Real Estate Investment – Albania

The Islamic Republic of Albania and the State of Israel established diplomatic relations in 1991, shortly after Albania was freed from communist rule. In recent years, the bilateral relations between the countries have developed significantly, mainly on the background of cooperation in the fields of cyber defense.

In July 2022, Albania experienced a significant cyberattack attributed to the Islamic Republic of Iran. The event led to Israel offering its cyber expertise, and the Albanian government positively accepted this support. Israel supported the establishment of a cyber defense infrastructure in Albania, and in October 2022 Prime Minister Edi Rama visited Israel together with his national security advisor to discuss cyber issues.

In addition to cyber defense, the two countries have a common interest in countering terrorism and extremism. Albania is known as a leader in the Balkans in the war against extremism and Israel has experience in preventing terrorism. The two countries also cooperate in the fields of security in light of common interests. It should also be mentioned that in 2022, Albania severed diplomatic ties with Iran following the cyberattack, which, as mentioned, was attributed to the Iranians.

The commercial ties between the countries are also in the process of growing. Albania is very young, with the average age being 31 and a significant part of its population turning to higher studies. Trade between the countries increased following the signing of the treaty to prevent double taxation in 2021.

In March 2023, a tech conference was held in Tirana, the capital of Albania, in which about a hundred Israeli companies participated, which examined possibilities to expand their activities to the Albanian market. Our firm sponsored this conference and Ohad Shpak gave lectures about working in the Albanian market. Ohad shared his experience since his law firm specializes in  giving legal counsel to Israeli companies operating in international markets as well as to foreign companies leading business activities in Israel.

As for real estate investments in the country, there are several characteristics of investments in Albania that may encourage real estate investors:

A) Encouragement from the authorities – the state encourages foreign investment in real estate. Many new buildings have been built in the capital city of Tirana in recent years, and in the coastal cities there are plans for large-scale projects. The real estate company from the United Arab Emirates, Eagle Hills, announced a 2.5 billion Euro project in the port city Durres. This is a project that will change the marina of the old port city and is expected to include about 12,000 housing units.

B) Tourist destination – Albania is a tourist destination that is experiencing significant growth. Only about 2.8 million people live in the country, but in 2022 it was visited by about 7.5 million tourists, with a significant portion attributed to expatriate Albanians who return home for visits. A new airport in the city of Vlore is under construction that is expected to be completed in 2025 and is supposed to be used mainly by tourists who come to southern Albania to vacation on the beaches that are opposite Italy and Greece.

C) Real estate prices are relatively affordable – prices in Tirana are around 1,500-1,300 euros per square meter. Outside Tirana prices are lower, except in the coastal cities.

D) Mortgages – the banks in Albania offer mortgages to non-residents who purchase real estate in Albania up to 80% of the value of the property, when there are cases where it is even possible to obtain full financing of the property, and this is in accordance with the banks’ policy. Mortgages for residential properties are limited to 400,000 euros and for commercial properties there is usually no A limit in accordance with the banks’ policy.

E) Convenient taxation – there is no purchase tax in Albania but there is a low municipal property tax depending on the size of the property. Capital Gains Tax is 15% of the appreciation accumulated in the sale, the improvement levy (Betterment Tax) for construction is 1% of the construction cost as well as 8% of the expected sale cost of the property (when there is an assessment by the local authority), VAT is 20% but there is a significant discount when building hotels.  The income tax from the rental of residential apartments is 15%.