Last unspoilt stretch of coastal Adriatic

With prices in Croatia and Montenegro already soaring, Albania remains one of the last chances to buy property on the Adriatic at excellent prices. The country has the same beautiful coastline as these other Balkan hotspots, with pristine, clear blue water and stunning rugged mountains. While prices in some parts of Croatia and Montenegro have rocketed to €10,000 per square metre, a slice of Albanian Adriatic coastline can be purchased for around €600 per square metre. Don’t you wish you bought in Croatia or Montenegro four years ago?

EU Accession

The path to EU membership was paved in June 2006, when Albania signed the Stabilisation and Association Agreement (SAA). Showing its commitment to embrace Albania, the EU has allocated a financial assistance package of more than €11 billion, to aid infrastructure between now and 2013. The target year for Albania joining the EU is 2014 but given the Union’s history of fast-tracking country membership, there is every reason to assume their accession could happen sooner rather than later.

Political Reform

To combat negative perceptions of the country and attract increased levels of foreign investment, the government has worked hard to implement a series of reforms, which are paying dividends. Foreign investment has increased fourfold to more than US$2 billion in 2006, and growing financial confidence in the country has been shown by foreign banks. Already Raiffeisen Bank, Société Generale, Crédit Agricole and the American Bank of Albania have moved into Albania. Moving forward, the Albanian government is committed to an ongoing privatisation program, and this along with favourable growth conditions, low operating costs and a young and dynamic population, continues to attract more foreign investment to Albania. There were no surprises then to see Albania had the second highest voter turnout of any democratic country last year.

Strong economic growth

The Albanian economy has grown at a rate of around 6% for the last three years. This is higher than the European Union average, where even the strongest economies, such as France and the UK, are achieving annual growth of 3-4%. With the government pressing ahead with its reforms and foreign investment on an upward trend, this growth is set to continue.

Growing Tourist Destination

Already popular amongst Italians and other Eastern Europeans, Albania has attracted plenty of press interest recently and is beginning to hit the radar of other Western European countries. The recent €50 million upgrade to modernise the international Mother Teresa Airport has seen visitor numbers increase by 22% this year, with the airport set to break the 1 million visitor mark for the first time. The airport caters for direct flights to all major European cities, including London, as well as flights to New York. Another €20-€30 million will be spent on the airport over the next two years, as the country prepares for even more foreign visitors.

Excellent buying conditions for foreigners

Apart from land ownership, foreigners can freely own residential and commercial property in Albania. Furthermore, they enjoy all the same tax benefits as the locals do – no VAT, no capital gains and no inheritance tax. Even the 3% stamp duty is payable by the seller. See the table on page 7 for more details.

POLITICAL OVERVIEW

Today, Albania is classed as an emerging democracy, and terrific strides are being taken towards a stable, open political system. In the 2005 general elections, the Democratic Party and its allies won by promising to reduce crime and corruption, promote economic growth, and decrease the size of government.

The second-largest parliamentary group, the Socialist Party, returned to opposition after eight years in power. In what was the second highest voter turnout in all worldwide democratic elections last year, the election, and particularly the orderly transition of power, was considered an important step forward in the country’s political development and stability. In this new era for Albania, the communist regime commonly associated with Enver Hoxa, and which governed the country for the best part of 50 years after the second world war, is firmly in the country’s past.

The modern political system is based on a constitution passed in 1998. Parliamentary elections are held every four years, while the head of state (the President) is elected every five years by parliament. The current incumbent is President Bamir Topi, who took up his position in July 2007.

Currently the government is working hard and instigating a series of reforms designed to attract increased levels of foreign investment and reduce the grey economy, which is thought to be as much as 50% of annual GDP. The policies are working, with more than 1,000 foreign companies now operating in Albania. A sure sign of confidence in the government’s policies and indeed the country’s financial sector, a growing list of international banks is also setting up.

Albania’s standing in the international political arena is set to be further enhanced when it achieves membership of NATO in 2008. It has also signed the Stabilisation and Association Agreement with the view to joining the European Union by 2014. As it is the fastest-growing economy in the region and the EU has already committed €11 billion to assist its accession plans, there is strong reason to believe the country will join the Union, bringing with it more security and growth.

ECONOMICAL OVERVIEW

Fifteen years ago economic reforms similar to those applied in the other newly democratic countries of central and eastern Europe were introduced in Albania.

Price and exchange rate liberalisation, monetary restraint and an incomes policy were complemented by a comprehensive package of structural reforms. Privatisation and the creation of the legal framework necessary to support a market economy were central to the plan.

While the economy has certainly progressed, there have been setbacks on the way. Most notably, the collapse of pyramid investment schemes in 1996 hit the country hard. Seventy percent of the population lost their life savings and violent riots broke out across the country resulting in death and destruction. However, the reforms have subsequently borne fruit.

Since 2002 GDP has increased by 6% a year - driven by the growth of the construction and tourist industries - and now stands at $9.3 billion. Inflation is low and stable at 2.5% and foreign investment is at an all-time high, reaching US$2.1 billion in 2006. The economy is bolstered by some US$1 billion a year, sent back by Albanians living in Greece and Italy.

In essence Albania appears to be a country where the economic fundamentals are good, but where there is great potential for further progress and wealth generation. Exactly the sort of conditions, in other words, that equate to a good long term property investment opportunity.

TAX