Author: Ina Allkanjari
Buying an affordable apartment has become a mission impossible. For years, Tirana has been facing rapid investment growth, a magnet for residents and foreign investors. But as urban development progresses and high-rise towers line the streets of the capital, the challenges of life for ordinary citizens become greater and greater. Experts raise the concern that the increase in apartment prices is the result of distortions in the market caused by the pumping of money of informal origin.
LD is a 35-year-old woman who has been wandering around the capital for months to buy a house for herself and her mother. She tells "Sinjalizo" that even though she is in a working relationship and can be approved for a loan of up to 80 euros, she finds it difficult to find an apartment.
At first, the 35-year-old looked for homes in areas where she could feel comfortable. Most areas of Tirana have high prices per square meter, leaving only a few affordable areas such as QTU and Linz.
"In Linza you can have peace and clean air, but the problem is that the infrastructure has not been developed in that area. Very rarely a bus could come, the distance is far. There is no school, no supermarket, no pharmacy, nothing...", says the 35-year-old. The price of the 70 m2 house was around 65 thousand euros.
The next stop for LD was the Kontakt residence in the Ali Demi area.
"I was surprised at first when I saw it online because it was a 2+1 apartment and had a price of around 80 euros. In such an area, such a price seemed very interesting to me”, however, the pear has its tail back
"It was about 70 m2, but this includes the common area that reaches over 12 m2".
LD also noticed that even apartments in existing buildings (before the 90s) had high prices, almost the same as those in new buildings, making it even more difficult to find an affordable home. Other costs are added to the costs of buying an apartment in Albania, which buyers are obliged to pay.
"At the bank, I was told by the loan specialists that they would send an external appraiser to the house I am going to buy, which I have to pay. In this case, the only payment I have to make for the appraiser is 100 thousand old lek", she says, adding that there are also cases when appraisers and home sellers set different prices for the same apartment.
"It happened to me that the owner told me the value of the apartment I wanted to buy, e.g. 100 euros, while the appraiser from the bank told me that based on the area, this property is worth 80 euros. In this case, the bank does not cover my loan".
LD also shows that he is interested in buying apartments in buildings that have just started construction. But in these cases, banks do not give loans without a certificate of ownership.
"People choose in this case to pay cash for the house or must have another collateral property to get a loan", says the 35-year-old.
The case of LD shows the difficulties faced by many citizens in Tirana in trying to buy an apartment. The increase in prices per m2, high loan interest, lack of infrastructure, high prices even in existing buildings are just some of the problems.
The unstoppable rise in prices
The real estate market in Tirana is facing a significant increase in apartment prices. Jetmira Kopliku, Administrator of "Eja" Real Estate, offers us a general overview of this market and the factors that have influenced these developments.
According to Koplik, the increase in apartment prices is closely related to several factors: Increasing the obligations of builders for infrastructure tax; Increasing the salary of workers; Forced increase for the quality of safety in the work process; Increase in world prices of raw materials that are imported from abroad; The increase in new reference prices set in 2024.
These factors have increased the cost of construction and consequently the prices of apartments.
"In the last 2 years, prices have experienced the highest increase. In the central area, within the Small Ring, we have an increase of 8%-10%. Where apartments are sold from €2.000/m² to €2.300/m². An increase from €150 to €300 per m² from previous years. Even the suburban area has a very significant growth. An apartment can be bought for 1.000 € / m². With an increase of over 11% to 30% from the last 2 years", says the administrator of "Eja" Real Estate.
The first requests for purchase, says Kopliku, are focused within the Little Ring, but with the high prices in this area, many buyers are moving towards the suburbs.
"Fresco is being introduced as a sought-after area because it has a slightly more affordable price. Then there is Shkoza with the new constructions. We have the New Boulevard area, which is in high demand due to the fact that it has a very good development plan", says Jetmira Kopliku.
She also focuses on foreign investors, as she points out that more and more are showing interest in real estate in Albania, especially in coastal areas. They constitute up to 27% of the purchasing power for apartments, contributing significantly to the real estate market in Tirana.
While Tirana is witnessing an unusual boom in the construction of apartments, especially in the central area, economic experts raise concerns about financing sources and purchasing power, presenting major challenges for the economy and society.
"In conditions where sales are low and at a time prices increase much faster, it must be accepted that this comes from the distortions that the market has due to the pumping of money of informal and criminal origin", says economic expert Zef Preçi for "Sinjalizo".
In a country that officially has a low level of income it is unpredictable to see such a rapid increase in housing construction. Economic experts indicate that a significant part of the money used to buy the properties is of illegal origin, thus presenting a deep problem of illegal money being introduced into the real estate market.
"Prices increase not simply because raw materials and taxes have increased, but primarily because of the criminal origin of the money that has been pumped and continues to be pumped in bulk in these sectors. The increase in the price of residential apartments and businesses, mainly in Tirana but also on the coast, is a reflection of what is known as the fiscal amnesty, even though without a law it is already happening every day", says the economy expert.
New or old housing
The administrator of "Eja" Real Estate shows that during the last years the prices of apartments of old constructions before the 90's with the constructions of 10 years ago and until today do not have a big difference.
The old buildings have only net m2 of the apartment, while the new buildings also include the common areas, which affects the buyers' decision.
According to Koplik, it is expected that apartment prices will continue to rise, but at a slower pace compared to recent years. She points out that the challenges for young people who want to buy an apartment in Tirana include high prices and the need for financing. However, there is also credit facility for the young age group, with banks offering loans of up to 100% of the value of the apartment with fixed interest.
The real estate market
According to Reinaldo Pipiria, Executive Director of the Albanian Real Estate Association (NAREA), the real estate market in Tirana has experienced rapid growth. Nationally, the market has seen an increase of 15%, from 1.1 billion euros to 1.3 billion euros. According to him, the average prices for new and old buildings have increased by an average of 5-8%, although the reports of the Bank of Albania suggest an increase of less than 5%. The downtown area and the suburbs have shown different dynamics. Due to the rapid increase in prices in new constructions, demand has shifted towards the suburbs, where prices are more affordable for the middle class.
"Last year, the preferred areas for the middle class were mainly the areas outside the small ring of Tirana, i.e. from 21 December towards the end of Kavaja, Kombinati, Astir, Yzberishti and Fresk streets. There the demand has increased, but the prices have also started to rise faster because the demand of the middle class is hitting the outskirts of Tirana", says Reinaldo Pipiria.
The opportunity for young people to buy an apartment in Tirana is becoming more and more difficult. In addition to high prices, other challenges include high interest rates on loans and fiscal burdens. Housing programs and soft loans are not sufficient and are often not accessed due to financial and bureaucratic constraints.
"There should be better housing programs. Maybe soft loans should increase the amount. On the other hand, the purchase of first residential houses will have to be encouraged through tax exemption,” says Pipiria.
Predictions for the next five years in the real estate market in Tirana are difficult to make due to the lack of detailed statistics. According to the Executive Director of the Albanian Real Estate Association, the market is expanding, but the pace of price growth is slowing down. "We do not have a decrease in prices, but we have a slower increase in them"
Number of building permits in the country
According to the latest data from INSTAT, only in the first quarter of 2024, 235 construction permits were approved for new residential buildings in Albania, with a total area of 252.267 square meters and a value of 9.291.946 ALL.
In the last four years, the number of construction permits approved in Albania has kept a constant high pace. Last year, a total of 1291 residential building permits were approved, 178 more than in 2022. This shows a steady trend of new construction development, which directly affects the country's urban landscape.
Of the 311 construction permits for new buildings approved in Albania for the first quarter of this year, 109 of them are permits for buildings approved in the capital, with an area of 231.968 square meters and a value of 9.108.409 ALL. In 2023, the Municipality of Tirana granted a total of construction permits for an area of 1.4 million square meters, which constitutes 67% of the total permits granted throughout Albania.
Although there is a large number of construction permits approved, the concern remains that most of these permits are for luxury constructions that do not meet the needs of the middle and lower class of the population. New construction is mostly focused on large and expensive units, leaving a gap for affordable housing for ordinary citizens.
This article was created based on input provided by individuals who have chosen to speak up. Share your story, empower others and be an agent for change. Visit the website: www.acqj.al/sinjalizo-dhe-ti/
