Property, Sites and Buildings

Property, Sites and Buildings

Property Market The Albanian construction sector has been one of the country’s most rapidly developing sectors throughout the last 6-7 years and now contributes 10% of total GDP. These developments have made the Albanian property market very attractive to foreign investors. The availability of office space is constantly increasing, while, according to MIGA (WB), Albania offers the lowest cost in the region for industrial sites. The Albanian government offers an attractive incentive package for leasing public property for private investment.

State – Owned Property

State-owned property can be transferred to private operators in three forms: sale by privatization, concessions, or leasing. The privatization process is used mostly in strategic sectors (banking, insurance, telecommunications, energy, etc.). Concessions are used in activities such as mining, oil exploration, tourism villages, and local hydro-electric energy production. In today’s production and services business environment in Albania, leasing public property has been an increasingly attractive for of property transfer. During 1998 – 2004, operators who leased state-owned property invested 70 millions USD, employed some 4,800 people, and paid 2 millions USD in annual rent.

Rental rates for state – owned property (2006)

Source: Decision of the Council of Ministers no.315, dated 24.04.2003 “On the leasing of state enterprises and institutions property”

Fact Sheet No.9

Last updated: February 2007

Property, Sites and Buildings

Lease Execution In the case of buildings with a total surface area below 200 m2, the lease is executed by the directorate of enterprise for a short-term lease (up to one year).

In the case of buildings with a total surface area between 200 and 500 m2, the lease is executed by administrative supervisor of the enterprise for a medium-term lease (up to five years) In the case of buildings with a surface area greater than 500 m2, the lease is executed by a representative of the state, i.e the Ministry of Economy, Trade, and Energy for national enterprises, for a long-term lease (up to twenty years) The Albanian Government has designed an incentive scheme for leasing public property to private investors based on the employment level and/or investment level. Rental levels (presented above) are reduced according to jobs created and/or investment level as shown in the tables below.

Rental incentives according to employment level (creation of new jobs)

Rental incentives according to investment level

Source: Decision of the Council of Ministers no.315, dated 24.04.2003 “On the leasing of state enterprises and institutions property�

Fact Sheet No.9

Last updated: February 2007

Property, Sites and Buildings

Private Property The market for office space is growing rapidly, particularly in major cities such as Tirana, Durres, and Vlora. The current trend is the construction of high-tech business centers which offer full services to renters and buyers of the office space. The demand for this kind of facility is increasing and the construction industry has responded by building high quality and technologically equipped buildings.

Office space for sale in Tirana, Albania (May 2005)

Source: Leading real estate companies in Tirana

Office space for rent in Tirana, Albania (May 2005)

Source: Leading real estate companies in Tirana

Fact Sheet No.9

Last updated: February 2007

Property, Sites and Buildings

Cost of an industrial site (USD)

Source: MIGA, World Bank Enterprise Benchmarking Program, 2005 Ministry of Economy, Trade and Energy 2006

Fact Sheet No.9

Last updated: February 2007