UPDATE: Albania and the Global Economic Crisis

In October last year (2008), I reported an article on the affect of the global economic crisis on Albania. And now I thought it was time that I provided an update.

My first response still is - just remember - the press are reporting on the very worst and paying little attention to all things good and profitable in the world at the moment.

My second response now is - yes Albania is feeling the effects to a degree.

In respect to banking, the banks in Albania are not really suffering. They have always charged high account keeping fees, commission when you receive money into your account and commission when you send money from your account, and now that some are offering internet banking, they are charging for this too.

Also they have always kept a large, buffering "spread" between the Euribor or Bank of Albania rate, and the "real" rate they offer to customers. This spread has generated large profits for these banks, and if you visit Albania you will see:

- enormous expensive advertising banners from the banks
- branches being expanded and refurbished
- advertising in the press and on TV

And regarding mortgages, you will see Albanians are having difficulty obtaining mortgages, and foreigner mortgage products have all but disappeared.

And what about Real Estate?


The Tirana Times recently reported that a local real estate agent stated that around 4,000 new build apartments are available for sale in Tirana - displaying an oversupply. I'm not exactly sure if this is true, or what this means, and various locals have their opinions.

But there is no denying that very few people are buying property in Albania at the moment, and sales are very quiet.

Does this mean prices will come down? Maybe a little. Maybe 15%. But developers do not seem to be budging much at the moment. They are holding fast hoping the summer season will bring the usual wave of tourists as potential buyers. I think they will be surprised.

I believe the reason for the sales halt, is the lack of finance for locals, foreigners and investors, and the general fear of buying or investing in anything at the moment. It has NOTHING to do with the investment potential of Albania.

Recently someone emailed me, asking me why Saranda apartments were so expensive. They were comparing Saranda to the Black Sea Coast in Bulgaria. But what they should be comparing Saranda to, is the Adriatic coast or Mediterrean Coast, which is more accurate in accommodation demand and similar weather. Prices up the coast in Croatia, or Montenegro or down on the coast in Greece, are still substantially higher than Albania.

And Tirana, is STILL a substantially CHEAPER capital in all of Europe and the Balkans.


Rents seem to be holding in Tirana at the moment. Near the Centre, a modern furnished one bed can rent from EUR350-400 per month, and a 2 bed from EUR500-800 per month. This can generate a rental yield from 7% to 10%, which is a very impressive yield for an emerging European capital.

On the coast, rentals are a little lower, but have just as much potential at the capital city. Tourist numbers this year are expected to be very high. Apartment bookings in Vlora started in February this year, much earlier than normal. And my friend at Belle Air tells me flights from the 27 destinations in Italy to Albania between May and September are getting close to fully booked. And the usual influx of Kosovans and Macedonians is expected. This will all put enormous pressure on accommodation on the coast this summer.

Also hotels keep putting their rates up. The effect of this? - Youth Hostels start appearing as a cheaper alternative, and many people opt to stay in apartments to keep costs down.

Either way, promising rentals in the capital and on the coast can only be happy news for investors.


Even the most sceptical Albanians cannot deny, infrastructure has improved. Roads are 10 times better than 2 years ago. Tirana to Vlora is now 2.5 hours, and Tirana to Saranda only 5.5 hours - a 30% cut in travel time.

A new road into Shengjin has cut travel time from the highway (and Lehza) to just 7 or 8 minutes. And the roadwork continues all around Albania.


This small section of highway between Tirana and Durres, with the International Airport accessible from the middle, is changing on a weekly basis. Commercial construction along this 30km road has exploded. New offices and warehouses seem to appear every week. Familiar faces crowd this once empty new road - from Coca Cola to DHL to Veko to new car showrooms - Mercedes, BMW, Toyota, Opel, Ford, Rangerover, Peugot, Renault and Fiat.

New shopping centres have appeared too - like Casa Italia (Kamza Crossing) and QTU. And shortly the largest shopping "village" will open - City Park Tirana - in September, which already has 75% of its commercial spaced pre-leased:

Also a new hospital is under construction at Kamza Crossing:

The opportunity in Albania for business is now, as unlike other countries in Eastern Europe or the Balkans, Albania's population will continue to rise. As the economy improves, new companies set up offices and branches, and Albanians will return from abroad to take advantage. So the property market will grow again under this demand - and prices will start to rise sharply by 2010 - 2011.

Also as a holiday destination, this is one of Albania's greatest untapped resources. I have seen this myself in my travels across Albania - beaches, cities, castles, lakes, pine forests - all such HUGE potential:

In summary, Albania will be affected by the crisis - remittances will be down, some small businesses will fail, some employees will lose their jobs and spending will slow. But from another aspect Albania will continue to grow and not recess, despite world events. The population is going up, wages are affordable for companies (despite being higher than other countries like Bulgaria), company taxes are very low, infrastructure is improving, FDI will continue and the scenery and coastline is just stunning.

Still, as last year, if a property investor waits for the global economic crisis to settle, they may just miss out on the best property investment opportunities in Europe.

Për të komentuar tek Peshku pa ujë, ju duhet të identifikoheni ose të regjistroheni (regjistrimi është falas).