Is Shkoder, Albania a good destination for real estate investment?

An easy day drive away from the beautiful Bay of Kotor in Montenegro and its exciting real estate investments, I figured I would head out to Shkoder, Albania. The city comes out regularly as one of the “top places to visit in Albania” by a number of blogs. 1 2 3

Looking at the map and reading online, these seemed to be some topline interesting points from a property investment point of view:

On the tourist map for people who venture into Albania. Tourism numbers are low, but growing fast as people want to visit the “next big thing” and get some Instagram cred.

One of the lowest GDP per capita in Europe, and the second lowest in the Balkans after Kosovo . Upside.

Real GDP growth of about 4% in 2018

Shkoder, population of a bit over 100,000, is close to Montenegro, with it’s booming high end tourism, and shares a pretty lake and National Park with its neighbour.

The local currency, the LEK, seems to have done relatively well in the past 5 years, strengthening about 12% against the Euro

I didn’t delve too much into the details; just looked top line, taking into account the reputation of the country as being very corrupt and worsening in this matter , and as having substantial levels of emigration and organized crime.

On-the-ground insight of real estate investment in Shkoder, Albania

Getting into Shkoder, once notices that there is not only barely any public transport and taxis, but that people seem to be riding bicycles a lot. Not out of green awareness, but rather out of necessity. Not much around; the place is pretty run down, and the cars definitely not as nice as in Montenegro. One occasionally sees high end German cars with Italian plates, being driven by young, tattooed Albanians back home for the holidays.

The city has nothing to offer, apart from the “Old Town”, which itself is rather underwhelming and over-hyped. There were a few bored looking tourists around, mostly backpackers. Looking at an environment like this there are only two plays

Buy something in the old town, renovate, Airbnb it and hope the tourists come (which they shouldn’t for their own sake)

Buy some apartment in the center targeting the local market and tag along the growth

Examples of properties for sale

I looked at 2 competing real estate investment options in Shkoder, Albania:

This one in the old town where there is not much for sale. €170,000 for 130m2, with a renovation needing to be done.

Core old town









Add some purchasing costs and a conservative figure of €150 /m2 for the renovation and you get some all-in cost of €1500 /m2. Before negotiating, one ends up at €195,000, and maybe 4 small apartments to put on Airbnb. You’d want to list at around 30 euros a night, maximum, and judging by the amount of tourists there was in peak season, you’d rent out for about 50 days a year. 4 studios x 50 x €30 = €6000 gross.

Take about half off for management, maintenance, ongoing costs, taxes, etc. and you end up with a net net yield of less than 2%, and very little upside. No matter how much you negotiate off the purchase price, this is not an attractive proposition.

A 98m2 2 bedroom apartment in a 10 year old building that is located on the main square/roundabout in town. Prime location. It goes for €63,000, so about €600 /m2.

Main Roundabout







Whatever you negotiate down would probably cover some basic renovation. On the rental market, if you were to add furniture, you could probably get about €225 per month. You end up with a gross yield of +-4% before maintenance, taxes, empty months, etc.

Seeing that the city is flat & has loose zoning laws, these are the only real prospects for capital growth, if capital growth there is to be. Outside the city center you can run down apartments for €400 /m2, and European standard new builds for €1000 /m2

A market distorted by the Diaspora

Why are yields so bad? Most buyers stem from the rather numerous Albanian Diaspora. They work overseas (Italy, Germany, France, Scandinavia, etc), save a bit of money and buy property back home, but the local market and tourism cannot absorb all that property for rent.

Also, one of the main agencies in the city center mentioned that they sell a single property per month, on average, including some on the coast. To sum up Shkoder property:

Low yields

All upside in core city center is already priced in

Non core has very little prospects

Extremely low liquidity.

Don’t go for a real estate investment in Shkoder, Albania. Go there for a good local meal and cheap beer/wine on your way to nicer places in Albania, of which the country has many to offer. For investments in the Balkans, both Montenegro and Bulgaria are better options.

Another article on Albania:

Subscribe to the PRIVATE LIST below to not miss out on future investment posts, and follow me on Youtube, Facebook, and LinkedIn.

If you want to discuss your internationalization and diversification plans, book a consulting session* or send me an email.

*a consulting session is a discussion about your portfolio and objectives. It does not constitute legal, financial, tax or investment advice.