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Buying a Property in Albania

Why Buy Property in Albania?

Albania has recently been one of the ‘forgotten’ states of Europe, but is now beginning to emerge from the shadows as one of the next emerging destinations for overseas property buyers. With a beautiful coastline on the Adriatic Sea, a developing economy, and a government that has been elected on a manifesto of cleaning up crime and corruption and growing the economy, optimism is high.

The country managed to avoid getting involved in the devastating Balkan conflict of the 1990s, and amid the new-found stability of the region, combined with the solidity of Greece on its southern border, Albania has managed the transition from Communism to democracy with relative ease. There have been some issues, and no-one in Albania would claim the system is yet perfect, but things are moving in the right direction.

Albania is not yet the finished article for overseas property investment by any means, but it is often in this kind of country that the best offers are to be found. In fact, studies have shown that prices in Albania are among the cheapest in Europe – which also means yield have remained stubbornly low. However, as the global economic slowdown hit, the property market in Albania had not developed to such a point where property was overvalued, or excessive development had caused a glut of supply. Therefore, there are those who feel that Albania could be extremely well-placed when the overseas property markets begin to pick up again.

Popular buying locations in Albania

As Albania is clearly still an emerging market for the overseas property industry, for the vast majority of people who buy there in the next couple of years there will be at least some element of investment to their purchase. As property buyers will be looking for the tourist market to make up most of the rentals, and then towards the local market as the economy continues to develop, rentability will be a key factor in deciding both what type of property and where they purchase.

There are a number of options available for property in Albania, focusing mainly on two types – city apartments and beach properties.

City apartments will, for the moment at least, be limited to the capital of Albania, Tirana. As well as being centrally located geographically, Tirana is the commercial and cultural hub of Albania. It is also home to around one in five of the Albanian population, therefore having good potential for rentals as the country develops and the population look for more luxurious property in which to live.

Tirana is also growing and developing its infrastructure as its free market economy begins to mature. Tirana international airport has been recently renovated at a cost of over £40 million, and the current housing stock is of low quality. The demand for new housing is high, and with very low prices per square metre, investment prospects are attractive.

On top of this, there is the potential to buy properties to let to students in the future. Tirana is also an educational centre, with eight universities in the capital itself.

Outside of the capital, the best places to invest are along the coastline, which leads from the Adriatic Sea in the north to the Ionian Sea in the south. Albania is already something of an established tourist destination in the local region with many visitors from Italy, Greece, Germany and Italy, particularly during the high season from June to August.

As a result, there are already a number of well-established coastal resorts in Albania which could easily present some great investment opportunities in the medium- to long term.

Durrës is the former capital city of Albania, and now an important trading and port city, having become the primary external commercial outpost of the country. Durrës is also the favoured destination for Albanians living and working in Tirana to escape for the weekends, and many of the more well-off inhabitants of Tirana have second homes in the city. Travel from Tirana to Durrës takes just 35 minutes by car, the same as it does from the international airport.

Property is primarily apartments near the centre, and with the tourist season running throughout the whole of June, July and August, and the fact that accommodation is so hard to come by during this period, there are good opportunities to rent property out. Prices are slightly higher here than in Tirana, but rental yields of up to eight per cent should be realistically achievable.

Outside of the main season, the climate in Durrës is pleasant enough to make it and ideal holiday home destination. Capital appreciation is also impressive, with property prices rising by 15 per cent per year for the past two years, though forecasts for the future will be somewhat below this if growth does continue.

Further south, Vlora is the second port in Albania, and marks the confluence of the Adriatic and Ionian seas. It is an important trading city for Albania’s exports, but is by no means an industrial blot on the landscape.

The city, the base for a booming tourist trade along the coastal reaches, has a rocky coastline extending in both directions away from it with sandy beaches dotted throughout. Behind the city, the landscape is framed by nearby mountains.

Vlora itself is a pretty and colourful city, with wide boulevards and a relaxed pace of life. The palm trees that decorate the place give it a real Mediterranean feel, while the Llogora National Forest is just half an hour away. The drive from Tirana currently takes around three hours, but the local military airport is under tender for commercial conversion, which would no doubt spur on the growth of the property market. Capital appreciation is estimated to be at around 20 per cent per year.

Finally, the gateway to the south of Albania, Saranda, is also an important tourist and trading town, located as it is just a thirty minute ferry journey from the Greek island of Corfu. This is the part of Albania with the warmest, most Mediterranean climate, and commonly known as the most attractive town on the Albanian Riviera. Attractions for tourists, aside from the warm seas, include the ruins of the World Heritage Site at Butrint.

The tourism market in Saranda is booming due to a high number of honeymooners visiting the town, and attracted by the proximity to Corfu. Property prices are around €650 per square metre, though capital growth is unlikely to continue at the rate of 20 per cent per annum seen in the past couple of years.

Legal issues

There are currently no restrictions on UK citizens owning and buying property in Albania, but there are certain issues to make sure you are aware of, and that you have all contracts and official documents checked but an independent lawyer to ensure you know what you are signing. You will also need to have a notary public engaged in order to register the purchase and act for both sides during the property purchasing process.

In particular, it is important to make sure the title deeds of the property are thoroughly checked to make sure you are buying from the true owners and they have the right to sell to you. Since the end of Communism in the early 1990s, properties in Albania were handed back to the people from the state. It is estimated that some 85 per cent of property has now been checked to have correct title deeds, but the remaining 15 per cent is mostly in Tirana and on the coast, so making sure your lawyer checks this is imperative.

Linked to this is the concept of building permission – the concept of property development is quite new, so permissions were not always sought or granted to construction companies. This situation has now improved vastly, but it is worth checking into this as well.

There is a strong history of corruption in Albania at all levels of society since the country emerged from Communism into the free market in the early 1990s, and anyone investing in the country would be well-advised to take this into account at all times. The Transparency International website (www.transparency.org) gives Albania a rating of 2.6 out of 10, lower than the 3.1 of Romania or the 4 given to Bulgaria.

The new government which came to power in 2004 has made fighting corruption one of its top priorities, introducing new laws and setting up an anti-corruption task force. As the country hopes to enter the EU in 2014, these efforts will continue and are likely to be extended, so the situation in this respect should improve.

The 1990s also saw a series of disastrous pyramid schemes collapse in Albania, bringing chaos to the country and rioting as people lost their savings. The schemes were set up as an alternative to banking in the new free economy, with early investors getting their payout from those who came in later on. However, they were badly managed and badly run, and collapsed resulting in the loss of huge sums of money and a government that struggled to govern. Despite this, investors are expected to receive at least part of their money back from the liquidation of the companies in the future, and the economy has bounced back.

More pages

Page 1: Why Buy Property in Albania?
Page 2: The property buying process
Page 3: Albania property: Investment potential

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