While the economy failed to recover even in the second quarter, growing by only 3.23%, real estate activities have been entirely in the opposite trend, marking new records and double-digit expansion of 11.7%.
The data published by INSTAT reveal that the gross domestic product at current prices in the real estate activity, which measures the value of economic transactions in this sector, reached 33.8 billion lek, or almost 320 million euros in the first three months of the year, the highest ever recorded, at least since 2008, when the data is reported.
In the first quarter of the year, the value was 32.3 billion ALL, bringing the entire first half of the year to 66 billion ALL, or about 630 million euros.
Since the first quarter of 2018 the market has grown at a much faster rate compared to previous periods, accelerating significantly in the last two years, as shown in the graph: Real estate activities, GDP at current prices, seasonally adjusted.
In the first 6 months of 2022, real estate transactions were 550 million euros, while in the same period of 2018, around 400 million euros.
Real estate activities were among the sectors that had the highest impact on economic growth in both the first and second quarters, along with construction. In the first quarter, the economy expanded by 2.72%, the lowest level since the pandemic period, as "Real estate activities" contributed +0.62 percentage points. Together with construction, of 0.42 percentage points, both sectors contributed to 38% of the total growth of the economy.
In the second quarter, in the 3.23% expansion of the economy, construction contributed 1.43 percentage points and real estate 0.72 percentage points. Both sectors made a much higher contribution than in the first quarter, affecting 66% of all economic growth.
The construction record is held by the capital, in line with the rapid increase in building permits. According to INSTAT Statistics, in 2022, a total of construction permits were granted by the Municipality of Tirana with an area of ??about 1.81 million square meters, about 70% of the total granted throughout the country.
Compared to a year ago, this indicator increased by about 10%, while it has marked the highest historical level, at least since 2005, when INSTAT reports detailed data by counties. In the first quarter of this year, the area of ??permits was significantly reduced, to increase again in the second.
In contrast to the rapid growth of constructions, the population in Tirana is no longer increasing at such a fast pace.
From 2012 to 2018, INSTAT data show that the population of Tirana increased by an average of 20,000 people per year. But, since 2019, the population increase in Tirana has decreased significantly, as the capital has not escaped the trend of immigration and the gradual aging of the population.
In 2019-2020, the capital had 11 thousand more inhabitants, a figure that was halved in the following years. In 2022, the population in the capital increased by only 5.75 thousand people, which is the lowest historical increase, at least since 2011, when INSTAT reports the data.
INSTAT reported that the population of Albania in 2022 has recorded the highest decline in three years, since the pandemic period, shrinking by 1.1%, or 31.8 thousand people less.
However, the decline in the country's population has been somewhat offset by the interest of foreigners to buy, which is higher in the coastal areas of the country.
Foreign investment in real estate is down this year
Foreign investments in real estate increased significantly last year, especially on the coast, in line with the country's return to a tourist destination.
According to data from the Bank of Albania, last year, foreign investments in real estate in Albania reached the value of 291 million euros, increasing by 52% compared to the same period of the previous year. Real estate brought in more than 21% of the total value of Foreign Direct Investment for the past year.
But, in the first 6 months, purchases by foreigners have fallen, in contrast to the upward trend of real estate sales in total.
In total, for the entire first 6 months of the year, the value of foreign investments in real estate has decreased to 127 million euros, down 14.2% compared to the first 6 months of last year./monitor