The inflow of foreign direct investments (FDI) in Albania rose to Euro 1.37 billion (Dollar 1.48 billion) last year, compared to 1 billion euro in 2021, central bank data showed on Monday.

On a quarterly comparison basis, FDI increased to Euro 388.3 million in October-December, from Euro 344.3 million in the July-September period, central bank data showed.

The biggest volume of foreign investment in Albania in the fourth quarter, of Euro 71.8 million, originated in the Netherlands, followed by Italy with Euro 37.7 million and Austria with Euro 27.4 million.

The sectors which attracted the biggest volume of investment by non-residents in the October-December period of 2022 were mining and quarrying with Euro 66.4 million, real estate with Euro 66 million and financial and insurance with Euro 65.8 million.

Meanwhile, the reinvested profit category expanded by 69% in annual terms and reached Euro 199 million.

It is the reinvested profits that have been the most determining factor in the record figures of foreign investments during the past year. According to the Bank of Albania, for the entire year 2022, the reinvested profit accounted for more than 53% of the total foreign direct investments.

According to BoA, during the fourth quarter of 2022 incoming foreign exchange flows in the form of foreign direct investments were mainly concentrated in the hydrocarbons sector at the rate of 17%, financial intermediation at the rate of 17%, and energy at the rate of 11%, as and traffic, to the extent of 11%.

Large amounts of reinvested profits are typical especially in sectors such as hydrocarbon extraction or banking and financial services. High crude oil prices starting in late 2021 and most of 2022 have played a positive role in spurring new investment to increase production volumes.

Also the financial sector and especially the banking sector is generally characterized by the use of a large part of the profits in order to increase the capital, to support the expansion of the bank's activity. But, in recent years, profits reinvested in the banking sector have increased due to the greater capital requirements imposed by the BoA.

As for new investment flows, a sector that has seen significant growth in recent years has been real estate. Full annual data on investments by sector is not yet available, but by the end of the 9th month of 2022 foreign investments in real estate reached the value of Euro 225 million, an increase of 60% y/o/y.

Purchases by foreign nationals are becoming a significant factor in the property market in Albania. Thanks to Albania's geographical position, climate, favorable taxation system and lower prices compared to the countries where they live, more and more foreign citizens are deciding to invest in properties in Albania, especially in coastal areas.