(Monitor.al)
It is being built all over Europe and the region, but in no country is this sector flourishing like in Albania.
In a recent report on housing, Eurostat has measured the size of the construction sector for the whole of Europe. This measurement is done through the gross value added (GVA[1]) generated by this economic activity as part of the total GVA (production in the economy excluding taxes).
According to Eurostat, for the European Union, this percentage was between 5 and 6% in the period 2010-2022. The indicator was highest at 5.8% in 2010, falling to 5.1% in 2014-2017 and then increasing again to reach 5.5% in 2020, 5.4% in 2021 and 5.5% in 2022.
Among Member States, the share of GVA in construction fell in 14 Member States between 2010 and 2022, with the largest decreases recorded in Spain, Bulgaria and Cyprus. Among the member countries with an increasing share of the construction sector during this period, Hungary, Germany and Lithuania showed the highest growth.
In 2022, the Member States with the largest percentages were Austria (7.3%), Finland and Romania (both 7.0%), Eurostat reported.
The indicator is much higher for Albania. According to Eurostat, in 2022, construction in Albania accounted for 11.1% of gross value added, the highest in Europe and twice as high as the European Union average.
Albania may be a developing country and has faced a strong demographic transition, but in other countries of the region, where such a cycle has passed, construction occupies a very low weight in the economy. For example, North Macedonia had this indicator at 6.2% of GDP in 2022, Montenegro, which is a tourism-oriented country, at 4.8% of GDP, Serbia 6.6%, Bosnia Herzegovina 5.2%.
The only country that “competes” us is Kosovo, which is showing the same trend as Albania with tall buildings in the capital and its surroundings. Construction accounted for 10.7% of gross value added in Kosovo in 2022.
The indicator for Albania in 2022 was the highest since 2014, when it dropped to 9.9% of GDP, from almost 15% that had peaked in 2010. As a cyclical sector, construction began the decline it had started after the 90s, as a result of internal population displacements, where a significant part of families turned to the downtown area. However, after 2014, it returned to growth, led mainly by constructions in Tirana and in tourist areas.
The trend is expected to continue, especially in the capital. In 2022, a record number of permits for residential construction was granted in Tirana, of about 1.8 million square meters, according to INSTAT.
In 2023, the municipality of Tirana estimates in the draft budget that it expects to collect 7 billion lek from the infrastructure impact tax from new constructions, from the 5.5 billion lek that was the initial plan. The municipality says that “The realization of the income from this tax exceeds the approved plan as a result of the applications beyond the forecasts. In the period 2024-2026, it is expected to collect about 6.5 billion lek per year from this tax, in a signal that the Municipality expects to continue with the rapid granting of construction permits.
This trend is coming at a time when the population trend is towards contraction, due to the high immigration that continues and the natural aging of the population. In 2022, the population increase in Tirana was the lowest historically, with less than 6 thousand people, from about 20 thousand a few years ago.
Foreigners have become an important factor in the purchase of real estate, but their pace is expected to decrease, after the continuous increase in prices, which is narrowing the gap with other countries in the region, such as Croatia, or Montenegro. Foreign investments in real estate for the 9th month of 2023 reached the value of 222 million euros, according to the Bank of Albania, with a slight decrease of 1.3% compared to the same period last year, unlike in 2022, when the growth it was double digits.
