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Everything you need to know is included in our Albania Property Pack
Are you considering buying real estate in the Land of Eagles? Are you thinking about when would be a suitable time to make a move?
Different individuals have different perspectives on market timing. The Albanian real estate agent you know might advise you that now is the opportune time to buy property, while your childhood friend from Tirana may suggest exercising more patience before making a decision.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Albania, we make decisions based on evidence and trustworthy data rather than subjective opinions or hearsay.
We have thoroughly examined all the official reports and statistics available on government websites. Now, we have a comprehensive database of reliable information and we can help you determining whether it is currently advantageous to purchase real estate in Albania.
Have a nice read!
How is the property market in Albania now?
Albania offers, today, a stable political and economic climate
Neutral
If you want to invest in real estate, prioritize stability as it fosters consistent cash flows and long-term wealth building. It is an information you need as a foreigner buying a property in Albania.
You'll be pleased to know that Albania is indeed a stable country for investors. The last Fragile State Index reported for this country is 56.7, which is a good number.
Albania has been steadily improving its domestic political and economic environment since the fall of communism in the early 1990s. The country has implemented a series of reforms to improve its business environment and strengthen its institutions, resulting in a more stable and prosperous nation.
The country provides a stable platform for investment. Next, let's assess the economic projections.
Albania is on track for significant expansion
Positive
It's better to check the country's economic viability before deciding on a property purchase.
As projected by the IMF, Albania is set to conclude 2023 with a growth rate of 2.3%, which affirms the country's positive direction. For 2024, we're talking 3.3%.
Besides that, the economy will keep growing since Albania's economy is expected to increase by 14% during the next 5 years, resulting in an average GDP growth rate of 2.8%.
The expected sustainable growth rate in Albania is a positive sign for investors, as it signals a stable and growing economy that is likely to continue to support real estate investments in the future. This provides investors with the confidence and assurance that their investments will be profitable and secure in the long-term.
However, there are other factors to consider beyond GDP growth.
Albanian business owners are more and more enthusiastic about the economic outlook
Positive
The GDP growth matters for property market evaluation, but may not reflect business community sentiments. Thankfully, in Albania there is an established metric that is routinely disclosed. It's not the case for every country, so we're lucky.
The metric, commonly referred to as the Business Consumer Index (BCI), quantifies business leaders' confidence in the current and future economic conditions through surveys and assessments.
According to the Bank of Albania's data, the latest Business Confidence Index value is 16 for Albania. This is a strong score.
If we look at the data, we can see that we're on a positive trend, moving upward. The BCI score has increased, 12 months ago it was at 10.
Strong business confidence among local businesses in Albania can have favorable implications for property investors. It indicates a positive outlook on the country's economy, leading to increased job creation and higher incomes. This positive environment can drive up the demand for properties, making it an opportune time for investors to earn rental income and potentially benefit from property value appreciation in the long term.
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Albania is providing a lot more building permits
Positive
The quantity of building permits delivered serves as a valuable indicator when determining whether it's a favorable time to purchase property in a country. When more building permits are issued, it points to a healthy and expanding property market.
We have great news for you: the number of building permits delivered is surging in Albania.
Within the past year, according to Instituti i Statistikave (INSTAT), the number of building permits delivered by the Albanian municipalities rose by 32.4%, from 1,396 to 1,849 units.
Without any doubt, the data shows that many people think it's a favorable time to invest in property.
It's worth mentioning that more real estate will become available in the market. This data suggests a potential future drop in property prices in Albania in 2024.
Albania's population is getting a lot richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Albania, the average GDP per capita has changed by 16.4% over the last 5 years. Very few countries have achieved superior results.
This means that, if you purchase a seaside apartment in Saranda and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Albanian cities like Tirana, Durrës, or Vlorë in 2024.
Properties promise modest rental yields in Albania
Neutral
Rental yield is a widely used benchmark for comparing different real estate investments.
It's the annual rental income of a property divided by its price. For example, if an Albanian property is purchased for 10,000,000 ALL and generates 500,000 ALL in annual rental income, the rental yield would be 5%.
Based on the data provided by Numbeo, rental properties in Albania promise gross rental yields from 3.0% and 5.7%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Albania.
It suggests a satisfactory level of income relative to the property's value.
Also, as we have seen before, there might be a fall in housing prices (because of more available properties) and potential tenants are getting wealthier. Consequently, gross rental yields are very very likely to soar in Albania in 2024.
Everything you need to know is included in our Albania Property Pack
In Albania, inflation is anticipated to be moderate
Neutral
Inflation is the overall increase in the cost of living.
It's when your usual plate of byrek costs 300 Albanian lekë instead of 250 Albanian lekë a couple of years ago.
If you're contemplating investing in a property, high inflation can bring you several benefits:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby boosting cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
According to the IMF's estimations, over the next 5 years, Albania will have an inflation rate of 14.5%, which gives us an average yearly increase of 2.9%.
This data is suggesting that Albania could experience a moderate rate of inflation in the future. Then, prices would rise. It might become more expensive to buy in the future. However, if you buy now, your investment might appreciate and you can sell for a higher value later.As a foreign investor, it is important to consider that Albania's high currency can present both advantages and disadvantages. On the positive side, a strong currency may indicate a stable economy and provide favorable conditions for investing.
However, it may also mean that property prices are relatively higher, potentially reducing the potential for immediate returns on investment.
Thorough research and analysis of the local market, including factors such as property demand, rental yields, and long-term growth prospects, would be crucial in making an informed decision.
Is it a good time to buy real estate in Albania then?
Time to conclude !
2024 could be a promising year to consider buying property in Albania due to several favorable signals indicating potential economic expansion. The country's trajectory towards significant growth is a positive indicator for real estate investments. With an increasing number of enthusiastic Albanian business owners anticipating a brighter economic outlook, there's potential for heightened demand for properties, driving both property values and rental prospects.
Furthermore, the surge in building permits being issued in Albania underscores the country's commitment to real estate development. This signals a favorable environment for property buyers, as increased construction activity could lead to an expanded housing market and potentially greater choices for prospective buyers. As the population in Albania gradually becomes more prosperous, there's a chance for increased affordability among potential property buyers.
The stability of Albania's political and economic climate is another reason to consider property investment in 2024. A stable environment reduces the risks associated with real estate purchases and ensures a secure investment. While rental yields in Albania may be modest, the stable economic landscape contributes to a reliable income stream for property investors, making it an attractive option for those seeking a balanced portfolio.
While inflation is expected to be moderate in Albania, the country's commitment to stability and growth minimizes potential negative effects on property values. The combination of a stable political and economic environment, along with the positive indicators of economic expansion, building permits, and a gradually improving population's financial situation, creates a compelling case for considering property investment in Albania in 2024.
We sincerely hope this article has provided you with beneficial information!. If you need to know more, you can check our our pack of documents related to the real estate market in Albania.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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