Albania remains a dynamic real estate market, growing in both the retail and office sectors. The COVID-19 pandemic had a definite impact in the first quarter of 2020, but with the ease of the quarantine restrictions, the real estate market picked up and recorded higher than usual transaction volumes, particularly in the residential sector. Colliers Albania published its top 5 predictions for the Albanian property market in 2021.
Despite the COVID-19 pandemic, the Albanian urban regulation entities kept on issuing construction permits throughout the year. The increasing trend continued during the first three quarters of 2020 where 1,054,000 sqm of total built-up area were granted a permit at a national level compared to 999,784 sqm of total built-up area in 2019. Albania`s construction sector is expected to be one of the main contributors to the GDP growth for the year to come. Activity, both in the construction and real estate market, will intensify due to large size projects under development located in the capital and coastal areas.
Travel limitations have increased demand from Albanians and diaspora for second homes, which is predicted to continue in 2021. Hence, sales and rental prices for quality second home premises will continue to thrive with incremental double digits if travel restrictions to the rest of Europe endure. While the pandemic has slightly postponed and delayed the arrival to the market of the first 4–5-star hospitality projects under construction, the appetite from investors and developers continues to remain high and is shown in the significant number of new permits issued during 2020 for high-end hotel projects in Tirana and the Albanian Riviera. Interest from high-end international hospitality groups have not withdrawn as Albania is seen as the last market to develop in quality tourism in the Mediterranean basin.
As expected, 2020 registered a double-digit increase in the office vacancy rates, while the decrease in rental prices was only moderate due to the relatively steady demand. On the other hand, as the modern office stock is expected to increase in the medium run, competition will increase among landlords and thus prices are expected to fall reaching more approachable and reasonable levels in the medium term. Colliers expects Tirana’s main landlords who remain primarily private owners to additionally increase their contribution to the tenants’ fit-outs and investments budgets
The presence of international retail brands offering incentives to their franchises has positively impacted the sales volumes of these brands which performed better than their counterparts abroad. Local demand has remained and will remain strong in 2021 as the pandemic effects will slide to 2021 and travel restrictions will continue.
Albania has always been attractive to international BPO companies, whose interest remained high even during 2020. New companies entered the market in the midst of the pandemic and have plans for future expansion, further strengthening Albania`s position in the BPO world and emphasizing the potential the county carries in this sector with its young and multi-lingual, educated population.
“Albania remains a dynamic real estate market, growing in both the retail and office sectors. The COVID-19 pandemic had a definite impact in the first quarter of 2020, but with the ease of the quarantine restrictions, the real estate market picked up and recorded higher than usual transaction volumes, particularly in the residential sector. The office stock is foreseen to see a notable change in the mid-term due to heavy construction activity with downward pressure on prices and the new entrance of BPO players that will diversify more the tenant base. The retail market will see growth by existing investors coupled by the entrance of new brands from the region. Fashion retailers are set to continue their growth by using multi-channel strategies to widen their reach and investment in e-commerce is expected to rise as an effective tool to target buyers. Tourism will see continuous investment by local investors, but this time coupled with experienced international hotel operators who should bring world-class expertise to the Albanian hospitality market when it comes to international standards for customer service and quality control. Albania is additionally attracting the interest of regional investors in the hospitality field who are looking at it as an interesting, new destination.” says Stela Dhami, Managing Partner at Colliers.
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