The ‘build-up’ effect in Tirana has a direct impact on apartment prices!

Dec 26, 2019

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.

Some of the projects in the construction sector and their offers:

  • At the construction site on Bajram Curri Boulevard, Kastrati Construction has laid the foundation of a tower that will be 137 meters high (over 30 floors). According to the company’s sales manager, in this project, sales prices for the mansion start from 2900 euros.
  • Another project of Kastrati is the Garden Residence Turdiu. According to the project planning, the Tirana apartment offer will increase with around 930-950 new apartments by 2022, when finalized. The company’s sales manager says the firm has come up with a cheaper price than the market price in that area, 800 euros per square meter.
  • Another major project is under construction in the Don Bosco area, Fiori Di Bosco. Lorena, sales manager of the project, which is a collaboration of two Matrix Construction companies and Edil-al, says they are applying a 900 euro per square meter sale price by the end of January end. After January, the price will be 1000 euros per square meter. According to the company’s sales manager, in that area if you buy an apartment in an underlying facility, the price is around 700 euros and adds that throughout Tirana, home prices have risen 100 to 200 euros per square meter. In total, this project has 6 towers with 9 residential floors, 2 of which will be completed within February.
  • The company E-88 sh.k. is at the end of the first tower, of the five towers it has designed to build on the Durres Street. The sale price for this project is 900 euros per square meter, according to a representative of the construction company E-88.. At the New Ring Crossing, near the brewery, the construction firm Milo 2000 is finishing up two residential buildings, priced at 850 euros and according to representatives, about 70% of the apartments have been sold.
  • Work continues on the Square21 project on Kavaja Street, which is being built by Arlis Construction Company. This project will increase the offer in Tirana with about 1000 new apartments, with a sale price of 1200 euros per square meter. Construction firm Kontakt is developing several projects simultaneously in Tirana. Residence Mangalem21, near the area of “Ali Demit” has come up with a sale price of 700 euros per square meter. Construction company Kontakt has planned 33 residential buildings in the Mangalem project21.

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 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 two main factors that are expected to affect household demand for housing:

– The phenomenon of emigration in recent years 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.

– 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.

There is a saturation of the market in terms of supply, but everyone who is building in the mall is working with cash. According to the collected data, there are currently about 25,000 families in Tirana, which for us are potential clients. But they are looking for affordable apartments. For 11 consecutive years, Konfindustria is considering apartment sales in the Tirana area, and within the capital’s Ring Road are selling an average of 100-150 apartments a year. In this area prices start from 1200 euros.