Investments in the real estate market made the main contribution to the record figure of foreign direct investment last year.

According to the data from the Bank of Albania, for the last year the investments of foreigners in real estate in Albania reached the value of 291 million euros, increasing by 52% more compared to the same period of the previous year.

Real estate brought in more than 21% of the total value of foreign direct investment for the past year. The last quarter of the year also brought the highest value of foreign investments in this sector, with 66 million euros, 32% more compared to the last quarter of 2021.

The cycle of rapid growth of real estate prices in Albania, especially in the post-pandemic period, has been largely supported by demand from foreign investors.

Foreign investments in properties are typical especially for coastal areas, where, despite the increase in prices, they remain quite competitive compared to other countries in the Region, such as Montenegro or Croatia.

The strong increase in property prices in recent years has made real estate an even more attractive investment alternative. This has increased the number of buyers who have bought properties not for residential needs or family use, but for investment purposes.

The Bank of Albania estimates that at the end of 2022, the stock of foreign investments in the real estate market in Albania reached 1.12 billion euros, an increase of 44% compared to the previous year. In the last seven years, the stock of foreign investment in real estate has almost increased tenfold.

The second sector in terms of specific weight against the total of foreign direct investments last year was the extractive industry. This sector brought investments in the amount of 268 million euros or 19.5% of the total.

Investments in this sector increased by 8.5% compared to the previous year and for the most part, it is estimated that these are reinvested profits of existing foreign investors, mainly Bankers Petroelum.

The increase in crude oil prices in international markets this year seems to have encouraged the increase of foreign investments in oil extraction in Albania.

Investments in the energy sector recorded an even higher increase, reaching 175 million euros last year, an increase of 187% compared to the same period last year.

Energy led the growth of foreign direct investment in Albania for years, mainly thanks to the major investment in the TAP gas pipeline, but also to other important foreign investment projects, especially in hydropower.

The stock of foreign investments in energy has already exceeded the value of 3 billion euros. The increase in energy prices have increased interest in renewable energies and especially, in recent years, in energy from solar sources.

The financial sector continues to have a significant weight in the absorption of foreign investments, with 158 million euros for 2022. Investments in this sector increased by 4% and accounted for a total of 11.5% of the annual flows of foreign direct investments.

The banking sector continues to bring significant investment flows, because the growth of commercial banks requires a gradual increase in share capital, to stay in line with regulatory requirements.

Another sector where a significant increase in foreign direct investments is being noted this year is the processing industry. For the past year, foreign investments in this sector reached 146 million euros, increasing by 49% compared to the previous year. Until now, foreign investments in the manufacturing industry have been mainly concentrated in the fashion sectors, including the branch of the automotive industry.

According to data from the Bank of Albania, foreign direct investments last year reached a record figure of 1.37 billion euros, the highest historical level. The value of foreign investments increased by 33% compared to the previous year.

(Source: Monitor)