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Albania suffers from negative stereotypes of being a backward, mafia-ridden country and has not yet become a property hotspot. Given the current trend of UK and Irish property investors buying in Eastern Europe, there are a number of compelling reasons why it worth looking beyond the stereotypes and investing in the Albania property market now. Albania is surprisingly more advanced in its real estate offer to the foreign investor than its more fashionable neighbours, Montenegro and Croatia.
1. Clean title deeds are a concern when buying overseas and many foreign buyers have been duped into buying unclean properties by unsuspecting agents in countries such as Croatia. This does not happen in Albania as the title is guaranteed by the public notary. The process of restitution is ongoing where land confiscated by the Communist regime is being returned to its original owners. The process is expected to be completed by the end of 2008.
2. Unlike Croatia, there is a well defined master plan for urban development, with clear build guidelines such as build density and number of floors / maximum build height. The planning process is more straightforward, particularly for plots of less than 5000m2, where approval can be granted at the local level. Therefore a developer can start to build months after a planning application, not three years as has been the case in Croatia.
3. There is a highly competitive mortgage market with 17 foreign banks operating in Albania (there are no local banks left). The 100% mortgage for the local market has just been launched. Foreign non-residents can form an Albanian company and leverage up to 70%, a clear advantage to investors over Montenegro and Croatia.
4. The government is pro-active in enticing and supporting foreign investment. There are numerous tax incentives ranging from no capital gains tax on private purchases to five-year tax holidays for direct foreign investment. Even when levied at their full rate, income tax progresses to a maximum of 20%, the same rate as Albanian Corporation tax. There is no capital gains tax and no repatriation tax.
5. There is a major ongoing upgrade of infrastructure in the country which will connect the country to Europe and increase its strategic importance. Two main motorways are planned – the so-called Dalmatian Corridor which will link Greece to mainland Europe through the former Yugoslav coast. This will pass close to the entire Albanian coast. The second motorway is the so-called Corridor VIII which will link the port of Durres to Macedonia, Greece and Bulgaria. Durres is already an important port for Bulgaria and the Black Sea area. A €50 million new airport terminal opened in Tirana in March 2007. British Airways already flies direct three times a week as do 10 other International airlines. German Wings and Belle Air are two low-cost airlines already flying to Tirana – others are in negotiations.
6. Albania offers the last virgin beachfront in Europe for sale. Prices are a fraction of the coast of Greece, Montenegro and Croatia. There are huge pristine tracts of sandy beach which can be bought – a unique offer in modern Europe. A strategy of buy and hold has worked well in Montenegro and Croatia, where prices for prime land have increased five to tenfold over a five-year period. Albania offers the additional buy, subdivide and sell. Due to historical reasons, large beach plots of 1-20 hectares are available for sale. These can be subdivided into smaller plots, put through planning and sold for considerable profit. Preliminary research has shown that there is large demand for such plots.
7. The current investment climate. Albania's economy remains one of the fatest growing in Europe, averaging 6% growth each year for the last five years, inflation has been firmly under control for the last seven years (most recently ranging between 2 and 3 percent). With this increased stability and economic growth the local currency has actually appreciated significantly in recent years.
8. There is a definite first mover advantage. Currently there is only one serious agency operating in Albania and they do not cover the whole country. There are many plots which have not yet been brought to market. The first development we marketed (103 apartments in Orikum) sold out in weeks.
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