Construction Sector in Albania Surpasses Europe

A recent Eurostat report on housing reveals that the construction sector in Albania is thriving more than any other European country. Eurostat measured the size of the construction sector across Europe, using the gross value added (GVA[1]) generated by this economic activity as a percentage of the total GVA.

For the European Union, the GVA percentage in construction fluctuated between 5% and 6% from 2010 to 2022. The highest indicator was 5.8% in 2010, decreasing to 5.1% in 2014-2017, rising again to 5.5% in 2020, 5.4% in 2021, and 5.5% in 2022.

Among Member States, 14 experienced a decline in the GVA share in construction from 2010 to 2022, with Spain, Bulgaria, and Cyprus having the most significant decreases. Hungary, Germany, and Lithuania, however, showed the highest growth in the construction sector.

In 2022, Austria led with 7.3%, followed by Finland and Romania, both at 7%, according to Eurostat.

Albania surpassed all, with construction accounting for 11.1% of the gross value added in 2022, twice the EU average.

Kosovo is the only country competing, as it demonstrated a similar trend with 10.7% in 2022. This contrasts with other regional countries like North Macedonia (6.2%), Montenegro (4.8%), Serbia (6.6%), and Bosnia and Herzegovina (5.2%).

Albania's 2022 indicator was the highest since 2014, signaling a resurgence after a decline that started in the late '90s. This growth is primarily led by construction in Tirana and tourist areas.

The trend is expected to continue, especially in the capital, where a record number of permits for residential construction were issued in 2022, totaling around 1.8 million square meters.

Looking ahead to 2023, Tirana municipality anticipates collecting 7 billion lekë from the Infrastructure Impact Tax, exceeding the initial plan of 5.5 billion lekë. This suggests a proactive approach in issuing construction permits.

This surge in construction occurs amid a population decline due to high emigration and natural aging. In 2022, Tirana's population increase hit a historic low, with fewer than 6,000 people, compared to about 20,000 in previous years.

Foreign investment in non-movable properties reached 222 million euros for the first nine months of 2023, showing a slight decline of 1.3% compared to the same period last year, unlike the double-digit growth observed in 2022. The slowing pace is attributed to rising prices, bringing Albania more in line with other regional countries like Croatia and Montenegro.