A Ticking Time-Bomb: Tirana’s Property Market Bubble Fueled by Money-Laundering
Tirana Times, 25 May 2021
The average price of residential property in Tirana has more than doubled since 2017. In a recent study which compares price-to income ratio, the capital of Albania was put on par with Munich and Milan. But is it reasonable to view the pricing-out of most prospective homeowners from the market as a negative development? Not necessarily.
Soaring property prices in a specific market are linked to large accumulations of capital, which in a healthy economy come as the result of growth, and the attractiveness of that market to foreign and local investors. The frustration of prospective homebuyers and tenants in Tirana is shared amongst citizens of most European capitals.
But in contrast to our geographical neighbors, we have a lot more to worry about. Even the most creative Albanian economists struggle to provide a well-founded economic rationale for the soaring property-prices. From 2013, Albania has experienced extremely modest economic growth, whilst more than 400,000 (predominantly young) people have emigrated. Over 20% of the remaining Albanian youth are unemployed. Our neighboring countries in the Balkans have experienced more growth in recent years, yet average house-prices in Tirana are the highest in the region. Furthermore, the level of foreign investment in Tirana has been negligible. Wealthy foreign investors cannot be blamed for the price-surge, as they often are in Milan, Munich and other cities.
