I spent time in the Summer looking at the real estate investment market on the Albanian coast.
Overall, I see Albania as more of a value lifestyle proposition, than an investment with upside or trouble-less yield.
Though Montenegro is more expensive, I believe that it has more long term upside and more property management talent to manage investors’ investments. I wrote a whole article on the real estate investment market in Montenegro.
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The Wandering Investor
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Full transcript of “Albanian Coast Real Estate Investment Overview”
Hi, Ladislas Maurice from thewanderinginvestor.com. Today, I am in Vlorë in Albania on the coast. So I’m going to be talking about real estate here on the coast in Albania. So last year, I spent some time in Tirana, in the capital city. I wrote a whole report on real estate in Tirana and on the economy. And essentially, it wasn’t really an interesting investment at all. But I said that I wanted to see the coast because it’s actually some of the cheapest seafront property that you can find in Europe for a sea that’s actually nice. So I wanted to see it for myself.
So just as a little bit of background about Albania, we’re talking of a country of about 3 million people. It’s the fourth poorest country in Europe, the poorest being Moldova, then Ukraine, and also the territory of Kosovo. What’s important to know about Albania is that it’s extremely dependent on remittances from abroad. So huge proportion of the population is not in Albania, they are mostly in Italy, in Greece, in France, in Switzerland, in Austria, in Germany, just working and sending money back home. And it’s something that you can feel when you’re in the country. And I’ll just give you an example of real estate.
So in my report from last summer, in Tirana, I was amazed at how apathetic real estate agents were. So this was during the peak of the whole Situation, there were almost zero tourists in Albania. I would enter a real estate agency in Tirana, all the agents would be sitting just talking with each other. I would go in, I would have specific requirements, say, “Hey, I’d like to see this, that.” I wouldn’t mention that I’m doing it for an article because I was genuinely interested for myself, if I found a good investment. But the agents would just not get back to me. It took me three, four days to find an agent that would even show me apartments, even though they clearly had nothing to do. So I kind of wrote it off as a one-off. But I found that it seems to be a recurring theme in Albania, of agents just not showing up.
So I had this happen to me a few times here on the coast. I go to a real estate agency, I say, “I’m interested,” they say, “Yes.” We agree on a time, on a meeting place, and they just don’t show up, or when I show up, they contact me five minutes later, and they say, “Oh, can we meet in two hours, rather?” It’s absolutely shocking. I’ve been to close to a hundred countries, I’ve looked at real estate in the majority of them, and I have never had such an experience as in Albania. But it doesn’t necessarily mean it’s a bad investment in itself. It makes the entry to barrier a bit higher, but it also speaks for, like, what’s going to make this country grow?
Okay, so it’s very dependent on remittances. So 10% of the economy is remittances, 6% is tourism, which is relatively developed, and a big portion, though not in the official numbers, is the drug trade. It’s the biggest producer of cannabis in Europe, and there’s a lot of transit of heroin from Central Asia to Europe, and from Latin America to Europe, that transits here through Albania. So those are essentially kind of the main activities, and agriculture.
But if you’re thinking what’s going to make the economy grow beyond that, and you have people behaving this way in basic sales jobs, there isn’t really much of a catalyst. So the way I’m choosing to interpret it is that the best have already left. And that’s also something that you see when speaking to locals, they’re either already gone and you meet them, and they’re just back home for the holidays, or they’re planning to leave, for the proactive ones. And then the ones that are staying is it’s not necessarily the most proactive people, because, again, salaries are very low in Albania. So if you want to have a decent life, and you’re not connected, and don’t have access to good jobs through connections, you’re better off trying your luck in Italy, or in Germany, for example.
Making a real estate investment in Durrës, Albania
So in terms of real estate on the coast, the main touristic cities are Durrës in the north. It’s a near 45 minutes away from the capital city. So when I saw this, I thought this could be an interesting play. But I went to the city, it’s essentially a port that happens to have a convenient beach. So it is absolutely ugly. Traffic is really bad as well. It’s quite polluted. You would not want to invest money there, nor would you want to spend your vacation there.
Making a real estate investment in Vlorë, Albania
Then there is Vlorë. So this here is Vlorë. It’s actually really nice. It’s two hours away from the capital city. It’s a lot of local tourism. Right now I’m seeing quite a few charter flights from Ukraine, a few from Poland, but it’s mostly local tourism. And it’s a city with good urban planning, which is quite rare in Albania. Usually, there is no urban planning and traffic is horrendous. But here, traffic is generally okay, apart from some construction works. And it’s relatively modern. You can see the beaches are quite nice. The water is clean-ish here, it’s all right. But if you go a bit farther, if you drive five minutes away, the water is extremely clear, really warm, lovely.
So this city is interesting from, like, if there’s a city on the coast that is like clear than the others to see capital gains for real estate in the medium to long-term, I would put my money on Vlorë because it’s a mere two hours away from the capital city. So as people from Tirana get tired of Durrës, because it is, objectively, not a nice place, they will increasingly invest their money in a city like Vlorë. It’s also an actual city with almost 100,000 people. It’s got a university. So it’s not just a summer destination, people live here all year round. And there’s economic activity even in even in winter.
Making a real estate investment in Sarandë, Albania
Now, the most well-known coastal city in Albania is called Sarandë. That’s in the South. It’s across from Corfu, in Greece. So I was quite excited about that one, I had high expectations. I thought, Okay, some of the cheapest seafront real estate in Europe, with a nice sea, right across from Corfu, you can’t really go wrong with this. I drove down there, again, extremely bad urban planning, a lot of traffic. The city itself is okay-ish. A lot of buildings from the 80s, 90s, 2000s. Not too much new construction. And they were hit hard by the whole situation. They seem to have a lot more Western tourism. They’re a lot less dependent on the local economy. So with all the restrictions, people haven’t been going there.
In terms of prices, whether in Durrës, Vlorë, or Sarandë, if you want full front line in these main cities, you can be looking at anywhere between €1,000 and €1,400, €1,300 per square meter, which is objectively very cheap. And as soon as you start going second line, third line, you can find really interesting deals like €600, €700 a square meter with decent views. So it’s extremely cheap. Now, good, but it doesn’t necessarily mean that it’s going to move from very cheap to less cheap in the foreseeable future. Sometimes, there’s a reason something is cheap. And I have the feeling that Albania is one of those situations.
So when you look at the whole coast, from Croatia, Montenegro, Albania, Greece, the whole coast is beautiful. I mean, the coast here is very nice. Swimming is great. But what you see is that in Croatia, you have all these beautiful old towns packed with history, etc. Montenegro, same thing, Greece, same thing. But you arrive in Albania and you don’t really see much of this. So there’s nothing from an architectural point of view that’s very appealing. It’s purely a beach play. You’re not buying anything of architectural value or of historical value when you when you invest here.
So it’s cheap, and I think it’s cheap for a reason. Some people have been saying Albania’s so cheap it’ll catch up with Montenegro. I do not see any reason for prices to catch up with Montenegro, or Croatia, for that matter. Maybe they’ll go up at some point, though there’s no clear catalyst for prices to go up. Prices will stay at a substantial discount to these other countries.
To give you an idea of the state of affairs in the real estate industry on the coast, approximately half of agencies that I found on Google maps were bankrupt. And the other agencies were not, when I’d ask them how’s business, clearly business wasn’t going that well. So the real estate market has been essentially dead since the great financial crisis on the coast, and it hasn’t recovered since. So in many ways, this looks and feels like a bottom. But, again, what’s the catalyst for things to improve? I’m really not seeing it.
Who should invest in Albanian coastal real estate?
So who is this for? Because I mean, there’s probably a space for some people to buy real estate here. Look, if you put €70,000, third line, you’ll get yourself a nice three-bedroom, 100-square-meter apartment. So it’s very cheap. It’s interesting for, I guess, middle class European families who want a place but don’t necessarily afford a Montenegro or a Croatia. But then, again, if you can’t afford buying in Montenegro, or in Croatia, and you just like the deep value that you have here in Albania, then it means you probably don’t have enough money to buy into a bad investment, what objectively is probably a bad investment with very low liquidity. If you buy something here, be ready to have it for many years, selling it will not be easy.
It’s for low budgets. But if people have low budgets, they should probably be spending their money in a wiser way than buying something in Albania. So again, I fail to understand the value proposition of buying real estate in Albania. It’s fine to come here on holidays. If you want to come here, I’d say rent. If you’re American, it might be interesting in the sense that Americans are entitled to one-year visa on arrival. So that’s pretty cool. And Americans are absolutely loved. So as I traveled around the country, there were American flags everywhere. So as an American, if you come here, you’ll be very welcome.
But then, objectively, if you spend enough time traveling in the Balkans, and you do Croatia, you do Greece, Albania, Montenegro, Serbia, like even the Bulgarian coast, then it’s very unlikely that you’ll reach the conclusion that Albania is the place where you want to spend a lot of time and where you would want to invest your money. I’ll just put it this way. So someone coming in from abroad the first time to the Balkans, sure, they might find it very charming. But then, comparatively, I don’t really see the value proposition, nor is it that good from a personal tax point of view. You’re much better off being a tax resident of Montenegro with its 9%-15% taxes, as opposed to here they’re higher in Albania.
So again, I don’t think there’s much of a space for many people to make investments in Albania, but I do encourage people to come here on vacation, allocate one week, 10 days, not necessarily more, there isn’t that much to do either. The country is bigger than Montenegro, but there is probably less to see than in Montenegro. But come here on a road trip, rent a car, go around the country, and check it out for yourself.
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