‘There’s no project for a Club Med in Albania,’ Florence Le Gall, Club Mediterranee’s director of regional development, wrote to villagers claiming ownership of the land at Kakome, about 200 kilometres south-west of the capital, Tirana.

This is a real blow to Albania’s hard work in attempting to attract major Western investment and tourists. At the same time this is also a clear indicator that there is a problem with land ownership in certain areas of Albania.

The European Union (EU) has in the past urged Albania to solve the problems over land ownership in order to attract foreign investors and meet the requirements for membership in the EU.

The 75 Million Euro holiday complex was to be built by Albanian construction company Riviera and operated by Club Med. It is understandable that after a long 5 year dispute Club Med has decided to cancel its project in Albania.

Above is an illustration of the planned holiday complex that was canceled.

It is difficult point a finger and decide who was to blame for this, however the site was supposed to be public property and there shouldn’t have been a dispute in the first place, although the locals think otherwise. It is also clear that the Albanian government needs to work harder in solving such issues.

At times land ownership problems can be avoided by just asking the locals about the property as most of them will be well informed. If you seek sufficient advice and research before you buy a property you will certainly make a safe and profitable investment.

The majority of investors do not have such problems as they invest in apartments and property in major cities where the government regulates heavily.

Whilst the current world property market has slumped the property market in Albania is proving remarkably strong.  The EU has seen its new property development market contract by almost 2% month on month recently and these figures are repeated almost throughout the world, with new projects and developments being canceled.

In Albania however the story is different.  The property market continues to expand and new projects are not being pulled.  Whilst growth has slowed the market itself is far more robust than other international options.

Why consider Albania for property development?

Obviously such growth has attracted the attention of many international property developers.  Many property investment funds have announced that they are investing in the strong Albanian market, including some of the biggest names in the world.

What is important to consider is the price.  Albania is one of Europe’s poorest nations, and as such the price of property is very low.  This makes entry onto the property ladder and into the property development industry far easier than in economically stronger nations.  With prices so low there are always interested international buyers willing to come in and try make a profit.

Because of it’s poor economy there has been no ‘property boom’ which many other countries have experienced.  The inflation of house prices never really happened in Albania, meaning that property was kept at a sensible level.  Because of this there has also been very little by way of a crash now that the world economy is struggling.

As the house prices are at such a reasonable level they are still attractive to both local people and foreign investors, meaning that there are a wide range of people to try sell any property to.  These cheap properties have meant that the market has risen at a very real, and very sustainable, growth rate.

Albania and foreign investment

So whereas Albania was previously an unattractive prospect in the property development world because it was not expanding at the same rate as other countries, now that the property world is seeing a fall in prices and production Albania’s sensible growth has meant it has suddenly become very much more attractive.

Because of this lack of foreign investment previously the number of projects has not saturated the Albanians need for new properties, and neither has it suffered from dramatic pull outs of foreign investment when the property market started struggling.

When considered alone with the weak economy of Albania meaning that prices are 75% cheaper than in other Eastern European countries, but experiencing growth rather than contraction, it is very easy to see why so many people are starting to get excited about investing in the Albanian property market.

So not surprisingly many people have started looking for other markets that are not suffering such a slump in prices and buying numbers.  Internationally a lot of the world are suffering through the same problems brought on by the credit crunch slowed marketplace, but there are still some markets that are proving to be profitable to invest in.

Albania and property investment

Albania is one such country.  Unlike many countries in recent years it has not gone through what one might consider a ‘property boom’.  So high prices have always risen in a slow but consistent manner.  Until now that has made it an unattractive proposition for anyone looking for returns on their investment.

However because the country never experienced anything like as big a rise in property prices as the rest of the world it has also not seen the crash they have experienced either.  Indeed unlike the EU’s property market, which is shrinking by 2% month on month at the moment, Albania is experiencing modest but steady growth.

Great for first time property developers

Such consistent growth is perfect for anyone who is considering getting into property development as it means that the market is a far smaller risk than that of many other property markets.  With positive growth and less development over the years there is still real need for property in Albania.

The economy of Albania is also a great boost for any potential international developers.  Albania is one of the poorest countries in Europe and as such costs are going to be down considerably on what it would cost to develop elsewhere.  Materials and labor are all at far more affordable prices than many developed nations.

The property price is also of benefit to first time property developers. With prices at 75% less than even Albania’s Eastern European neighbors, and therefore much less again than countries such as Spain and Portugal, traditional property strongholds, it costs dramatically less to get your foot on the property ladder than it otherwise would.

The buyers within Albania are also far more numerous.  Because there has been no hike or crash of prices buyers within Albania are not as wary of house buying as many populations are.  With house prices still at affordable levels for locals there is a considerable number of potential buyers available.

Foreign investors are really starting to wake up to the value of property in Albania, with many property investment funds announcing that they will be putting money into the area, which gives additional buyers for the canny property developer to sell to.

Albania is proving that property development is, even in the credit crunch, a viable business model.  You just have to look further afield than you might have thought.

Property developers have been searching the world for new markets.  The credit crunch has limited the opportunity for developers to make money in many different ways.  Difficulties gaining credit has limited buying power whilst the same problem has also cut the number of potential customers available for developed property.  Coupled with many people having less money to spend anyway, with job losses becoming all to common in much of the Western World it is far from surprising to see people considering other markets to develop in.

So international markets have become the destination of choice, with developers studying statistics of many different countries trying to assess where will provide the best RoI (return on investment) for their time, money and efforts.  And where is proving to be most popular?

Albania

That’s right, Albania.  Most people aren’t even aware of just where Albania is (Northwest border of Greece in Europe) but it is fast becoming one of the worlds biggest property hot-spots.  It has huge potential as a country for those who are looking to build or develop property for profit.

The country is one of the poorest in Europe, with a small but fast growing economy and exports limited to mostly textile based industries.  But by looking a little deeper property developers are starting to see real benefits in investing in the area.

Property prices

Property prices in Albania never underwent the mass rise that most of the Western World did, and so it has also managed to stay free of most of the crash that the world is now going through.  Rather than suffering the 2% month on month contraction of the property market that the EU is going through Albania is actually seeing modest growth in the property sector.  Also unlike much of the EU all it’s new projects and developments are going ahead, with little to no cancellation.

It is this growth in property prices that is especially appealing.  All over the Eastern European country prices are rising at steady rates, but it is in the countries capital of Tirane that property prices are performing best, with annual growth of 30% far from uncommon.

Foreign Investment

Another reason to believe that property prices in Albania are likely to continue to rise is the level of foreign investment that has started.  Large foreign companies such as Hewlett-Packard and Citroen have set up offices in the country, whilst many international banks have started opening up offices in the region.

Economic Growth

The potential for Albania as a country is only just starting to be realized.  The number of tourists coming into the country year on year is increasing exponentially, increasing the need for holiday homes and the amount of money being brought into the country.

The economy itself is starting to improve dramatically upon its poor history, with growth at 6% for the last few years running, outstripping much of Europe for growth.  Such new money, foreign investment and growth is showing that Albania really is a country with huge property development potential.