Energy, Real Estate, Main Sources of Foreign Direct Investment in Albania – Exit
Energy and real estate are the sectors in which foreigners invest the most in the first half of the year, according to data from the Bank of Albania, but the interest in Albanian real estate also has its drawbacks.
Overall, foreign direct investment in the first half reached some 634 million euros, the highest amount ever recorded for this period and an overall increase of 35% in the second half of 2021.
In this context, some 103 million euros were invested in the local energy sector by foreigners, an increase of more than 145% compared to the same period of the previous year. This continues a long-established trend, mainly due to the large investment in the TAP pipeline, but also due to various hydroelectric projects.
The Bank says many of these investments are renewable energy such as wind and solar.
During the second quarter of 2022, foreign investments in real estate reached a record level of 83 million euros, an increase of 66% compared to the same period in 2021. During the previous year, the foreign real estate purchases accounted for only 21% of real estate. real estate transactions, but in the last year this has increased significantly, especially in coastal areas.
Although this is good news for the economy, there are fears that it could contribute to an increase in rental and purchase prices, which will prevent residents from buying or renting properties in areas where they want to live. . Many foreigners choose to buy in Albania as the prices are lower than many other places in Europe and it is slowly becoming a sought after tourist destination.
In addition to the increase in prices for properties already built, the cost of new apartments under construction is rising sharply. New apartments in Tirana currently cost 40% more than in 2021.
This was influenced by several factors, including rising construction costs such as steel, cement and other metals, and expectations about the upcoming tax amnesty. The bill would allow Albanians and foreign citizens to deposit up to €2 million in a local bank with no questions asked, no legal immunity and with a 5-10% tax payable. The EU and the IMF condemned an earlier version of the plan last year, while the Commission also criticized the current version for exposing Albania and member states to the risk of financial crime.
Celesi Media Group CEO Ylli Sula told Monitor that many developers expect the amnesty to be approved, allowing them to invest informal funds.
“Apartment prices are high as builders anticipate the effects of the tax amnesty. Those with informal money will rush to invest it. Since interest on deposits is low, while in real estate profit rates are higher, the money that should be formalized will be invested for the purchase of apartments,” he said. .
Prices in the capital reach 5,000 euros per square meter in certain central areas, while it is becoming increasingly difficult to find a property at less than 1,000 euros per square meter.