According to the Albanian Construction Portal there are 245 construction projects currently underway in Tirana, from 227 at the beginning of the year. In the first quarter of 2019, the Municipality of Tirana has issued permission for the construction of residential buildings with an area exceeding 479 thousand square meter, with an approximate value of about 141 million euros. Compared to the same quarter a year ago, the area of new permits granted has nearly fivefold.
The main actors in the country’s real estate market, builders and real estate agents say they have already reached peak construction levels in the capital, moreover that a good deal of permits have not been used yet. While the offer is rapidly increasing, prices have reached some sort of equilibrium in the market, while in certain areas they have begun to fall due to the high number of apartments being built. As buyers can find apartments varying from 700, 850, up to 2500 euros per square meter in some residential areas, there are some other projects emerging in the center with luxury apartments which prices start from a minimum of 2600 euros per square meter and reach up to 4000 euros per square meter.
The main buyers of these apartments which cost a minimum of 250-300 thousand euros, are entrepreneurs, bankers, etc. Market actors claim that cash sales are high as well, as banks are generally focused on lending average loans and stay away from this segment. However, market actors predict that there will be positive performance for sales in areas with average prices of 700-900 euros per square meter, but predict stagnation for downtown construction and towers. They expect the demand to be weak, as high taxes will not allow builders to lower prices. Taxes are one of the main concerns of the sector. Initially, it was the infrastructure tax, which by 4 percent over construction costs became 8 percent over the sale price, and it is paid before construction began.
The biggest concern of the main operators in the market is that construction in the Tirana area is being done without empirical studies and without relying on an analysis of how the demand performance will continue in Tirana. Market operators predict that there will be a real estate market deadlock in the next two or three years, driven by falling demand, as well as price fluctuations in relation to purchasing power in the country. There are several factors that are expected to affect household demand for housing.
Firstly, the phenomenon of emigration in recent has become apparent, reflecting its consequences on consumption as well. Many agro-food industries in the country are talking about declining sales, owing to lower consumption of food by the departure of young people. Secondly, core families are becoming increasingly small, which will change consumer behavior. Klajdi Memajdini who is real estate agent from DevInf, says families are now looking for a modest area because of the inability to buy homes with a larger area, and because they are increasingly smaller.
Housing demand will be mainly provided by new residents coming to Tirana from the districts. About 70 people per day arrived in Tirana during 2018. Market operators say the new arrivals in the city supply both the rental and sales market at the same time, but they belong to a category seeking economic prices, which does not match the boom of luxury and high-rise construction. Most people who have changed their place of residence in the last four years have moved to urban centers, which in most cases involve the capital or the surrounding areas. Although internal movements are multidimensional, it is evident that the vast majority of internal migration flows focus on Tirana and Durres.
There are three main residency areas:
Zone 1: Yzberisht, New Ring, Astir and Fresku. Sales prices range from 500 to 700 euro/m2, with an increase by almost 25 percent in the last two years.
Zone 2: Rr. Elbasanit, Rr. Medar Shtylla, Rr. Ali Demi, Rr. Dibra, Train Station, and Lake. Sales prices range from 800 to 1400 euros/m2. In the Lake area the sales prices currently range between 800 to 1,400 euros/m2. Over the past two years there has been a 20 percent increase in these areas.
Zone 3: the Block (Blloku), the Republican Guard, and around the Albanian Radio Television (RTSH). Prices range from 1,800 to 3,000 euros/m2. In the last 24 months prices in these areas increased by 14 percent.