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Albania Property Guide

2013

Albania Property Group Š January 2013


Albania Property Guide

Contents About Albania & Albanians International integration Economic data Albanian Cities Questions & Answers Conclusion

Albania Property Group − © January 2013

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Albania Property Guide

Scanderbeg square in the center of Tirana – Capital of Albania

About Albania and Albanians History of Albania Albania covers a total area of 28,748 km2, coastline 362 km. Albanian Coastline bordering the Adriatic and Ionian Seas. The territories of present day Albania have been inhabited as early back as 100.000 years ago. It was at the turn of the third millennium BC that an Indo - European population settled there. As the result of the mixture, a population incorporating the unique cultural and linguistic characteristics of the whole Balkan Peninsula (pelages) was created. Based on this ancient population, the Illyrian people developed through the second millennium and the first century B.C. After its fall in the year 168 B.C. Illyrian Kingdom came under the control of Roman Empire. With the division of the Roman Empire (395 A.D), Illyria became a part of the Byzantine Empire. The country has suffered continuous invasions over the last 1000 years and by the end of the 14th century Albania was occupied by the Ottoman Empire. Albanians fought successfully Ottomans during 1443-1468 under the legendary Leader Gjergj Kastrioti Scanderbeg. Ottoman Empire at its best was stopped by Albanians who saved Europe from the invasion. The subsequent efforts and insurrections for independence eventually brought about the proclamation of the independence of Albania in 1912. After 1912 till the end of the First World War, the country was attacked by neighboring countries. Albania Property Group − © January 2013

Location of Albania in Europe

MONTENEGRO

KOSOVO

Shkodra Lezha Laç ADRIATIC SEA

Peshkopi MACEDONIA

Durrës TIRANA Kavaja Lushnje Fier Vlora

IONIC SEA

Elbasan Pogradec Berat

Korça

Tepelena

Saranda GREECE

Map of Albania

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Albania Property Guide

Mosaic at the National Historic Museum in Tirana

After eleven years of monarchy the country was occupied by Mussolini forces in 1939, putting the end of monarchy. In 1943 the armies of Hitler occupies the country. Albanians are well remembered for providing shelter to Jews during the war. Albania was a safe haven for Jews from neighboring Yugoslavia and Greece.

poverty when it finally emerged from isolation in 1991.

The principle of self-reliance applied by the Communist regime prohibited foreign loans, credits and investment. From 1991 until 1997 The Democratic Party led the country. After the unrests of 1997 due to the failure of pyramidal schemes the Socialist Party with its The resistance against foreign invasion coalition was in power until 2005. After was known as the Anti – Fascist National the last elections on 3 July 2005 The Liberation front. The Communist Democratic Party with its coalition is party took power in November 1944, turn back in power. Albanian policy when the foreign armies were expelled. intends to integrate the country into Shortly thereafter, a totalitarian regime European Community and the Alliance was established under the communist of NATO forces. leader Enver Hoxha. For about 50 years, the regime applied the policy of

Population Albania has a population: 4.1M (est. July, 2012) but only 3.1 M are residents and the difference is made of Albanian emigrants who leave and work mostly in Greece and Italy. Median age ~ 30 years Life expectancy at 78 years Albanian capital: Tirana with approx 900K inhabitants

Albania Property Group − © January 2013

Albania is a secular country. Albania is well known for its model of religious tolerance and this goes back to the middle age. Muslim religion was first introduced into Albania by the Ottomans invaders. In the country now live together Catholics, Orthodox, Evangelists and Muslims. According to the 2007–2008 Gallup polls, 63% of Albanians claim that religion does not play an important role in their life 2


Albania Property Guide

Paving the way for European Integration Parliamentary Democracy Member NATO − April 2009 Albania to become a member of the EU in the next 5 years

Credit rating Political Risk: 3 (1 = best; 7 = worst), In global financial market: B1, Moody’s classified as a country of “stable outlook” (Mar., 2012) The enactment rule of law is foundation of free society All new laws are in accordance with western standards Europe - Albania’s long time aspiration

International Parameters Ease of Doing Business rank: 2012 rank: index climbed to 82 2011 rank - 86 2010 rank – 135 Corruption Perceptions Index (CPI) score Transparency International 2011: rank – 95, score 3.1 2010: rank – 85, score 3.4 More links about Albania indicators http://www.worldbank.org.al http://www.doingbusiness.org http://www.transparency.org Albania is a member of the UN since 14 December 1955

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Albania Property Guide

Economic data Exchange rate (August, 2012) EUR/ALL 138.0 USD/ALL 110.4 EUR/USD 1.25 GDP – real growth rate: 2.5% (2011 est.) GDP – per capita: $7,800 (2011 est.), $7,600 (2010) Budget: Revenues: $3.405 billion Expenditures: $3.87 billion (2011 est.) Taxes & other Revenues: 25.6% of GDP (2011 est.) Inflation Rate: 3.9% (2011 est.), 3.5% (2010 est.) Exports: $1,886 billion (2011 est.), $1.548 billion (2010 est.) Export Partners: Italy 50.8%, Kosovo 6.2%, Turkey 5.9%, Greece 5.4%, China 5.5% Imports: $5.022 billion (2011 est.), $4.305 billion (2010 est.) Import Partners: Italy 28%, Greece 13%, China 6.3%, Turkey 5.6%, Germany 5.6% Public Debt: 59.4% of GDP (2011 est.) Investment: 31% of GDP (2011 est.) Albanian current Currency

Commercial Banks (2012) Alpha Bank – Albania

International Commercial Bank (ICB)

Intesa Sanpaolo Bank Albania (Former: American Bank of Albania)

Italian Development Bank (IDB)

Societe Generale (SG) Credins Bank (CB) Credit Bank of Albania (CBA) Credit Agricole – Emporiki bank (CA) First Investment Bank Tirana Branch (FIB)

National Bank of Greece (NBG) Banka Kombetare Tregtare (BKT) Procredit Bank (PCB) Raiffeisen Albania (RZB) Tirana Bank (TB) (Part of Piraeus Bank) Union Bank (UB)

First Investment Bank, Albania sh.a. (FIB) Albania Property Group − © January 2013

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Albania Property Guide

Pedestrian bridge over the “Lana” river in Tirana

Tirana – Albania’s capital city Tirana enjoys a beautiful setting between the ranges of Dajti Mountain from one side and the coastal plains on the other one. This relatively new city was founded in 1614 by Sulejmen Pashe Bargjini, feudal lord of that time, and proclaimed capital in 1920. However the area has been inhabited as early back as the Neolitic period. With a population of approx 800,000 inhabitants, Tirana is growing rapidly, and is a busy commercial and administrative center with several comfortable hotels, restaurants, discos, pubs as well as modern facilities for conventions and conferences. About 70% of the businesses are located in Tirana area. It is always nice to have a walk in the Grand Park, lying in the southern part of the city and extending over an area of 250 hectares with an artificial lake included. It has 120 kind of plants, decorative shrubs and flowers of various colors. Albania Property Group − © January 2013

Vast urban development in Tirana

“Scanderbeg” square in the center of Tirana

“Grand Park” in the southern hills of Tirana

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Albania Property Guide

Ksamil Beach in Saranda

Saranda – The Pearl of the South Saranda, the gateway to the southern Albania, is a small town located between high mountain and the Ionian Sea. The name Saranda derives from an early Christian monastery dedicated to Santi Quaranta (Forty Saints). Located on the shores of Ionian sea, in front of Greek island of Corfu, Saranda is characterized by a Mediterranean climate and warm sea waters.

“Monastery Bay” in Saranda

Due to its location and warm weather Saranda is one of the most attractive tourist town in Albanian Riviera, where honeymooners traditionally spend their holidays. Located in front of the sea and along the main promenade there are some hotels and restaurants which offer you catering facilities and accommodation. Daily ferryboat links Saranda with the nearby Greek island of Corfu.

“The Blue Eye”– unique natural spring in Saranda

Albania Property Group − © January 2013

Butrinti – largest archeological site in Albania

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Albania Property Guide

Medieval Tower in Durres

Durrësi – Albania’s oldest city Durres is an ancient city, founded in 627 B.C. and known by the names Epidamnus and later on Dyrrachium. The most important archaeological site is the Amphitheatre, the largest in the Balkan Peninsula, built in the 2nd century B.C. with a capacity of 15 - 20 thousand spectators and containing an early Christian Crypt with rare wall mosaics. Worth visiting is also the fortress of Durres of the early Middle Ages, V –VI Centuries. Located in the vicinity of international Airport of Rinas and the capital, Durres maintains regular connections with Italian ports

The Durres sandy riviera is the longest in Albania

Albania Property Group − © January 2013

Durres is the largest beach and sea destination in Albania With a coast of 6 km long and 150 –180 meters wide, only 30 km from Tirana International Airport and 39 km far from the capital Tirana. Along the seaside there are tourist establishments which provide adequate services. Durres is the second largest city of Albania with a population of 150,000 inhabitants which gets almost doubled during the summer. It is the biggest seaport and the main railway connection center.

Durrës seaside by dawn

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Albania Property Guide

The adorable Ionian riviera spans the whole length of Vlora

Vlora – Miles of White Beaches Vlora coast is situated in the southwestern part of Albania, exactly where the Adriatic and Ionian seas meet. Vlora, through the Otranto Channel, is the nearest point of Albania to Italy (72km). It is 135 km far from Tirana and 123km from Greece. Along the Vlora coastline you will find outstanding white beaches and stunning surroundings. There are plenty of beautiful beaches in places like the natural Park of Llogara, Dhermi, Palasa, Himare and Cold Water (famous for its rich clientele and natural water resources). Vlora averages 274 days of sunshine in a year. Sazani Island as seen from Vlora’s seaside

Dhërmi – Lush vegetation by the pristine seaside

“Cold Water” rocky beach in Vlora

Albania Property Group − © January 2013

Secluded private beach in Vlora

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Albania Property Guide

We promise you a piece of the Mediterranean Now is the best time to invest in Albania

www.AlbaniaPropertyGroup.com

Buying residential, commercial property, or land is straightforward and the lack of restrictions and minimal taxes are just few of the incentives towards buying into the most exciting opportunity in Eastern Europe today.

Questions and Answers How much would a property cost me and how big are they? Do apartments come furnished? How much is the Reservation/Agency fee? What do I get for my agency fee? What are the payment terms? How can I instruct a lawyer? What is the process after the initial reservation fee is paid? Can I buy as an individual or company? What other costs do I need to be aware of? Is there a need for car parking? What is the rental market like? Approx how much are communal charges? Are there any guarantees from the developers? Property Management & Rental Services Do you organize Property Tours? Albania Property Group − Š january 2013

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Albania Property Guide

Q A

How much would a property cost me and how big are they? Offices Office property is mainly based in Tirana. The office market has seen impressive growth in the last 5 years. Many office buildings has been constructed and many more are under construction. They are all being built under international standards. Tirana has now around 50,000 m2 of Class A buildings completed whilst construction companies not frightened by oversupply may deliver more than 70,000 m2 in the next 36 months with the Millennium project bringing 20,000 m2, and TID Tower 41,000 m2. Almost all of the modern space in Tirana is located in the Central Business Area; in Tirana business centers rents range from 12-24 Euro/1m2 per month. The most expensive and most recent business center is ABA center with 24 Euro/1m2 per month. Then Twin Towers, ETC rent space at 17-22 Euro/1m2, while Sky Tower and Torre Drini at 15-18 Euro/1m2. Service fees in the business centers amounting at 1-3 Euro/1m2 per month.

Residential The purchase price per 1m2 will vary depending on the location and the quarter within that location, in addition to the quality and the year when the residence has been built. To purchase in Tirana, the prices vary from: 400 – 500 Euro /1m2 in more populated Kashar, Yzberisht and Dajti regions 700 – 1,000 Euro /1m2 per m2 in the lake area 900 – 1,200 Euro /1m2 in Tirana e Re 1,100 – 1,600 Euro/1m2 around the National Park of Tirana 1,300 – 2,200 Euro /1m2 in the Block area. To purchase in Durres - 30 minutes west of capital city: 400 – 500 Euro/1m2 close to the sea without sea view 500 – 750 Euro/1m2 inside the city with no sea view 750 – 1,000 Euro/1m2 inside the city with sea view 1,000 – 1,400 Euro /1m2 in the front line or in resorts south and north of Durres. To purchase in Vlora - 2 hours south of capital city: 550 – 680 Euro/1m2 in the old beach area. 750 – 900 Euro/1m2 along lines 1 and 2 between Skela-Uji Ftohte road. 1000 –1,400 Euro/1m2, at complexes with top quality and swimming pools. To purchase in Saranda - 5 hours south of capital city, in front of Corfu in Greece: 550 – 700 Euro/1m2 at Street 5, and towards Cuka channel with sea view 700 – 900 Euro /1m2 for apartments across the road from the sea 900 – 1,300 Euro/1m2 for apartments next to the sea.

Typically one-bedroom apartment have been built around 55-75 m2 and the two-bedrooms 80-100 m2. They would both have balconies, communal areas and one or two bathroom, which are included in the size of the apartment. During 2011-2012 due to the market changes in the coastal areas, developers tend to build smaller apartments, use space in a more efficient way. Foreign buyers are more cautious towards Apartment Size vs. Return on Investment. Now we can find more one-bedroom apartments in new buildings with 60-65 m2, and two-bedroom apartments at 80-85 m2. Albania Property Group − © January 2013

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Albania Property Guide

Q Do apartments come furnished? would be very unusual to find apartments being sold with furnishing. Albania Property A ItGroup has managed with the our exclusive project Saranda Azzurra to offer kitchen furniture and air-conditioning within the selling price. It has prooved to be a success story. Considering that competition is becoming stronger and stronger developers are more willing to offer furniture, higher quality works, and therefore accept lower margins. This is a positive sign, and we are witnessing more reasonable pricing and developers thinkign of offering more than just accomodation. Furniture packages are available through Albania Property Group and will cost from about 3,500 Euro, depending on grade and amount of bedrooms. After-sale services with Albania Property group include Furniture Packages Property Management Property Rental Services These services are explained in detail under “Services” section at our website www.AlbaniaPropertyGroup.com. Air conditioning costs from 320 Euro per unit but it is sometimes included in the developer’s price. However, do expect the following to be included in your apartment: plumbing, electrics, sanitary ware / bathroom tiling, sockets, doors, double-glazing.

Q How much is the Reservation / Agency fee? Reservation/Agency fee is 2,000 Euro for apartments and Land fees 4 % on a sliding scale A The downwards. This fee is payable immediately on return of the reservation form. On receipt of this money and form, there is usually a cooling off period of 15 days, in case the buyer, should wish to not proceed with the purchase. On receiving of this fee Albania Property Group communicates with developing company and takes the apartment out of the market. With the next step client can start the legal proceedings in order to finalise the undertaking contract.

Q What do I get for my agency fee? A We work on a set reservation fee as oppose to a percentage as we feel it penalizes the higher spender. The fee is small in comparison with other countries.

Airport transfers from Tirana Accommodation Arrangement Car hire through our Rent-a-Car Program Market overview Property Tour Legal advice Assistance with arranging finance/opening a bank account Power of Attorney option and we can finish the paperwork for you once you leave. Discuss After Sale Services through our agency such as: Property & Rental anagement, Furniture Packages. Albania Property Group − © January 2013

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Albania Property Guide

Q What are the payment terms? A Generally you would pay between 20%-30% of your total purchase after the pre-contracts have been signed by you and your POA. The percentage varies depending on how far the construction is towards completion.

Then we try to put other payments in relation with the stages of construction. Therefore payments might follow with another 30% on completion of concrete shell of the residence, 15%-20% on completion of installations, 10%-20% on delivery of the apartment and 10% with registration and receiving of the title deed. The final payment which is paid upon registration of the property takes time in general. It comes after completion but what is more important clients can furnish and live in the property before they receive the deeds. Nevertheless the new law which has come into force in 2012 aims to shorten the period of time between completion and the registration of individual property.

Q How can I instruct a lawyer? A Since Albania Property Group started selling Albanian property to internationals 6 years ago, it has been possible to source the best independent lawyers and recommend them to our clients. There is no obligation for buyers to use our recommended lawyers and our advice would always be to consider some sort of consultation with an international lawyer in your own country in an advisory capacity.

You would expect to pay from 600-2000 Euro plus expenses for a quality English speaking lawyer in Albania. Price is determined based on how many units you buy. Further to our initial due diligence with a lawyer, in checking paperwork etc, your lawyer would be your contact through the initial contract procedure up until your first payment. They would also be on hand to remind you when further payments are due and to push for security of your title deeds after completion of the project. At Albania Property Group we will be using our own in house lawyer to verify papers before passing onto the lawyers for final checking and stamps.

Q What is the process after the initial reservation fee is paid? A Appoint a lawyer.

Await POA certificate to be sent via email. Sign certificate in front of notary in your own country & have the POA apostilled. Return POA certificate to your lawyer in Albania. Receive by email draft of undertaking-contract. Liaise with lawyer for any issues or clarifications & agree on the draft. Await pre-contract signed by lawyer and developer. Transfer first installment into the developer bank account, based on with details supplied by your lawyer. Other installments will follow during the construction period.

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Albania Property Guide

Q Can I buy as an individual or company? tax benefits are better to buy as an individual for residential property, however a local A The company would be needed should you be venturing in securing land. With the latest improvements in the procedure of registering a company in Albania you can make such registration within 24 hours.

Q What other costs do I need to be aware of? is no VAT on your purchase and no transfer tax. Most countries around the world will A There charge a percentage of the purchase price, when buying a property in their country. This figure can vary from the 2% to 15% in those countries. This is not the case in Albania. Should you decide to sell the property, there is a Selling Tax (similar to capital gains tax) of 10% payable in Albania, on the difference between purchase and sale. There is also a flat income tax of 10% on the rental income, should you rent your property out. Starting on January 2008 corporate tax was also reduced to a flat 10%, as is income tax. With all this in mind, your only extra fees in purchase will be real-estate agents and lawyers. For total tax and financial advice, Albania Property Group can recommend certified accountants to help you through any questions you may have in this respect.

Q Is there a need for car parking? is a problem in Tirana and the coastal towns. Our advice at Albania Property Group A Parking would be to purchase if you can afford it. It will be money well spent as an investment and will be an important commodity when selling or renting. Prices will vary from 12,000 to 25,000 Euro in capital city Tirana; 10,000- 15,000 Euro in Durres and Vlora; and 7,000- 10,000 Euro in Saranda.

Q What is the rental market like? A Albania has not been in the world tourist map before. However it has been moving up the

league table gradually over the last 4 years and is accelerating fast. A 20% increase of the number of visitors over the last three years, through the international airport in Tirana, proves this.

Albania Property Group has always said that this is the beginning stage for the ones wanting to go for rental income. Anyhow, it is important to understand that on the coast the rental market is not great yet, but it is growing. One would expect to receive a maximum of 6% rental income yield in the high summer months from best properties in the coastal cities. At same time rental income in central Tirana can surely go higher than what you could make in coastal cities. Big tour operators have low presence in the country for the time being, but the situation is changing gradually. Foreign operators have started cooperating with Albanian travel & tour companies. Once they are in, on a larger scale, then travel agents and holiday programs will be singing the praises of this stunning country and the rental market will shoot up accordingly. With ferries running daily from Corfu and Italy and major roads linking all parts of the country to their neighbors, already finished – tourism is becoming a very interesting and profit-making business. Albania Property Group − Š January 2013

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Albania Property Guide

Q Approx how much are communal charges? to pay around 150-200 Euros a year for maintenance in the residences without A Expect swimming pool. Then water, electricity, is paid based on consumption and an average monthly bill could go approx 50 Euro, or 600 Euro per year if the apartment is used during 12 months.

Q Are there any guarantees from the developers? Albania Property Group is very particular in the developments that come onto the market A through themselves. All the paperwork is checked with our lawyer and solicitor to be sure of legality and title. It is nearly always the case that that developers will look to raise finance from the financial institutions, which will themselves cross check the credibility and finance of the developer. This package gives the comfort of security to all our investors at Albania Property Group.

Q Property Management & Rental Services Property Group provides full Property Management Services to owners of single A Albania family homes, individual and multi-family apartments. We specialize throughout Albania, with superior service to protect your investment. Albania Property Group gives each property individualized attention during every phase of management. Today owners require a wide range of services depending upon the property and market conditions. Albania Property Group agrees to look after the property, to maintain, to repair the property and to hire and to supervise all employees and other needed labor. For a monthly fee of 40-50 Euros our Maintenance Services offered are: Maintenance and Services One complete cleaning of apartment per month. Collecting & Paying utility bills and yearly taxes. Check of all contents against the inventory in the case that apartment is rented. Visual inspection of the interior, and check for any obvious defects Test of all appliances and electrical equipment Examination of all furniture and furnishings for wear and tear Check of all sanitary equipment and plumbing Test of security services and equipment Preparation and sending of monthly report Property Rental Services Once you have committed to our rental management plan, we then take photos of your property and upload them on our rental website www.RentinAlbania.com as well as the other international portals with which we cooperate. In addition we advertise your property in different directories, search engines, and magazines as well as with tour operators. We cover all aspects of supervising the rental agreement. Albania Property Group provides best service to our international clients that have signed Property Management Contract with our company. Due to our position in the holiday rental market, we managed to sign recently an exclusive partnership with Novasol, a Danish company which since 42 years ago provides holiday properties for rent to Northern European clients. Novasol portfolio includes over 35,000 properties across 27 countries. Over 3 million clients rent from Novasol every year.

Albania Property Group − Š January 2013

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Albania Property Guide

RentInAlbania.com Rent in Albania (www.RentinAlbania.com) operates under the umbrella of Albania Property Group and has been offering apartments, villas, offices and commercial buildings for rent in Albania since 2005, with hundreds of satisfied customers. Comprehensive expertise and knowledge of local market. Exposure of your property to international renting portals. Advertising for free in our web sites. Detailed records and accounting reports. Professional screening of tenants. Professional relationship with tenants. Increased occupancy rates through strict screening and constant supervision. Efficient rent collections.

Q Do you organize Property Tours? of our clients have never been to Albania and want to visit to get a feel for the country, A Many the coastline, cities, its topography, and the various areas for potential investment. We welcome you and highly recommend that you come to the country and take one of our “Albania Property Group Tours”. We are the most experienced in rentals and management in the Albanian market and now we have 3 offices in Albania – Tirana, Saranda and Vlora. The property tour is a “rolling mini-seminar” through most key areas of the country - from Tirana, Durres and then down south to Vlora, Dhermi, Palase, Himara and Saranda. Our professional people have deep knowledge about property issues, property management, maintenance expenses, and other issues specifically relevant to owning investment property. We believe in educating our clients, not applying high pressure sales tactics.

Albania Property Group − © January 2013

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Albania Property Guide

Conclusion In the past few years, Albania has made clear progress in a number of areas necessary to allow the smooth running of real estate finance and real estate transactions. The lending environment is greatly improved. Overall, there is a growing awareness among the central and local government of the importance of the real estate sector and they already making reforms which aim to solidify and improve its legal and administrative framework. Foreign investors are present in the Albanian real estate market trying not to miss the last European newcomer. Opening the country to international investors is desirable for increasing transparency and building up expertise. Foreign capital is also important as additional source of finance. An encouraging factor in favor of rising standards in the Albanian markets over the next years is the anticipation of continuing GDP and consumer expenditure growth compared with the EU recession. Albania Property Group − © January 2013

Immaculate beach in Dhërmi – Vlora

The economic knock-on effect will benefit real estate growth, investment opportunities and development prospects. The growth of the economy, the price stability with a low inflation rate of 2.5%, the favorable tax system, the increase in urbanization, the demographics and the Diaspora are determinant factors that are likely to deliver a different profile of performance to that in Western markets. NATO membership, bright prospects for EU membership, a better political climate, the developing economy and moving real estate prices – Albania has it all. Enthusiasm from local investors has been substantial and interest from international investors is just emerging. The real estate market in Albania currently offers specific opportunities and looks set to do so for the foreseeable future.

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Albania Property Guide

For further details on how we can supply you with more information on outstanding investment opportunities, please contact us: Tirana Office - Headquarters Kavaja street, Tirana Tower 59, Floor 6, Tirana, Albania Ilir Konomi - Managing Director - Albania Cell: +355 6720 80001 +355 6940 00711

Crystal-clear beach in Ksamil – Saranda

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Albania Property Guide 2013