ABSOLUTE gUIDE sERIES to Investment Property
Albania
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Date of Publication: September 2008 © Obelisk 2
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Contents 5. Welcome to Albania
Dedicated to providing impartial information.
6. Economic Growth & Stability Albania’s economy has a promising future.
7. Currency & Banking
Albania’s banking sector offers a sleek, advanced and
automated banking system.
8. Foreign Investment
Overseas investors find Albania good for business.
9. Political Situation & Stability
16. Mortgage Market
Expanding rapidly with a host of new products.
17. Market Risks
The government continues to stamp out corruption.
18. Purchase Process
There are no restrictions on the foreign ownership
Albania continues to develop a multilateral trading system.
of real estate.
10. Tourism
19. Investment Costs
Europe’s Last Secret is seeing a rise in visitor numbers.
Rental income tax in Albania is payable at 10%.
11. Infrastructure
20. Summary
Airport modernisation and increased flights transform
Buying costs are relatively low, compared with
the sector.
neighbouring countries.
12 - 13. Property Market
21. Verdict
Albania is shaping up to be the latest property hotspot.
Albania has much to offer the potential investor.
14 - 15. Secondary Market
22. Obelisk Advantage
The capital, Tirana, provides high demand for rentals.
Obelisk approaches its projects purely from an investment perspective.
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Bajram Curri
Shkoder
Kukes
Puke
Lezhe Peshkopi
Lac Kruje
Durres
Burrel
Tirane Librazhd Elbasan
Fier Berat
Vlore
Corovode Memaliaj Gjirokaster
Sarande
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Korce Permet
Ruse
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Albania forms part of the Obelisk Absolute Guide Series, dedicated to providing impartial information to numerous property investment destinations worldwide.
Welcome
to Albania
As the market leader for overseas investment property,
provide you with in-depth, clear-cut knowledge on the
we are committed to providing cutting edge information
most important factors influencing your property
for property investors, one aspect that has earned us
investment decision in Albania.
the award of International Property Specialist 2008 by Business Britain magazine.
In this guide you will find recent economic performance and predicted growth, a profile of the current
We are therefore pleased to present our latest Property
property market and its future potential, along with
Investment Guide to Albania, an essential tool for the
tourism trends and infrastructure improvements. The
investor planning to buy property in this country. This
guide also includes information about Albania’s
guide forms part of the Obelisk Absolute Guide Series,
mortgage market, the buying process and buying costs.
dedicated to providing impartial information about numerous investment destinations worldwide.
Obelisk’s Absolute Guide to Albania offers investors objective and authoritative information to facilitate an
At Obelisk, we are only too aware of the importance
informed decision about investing in Albania. We trust
of extensive research into an investment destination and,
that you, as an investor, will find this guide indispensable.
as part of our policy to offer investors the definitive service, this guide has been rigorously researched to
Here’s to Successful Investing!
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GDP Growth (predicted for 2008): 6% GDP Per Capita (2007): US$ $5,800 Inflation (July 2008): 3.7% Unemployment (2007): 13.2%
Economic Growth
& Stability Albania’s economy is growing steadily - GDP growth
Inflation has crept up from 2.5% in 2007 to 3.7% in
was 6% in 2007, with the same level predicted for
July 2008. However, this is low compared to other
2008. Economic reforms have contributed to a more
countries in the region. Unemployment figures have
stable market economy.
decreased from 13.9% in December 2006 to 13.2% in the third quarter of 2007.
In 2007, Moody’s Investor Service assigned Albania its first ever sovereign ratings of ‘Ba1’ for foreign currency
The Albanian government recently adopted a fiscal
bonds. A rating of ‘B1’ was also assigned for the debt
reform programme to improve the economy and attract
obligations of the Albanian government, along with a
foreign investment. Further reform will only improve the
‘B2’ foreign currency bank deposit ceiling. These ratings
country’s economic growth and stability.
indicate a stable outlook; “The ratings reflect the fact
Macroeconomic growth was strong between 2003
that Albania began its transition to a market economy
and 2007.
from an isolated administered economy, and from a very low per capita income level”, Jonathan Schiffer, Moody’s Vice President.
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Currency
& Banking Albania’s banking sector offers a sleek, advanced and automated banking system, based on free market principles. Since the country introduced new banking laws in June 2007, higher standards have been set, keeping the sector fluid and profitable. The Bank of Albania has played a major role to protect consumers, implementing regulations that control banks in their giving of loans and credit lines. Although Albania isn’t scheduled to become a member of the EU until 2014, its financial sector is continuing to attract overseas banks. Since the Albanian American Bank opened in 1992, major European banks have followed suit, acquiring local banks as well as establishing new ones, all of which have contributed to driving the country’s banking system to meet the latest technological requirements. At September 2008, Albania’s exchange rate stands at 121.61 Albanian Leks to 1 Euro and 82.60 Albanian Leks to 1 US dollar.
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Foreign Companies Investing in Albania Siemens, Bechtel, Raiffeisen, France’s Société Générale
Foreign Investment According to a survey by Colliers International,
Central Bank. Financial experts in the capital city,
foreign direct investment (FDI) in Albania reached
Tirana, attribute this largely to the fact that many
€361.6 million from January to September 2007,
Albanian economic migrants fly home regularly with
compared to €197.7 million during the same period in
large sums of money.
2006. The privatization of one of the country’s major communications services, Albtelecom, played a crucial
Foreign investment is set to increase further towards the
role in this increase with Turkish construction group,
end of 2008, according to Albania’s Finance Minister,
Calik, and Turk Telecom acquiring 75%.
Ridvan Bode. Measures are being taken to improve the investment climate and to continue attracting overseas
Albania has climbed an impressive 34 places in the
investors, including a 10% flat rate tax on corporate
Forbes Best Countries for Business list, moving from rank
profits and personal incomes.
111 in 2007 to 77 in 2008. Albania’s ranking improved from 135th to 86th place in the World Bank Doing
Many Italian, French and Turkish investors have entered
Business 2008 report. Furthermore, Albania was rated
the market. Italy’s Intesa Sanpaolo bank has acquired a
second in the top 10 reformers for 2007/2008.
majority stake in the American Bank of Albania, the second largest lender, whilst French bank, Société Générale, has
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Albania’s flow of remittances has doubled over the past
taken control over Banka Popullore. Albania boasts the
five years to €1 billion in 2007, equivalent to 11% of
largest onshore oil reserves in Europe, which Canadian
gross domestic product (GDP), according to the
company, Bankers Petroleum, are now exploiting.
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WTO Member: Since 2000 EU Member: Expected 2014 Political System: Parliamentary Democracy Ruling Party: Centre Right Democratic Party Next General Election: 2009
Political Situation
& Stability Awaiting NATO and EU membership, and already part of the World Trade Organisation (WTO), Albania is now developing a multilateral trading system. WTO Director-General, Mike Moore, commented, “Membership promises a more prosperous future and raised living standards for all Albanian citizens. By encouraging the trade links between countries, the WTO can help foster greater peace, stability and development.” Having signed the Stabilisation and Association Agreement (SAA) in 2006, (the first step to becoming a member of the European Union (EU)) Albania is set to join by 2014. Albania’s modern political system is based on a constitution which was passed in 1998. The head of state is elected every five years by parliament. The current President, Bamir Topi, was elected in 2007 and is expected to remain in power for the following 5 years. Sali Berisha is the country’s Prime Minister and was re-elected in 2005 by popular, proportional vote to serve a 4 year term.
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Visitor Numbers (2007): 2.1 million Tourism economy expected contribution to GDP (2008): 14.7%
Tourism Albania’s first official tourism strategy was made public in 2004, with the guidance of the German Technical Co-operation Agency (GTZ). The strategy aimed to promote Albania as ‘Europe’s Last Secret’. As visitor numbers began to pick up, ‘Albania. Yours to Discover’ became the new line, to focus on the theme of generosity as a core historical and cultural virtue of the Albanian people. June 2008 saw a 20% increase in tourist visits to Albania from the same period of the previous year. A major engine of Albania’s overall economic growth, the country’s tourism industry earned €170 million revenue in 2007, according to statistics from the Bank of Albania. The contribution of Albania’s travel and tourism economy to the country’s employment is expected to rise from 149,000 jobs in 2008 (11% of total employment) to 179,000 (12.4%) by the year 2018. This key segment of Albania’s economy is expected to grow by 4.9% annually in real terms between 2009 and 2018.
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Tourism economy expected contribution to employment (2008): 11.9% World/European ranking: 80 th in the world
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Infrastructure Larger, modernised terminal at Tirana International Airport New and improved road and highway links
Growing shopping centre space March 2007, the gateway to Albania’s capital city – the
A new thermal energy plant is being built in Vlora and
Tirana International Airport - was open to the public after
an €80 million investment is being made to renovate its
receiving a €50 million makeover in the form of a new
gateway port.
and modernised terminal, bringing the airport’s yearly capacity to 1 million passengers. British Airways and
Over the next few years, Albania’s shopping centre
Albanian Airlines serve London Gatwick and Stansted
population is set to experience massive growth,
in the UK, however, there are many budget airlines now
according to Colliers International. In 2007, there was
flying to Tirana from Italy and central Europe. The first
growth of almost 141% in total shopping centre space,
half of 2008 saw a 19% increase in passenger numbers
and the opening of City Park Tirana will add another
through Tirana International Airport.
75% increase. A €600 million project to upgrade the road from the port of Durres, the main trade gateway
More than €422 million of EU funding has been
in Albania, to Kosovo will have a significant impact on
allocated to help Albania’s reconstruction and
northern Albania’s economy. Another key road project
development under the PHARE and CARDS schemes.
will link Albania and Dubrovnik in Croatia.
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Described by real estate experts as ‘One of Europe’s Final Frontiers’, Albania is shaping up to be the latest hotspot of the property world. Predicted Annual Capital Growth: 25% Average Annual Rental Yield: 5% - 7%
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Property
Market
With an unmistakably Mediterranean climate, long
of a construction boom as well as recently benefiting
stretches of unspoilt beaches and crystal-clear waters,
from some major upgrading. The city’s population has
it’s hard to believe that Albania boasts house prices
tripled in the last 15 years and apartment prices have
which are around 70% lower than the rest of Europe,
jumped 107% between 2002 and 2006, according
particularly when compared to Croatia, Montenegro,
to a study by real estate agency, INF 93. As a result
Bulgaria and Greece. However, this Balkan gem is
of these factors, property-hungry investors, particularly
now rapidly generating interest from investors. With its
those from the UK, are now aiming to capitalise on
stable political system, talks underway regarding a flat
these strong growth trends.
tax on income and profits reduced from 20% to 10% in 2009 and plans for the country to join the EU in
Property prices for desirable units, both in coastal
2014 are looking more and more positive.
regions and in Tirana, have seen annual appreciation of 30% since 2005, according to a report in the Sofia
Described by real estate experts as ‘One of Europe’s
Echo. Many experts predict that property values in
Final Frontiers’, Albania is shaping up to be the
the capital city will grow at an annual rate of about
latest hotspot of the property world. But it’s not just the
25% over the next few years, thanks to the continued
areas along the pristine Adriatic coastline that are
influx of expatriates, overseas government support and
turning heads. Its capital city, Tirana, is in the midst
embassy staff.
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Secondary
Market
Investing in property in the capital city, Tirana, is
of new jobs. Albanians who have been living abroad
generally secure and sustainable, thanks to the high
are now returning to their home country and are
demand for rental accommodation. According to the
playing a part in increasing the demand for good
English-speaking expat publication, Sofia Echo, less
quality property in these areas.
than 10% of sales in the capital are made to foreign investors. A new, luxurious end of the market is
The population in Tirana has grown from 300,000
beginning to develop as Albania welcomes a growing
to over a million in less than a decade. Rental yields
number of foreign nationals who have found work in
are around 5% to 7% per annum, but property buyers
the city. A 10% increase in the country’s salaries has
are looking to gain more on capital appreciation for a
also helped to boost this crucial segment of Albania’s
return on their investment.
growing property market. Urbanisation in Tirana, as well as Albania’s second largest city, Durres, is attracting a wealth of young professionals and families alike, due to the creation
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Rental yields are around 5% to 7% per annum, but property buyers are looking to gain more on capital appreciation for a return on their investment.
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Mortgage
Market The mortgage market is still somewhat new to Albania. However, over the last three years there has been an influx of major European Banks offering mortgages as well as a host of new products. Mortgages have only recently been available to Albanian citizens and aren’t widely available to international investors, but the market is expanding rapidly. With the market developing at such a pace, experts believe these facilities will soon be the norm. However, residential house purchase and re-financing for home improvements can often be agreed on an individual basis. In 2007, the Private Sector division of the World Bank Group signed an agreement with Banka Popullore to help expand the emerging housing market in Albania. The bank’s loan of €10 million will help to strengthen its lending facilities as well as enable it to add over 1,000 long-term residential mortgages. Albanian mortgages are available from 5 to 30 years, up to the age of 70, on a repayment and interest only basis. The minimum loan is €30,000 with a maximum of 70% of the property valuation or purchase price. In all instances, proof of income is required (this can be made up of earned income, pensions and investment rental income), as is rental income. Interest rates generally follow Libor, Elibor and Tbill and payment modes require a fixed monthly instalment (principal and interest).
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“The Albanian government have taken huge steps to tackle corruption and organized crime. They are also continuing to support both foreign and local investors, as well as predicting a positive future for the country’s economy.”
Market
Risks
Property investment into emerging markets may carry
There are only a handful of established agents, but
some degree of risk. However, the degree that market
because the industry is unregulated, it’s easy for
risk in a particular country affects the property
anyone to claim to be an estate agent. In some cases,
investment depends largely on thorough due diligence
unscrupulous agents sell properties without the
conducted prior and during the purchase process.
knowledge of the legal owners. Therefore, it is important to carry out thorough checks and make
An inadequate energy and transportation
enquiries into the agent’s background to ensure all
infrastructure have contributed to the fact that
their operations are legitimate. The Albanian
Albania is still one of the poorest countries in Europe.
government is working hard to stamp out corruption
Despite this, its economy is growing at an
and organised crime, as well as continuing to support
impressive speed. So much so, market experts say
both foreign and local investors.
it is set to experience the second highest economic growth rate in the Balkans region over the next 12
Prime Minister, Sali Berisha, recently appeared in
months, following only Montenegro. According to the
a television commercial as part of a campaign
International Monetary Fund’s forecasts, the economies
urging the Albanian public to help tackle corruption
in Montenegro and Albania are expected to grow by
and bribes within the administrative services.
7.2% and 6% respectively by the end of 2008. Such economic growth and increasing FDI will generate more wealth in the country.
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Purchase Process Albania’s laws and legal processes may be very different from what you are used to and Obelisk strongly recommends that independent legal advice be taken during a property purchase.
Below is the standard purchase process in Albania and issues that may affect a property purchase: There are no restrictions on the foreign ownership of real estate in Albania, except for the purchasing of agricultural land. In order to purchase property, the buyer must sign a number of contracts; a reservation agreement, an undertaking contract, a preliminary contract and an actual sale-purchase contract. Once the reservation agreement has been obtained, there is a 4 week reservation period. The undertaking contract can then be signed by both parties. This document contains details of timescales, payment terms, prices and the terms and conditions of the purchase, as well as signifying the promise to buy and sell. The undertaking and final sale-purchase contracts must then be signed in the presence of a Notary Public and a public official appointed by the government. The final contract must be registered at the Office of Immovable Property Registration (ZRPP) for the transfer of the title deed to the new owner.
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Investment Costs Albania’s taxation is complex and subject to change. You are therefore recommended to take expert and up-to-date advice on taxation issues affecting the purchase and ownership of property in Albania.
The costs of a standard property purchase in Albania may include the following: Notary fees are between 0.05% and 0.25%. Rental income tax is payable at 10%. Stamp duty is 3%, payable by the seller. No capital gains tax. The sale of buildings and land is not subject to VAT. No property tax.
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Summary The following summary provides key highlights to consider when investing in Albania’s property market: Albania is set to experience the second
Apartment prices in Tirana have increased
highest economic growth rate in the Balkans
by 107% between 2002 and 2006.
region over the next twelve months. Tirana has seen 30% growth in property GDP growth reached 6.0% in 2007. 6.0%
prices year-on-year.
is predicted for 2008. Rental yields in Albania are approximately Foreign investment is being encouraged
between 5% and 7% per annum.
and supported by the Albanian government. The capital city, Tirana, is a good option for Foreign direct investment in Albania
both commercial and private investments.
reached €361.6 million from January to September 2007, compared to €197.7
The mortgage market is expanding rapidly
million during the same period in 2006.
and new products are to become more readily available for both local and
Albania is expected to obtain EU
foreign investors alike.
membership in 2014. 2009 will see corporation and income tax Tourism in Albania is on the rise, with a
fall from 20% to 10%.
20% increase in the year to June 2008. Buying costs are relatively low, compared Albania’s infrastructure is under huge improvement with major road and highway links as well as a larger, more modernised airport in the capital, Tirana.
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with those of neighbouring countries.
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The Absolute Guide Series Rating
Based on our extensive research, Obelisk has introduced a 5 star rating system to summarise the investment potential of a country. The availability of finance, economic stability, political stability, the strength of the local market to provide an exit strategy and the potential to earn from investment are the key criteria that determine the investment grade of each country.
Verdict Hailed as one of Europe’s last hotspots, Albania has much to offer the potential investor. Benefiting from a stunning coastline and an ideal climate, Albania is finally establishing itself as a top European holiday destination. The country’s tourism sector has seen a 20% rise since 2007 and over the next twelve months, Albania’s economy is set to grow at the second highest rate in the Balkans region. Improvements to the country’s infrastructure, such as the newly revamped airport at Tirana and recently upgraded road links will be advantageous to all areas of the economy. Albania now boasts a stable and modern political system and with NATO and EU membership just around the corner, a major boost in the country’s trade is expected. A sophisticated banking system is now in place and a number of overseas banks have contributed to the dramatic increase in foreign direct investment. The mortgage market is expanding rapidly and the government is actively encouraging foreign investment. With property prices still lower than its Balkan neighbours and prices expected to continue on their strong upward trajectory, we at Obelisk believe that 2009 is a good year to explore investment in Albania.
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Obelisk
Awards Obelisk ‘International Property Specialist 2008’
Advantage
Voted International Property Specialist of the Year 2008 by Business Britain magazine, Obelisk has been recognised as the authoritative voice within the industry and its clients benefit from the company’s uncompromising high standards and professionalism. Obelisk has identified a simple and transparent purchase process for its clients as a simple, four step process: 1.
The client chooses and reserves the unit that best suits their investment requirements, and Obelisk takes the client through a compliance procedure.
2.
An independent lawyer, sourced and appointed for the client by Obelisk, will have already carried out full due diligence on the project. They will issue all purchase contracts and paperwork to the client.
3.
On receipt of this contract, the client will sign and make the first payment. The lawyer will notify the client of all further payments when required.
4.
The appointed lawyer will also represent the client in all aspects legally required within the country of purchase, ensuring that clients of Obelisk enjoy the benefits of simple and hassle-free real estate investment.
For more information about Obelisk’s investment opportunities in Albania, contact us now on info@obeliskinternational.com, visit our website at www.obeliskinternational.com or call us FREE on 0808 160 0670 (UK) or 1800 932 514 (IRE).
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Disclaimer The material contained within this document has been prepared for information purposes only. Information contained herein is not to be relied upon as a basis of any contract or commitment. The information is not to be construed as an offer, invitation or solicitation to invest and opinions expressed are based on market conditions at the time of print and may be subject to change without prior notice. Information contained herein is believed to be correct, but cannot be guaranteed. In case of queries or doubt you should consult an independent investment adviser. No personal recommendation is being made to you and the past is not necessarily a guide to the future. The brochure in its entirety – text, images, marks, graphics, logos, buttons, combinations of colours, and the structure, selection, ordering and presentation of its content – is protected by the legislation on intellectual and industrial property, it being forbidden to reproduce, distribute, publicly disseminate or transform it, except for personal private use. It is also forbidden to reproduce, relay, copy, assign or broadcast, in whole or in part, the information contained in this brochure, for whatever purpose and by whatever means, without written consent.
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Call us free from UK: Tel. 0808 160 0670 Call us free from Eire: Tel. 1800 932 514 For general and international enquiries contact us at: Tel: (0034) 952 820 319 Fax: (0034) 952 825 790 Alternatively you can email: info@obeliskinternational.com or visit: www.obeliskinternational.com