 on Reg- istration of Immovable Property, real estates must be entered in the real estate register. Otherwise property rights on real Leading Companies 3 In 2010 the total number of companies registered in the Na- • Century 21 Albania Sh.p.K. (Tirana); tional Registration Center was 32,820, of which 197 were • Crespi Estates Sh.p.K. (Saranda); active in real estate. Leading Albanian real estate companies • Dev-Inf Sh.p.K. (Tirana); include: • Fresh Property Co.(Tirana); • Albania Property Group Sh.p.K. (Tirana); • Pespa Imobiliare Sh.p.K. (Durres); • Alb-Estate Sh.p.K. (Tirana); • Pestalozzi Group Sh.p.K. (Tirana); • Albania Properties Sh.p.K. (Tirana); • Prona-AL Sh.p.K. (Tirana); • Uniqa Real Estate Albania Sh.p.K. (Tirana); • Usluga Sh.p.K. (Tirana) • Danos & Associates Sh.p.K. (Tirana); 3 SUPPLY BUILDING PERMITS BY TYPE OF BUILDING NUMBER OF COMPLETED RESIDENTIAL BUILDINGS AND FLOOR AREA (IN SQ M) Number of Average Cost Year Floor Area (sq m) Value (mln ALL) Type of Building 2009 2008 2007 2006 2005 Buildings (ALL/sq m) Buildings 2,321,000 2,880,000 1,275,000 2,563,000 2,719,000 2008 910 2,222,000 60,199 27,092 1. Residential 1,897,000 2,222,000 884,000 2,085,000 2,307,000 2007 466 884,000 23,137 26,173 2. Non- 2006 1,491 2,085,000 55,346 26,544 424,000 658,000 391,000 478,000 412,000 residental 2005 1,750 2,307,000 65,173 28,250 a. Hotels 32,000 11,000 12,000 39,000 21,000 2004 885 923,000 25,452 27,575 b. Wholesale 202,000 265,000 133,000 202,000 170,000 and retail trade Source: INSTAT c. Industrial 89,000 217,000 130,000 115,000 79,000 d. Other 101,000 165,000 116,000 122,000 142,000 Office Real Estate Source: INSTAT Tirana Business Park, the largest commercial construction pro- BUILDING PERMITS BY TYPE OF CONSTRUCTION ject in Albania, was