Construction was the most credited sector of the Albanian economy for September, while the data of the Bank of Albania show that the new construction credit provided by commercial banks reached the value of ALL 4.3 billion, the highest level since December 2019.

For the first time in at least the last five years, construction has passed the trade in monthly borrowing values, becoming the most credited sector of the Albanian economy.

During this year, the trend of construction lending is growing significantly. For nine months, this sector has benefited from new loans in the amount of ALL 23.1 billion or about 188 million euros. Compared to a year ago, new construction credit has increased by 50%. The specific weight of this sector in new lending has increased significantly to 20.25%, from 12.3% for the same period a year ago.

At the end of September, the total active loan portfolio for the construction sector reached the value of ALL 58 billion, with an annual increase of 13.7%.

Construction has been one of the main sectors supporting credit growth until the end of the first decade of the 2000s. of many investments that turned out to be wrong or based on overly optimistic expectations.

Already, construction credit is experiencing a new phase of growth, driven by positive developments in the real estate sector, especially in the capital and the coast. According to the Bank of Albania, the average price of real estate last year increased by 11.3%. Rising prices are not only encouraging entrepreneurs, but also encouraging more banks to support these projects. Although most construction investments are being financed from other sources, commercial banks are also taking advantage of the favorable performance in the real estate market to expand their business in financing these investments.

However, the increase in construction credit is not only related to loans for residential or commercial construction, but also to engineering works. In some cases, banks have substantially supported public-private partnership projects, especially in road infrastructure.

In August of this year, the banks Intesa Sanpaolo Albania, OTP Albania and Tirana Bank announced that they have financed a joint loan (syndicate) of 26 million euros to the concession company "Orikum-Llogara". The object of the activity is the construction and maintenance of the road segment "Yacht Port - Byik Orikum - Dukat (St. Eliza Bridge)".

Recently, Union Bank has decided to support the concession company "MBM Port", with a loan of 6 million euros. The banking sector has shown interest in financing PPP projects, judging good business opportunities with limited risk, despite the fact that they are not guaranteed by the Albanian government.

In 2017, BKT approved a loan of 28.5 million euros for the company Albania Highway Concession, which is managing Rruga e Kombit with a concession, while in 2018 the same bank approved a loan of 9.5 billion ALL for the company "Gjoka 87", which is performs the works for the construction of Arbri Road.

(Source: Monitor)