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Albania is preparing new conditions for foreign investors, including preferential access to state-owned property and additional safeguards for strategic sectors. The changes are under discussion amid record capital inflows, more than half of which are going into real estate. At the same time, new requirements for resort developments and proposed tax measures are raising concerns among businesses.

Capital Inflows and the Housing Market

Foreign investment in Albania increased for five consecutive years. In 2025, inflows reached a record €1.64 billion, equivalent to 6.1% of GDP, according to the central bank. Another €1.14 billion entered the country in the first six months of 2026, amounting to more than two-thirds of the total for the entire previous year.

Foreign investors directed the largest amount of capital into real estate: €609.6 million, or 53.3% of total inflows. By comparison, the sector accounted for 19% of investment in 2021 and approximately 34% in 2025. Financial and insurance activities attracted €181 million, manufacturing €92 million, and information and communication services €48 million. The concentration of capital in property makes investment activity increasingly dependent on housing demand.

In Durrës, prices for new apartments rose by 24.1% over the year to €1,650 per sq. m. This was the fastest increase among the cities covered by the Deloitte Property Index 2026. The average price of new homes in Albania reached €1,720 per sq. m. In Vlorë, a 70 sq. m apartment costs the equivalent of 21.28 years of earnings at the average pre-tax salary, according to Ekofin.

Investor Incentives

On October 21, a draft investment law in Albania was opened for public consultation. It is intended to replace two existing laws governing foreign and strategic investment. The proposals include preferential use of state-owned property, government participation in private developments and additional scrutiny of transactions in sensitive sectors. The draft has not been adopted, so these provisions are not yet in force.

Charges for using state-owned assets would be set according to the economic potential of each area. Standard rates would apply in the most developed zones, while fees in areas with medium potential could fall to 50% of the standard amount. Land plots and buildings would be added to a dedicated fund once their legal status had been verified. A list of available properties would be published on the website of the Albanian Investment Development Agency (AIDA).

The authorities would also be able to allocate an adjoining state-owned plot without a tender if it is needed to provide access to a privately owned property or connect utilities. The additional land could not exceed 20% of the original private holding, and its legal status would have to be confirmed by the cadastre. Foreign investment in energy, transport, communications and other strategic sectors would be subject to separate screening. The final conditions will become clear once the law is enacted.

Resort Real Estate

Tourism developments have already faced a revision of the rules. On November 5, the government approved requirements for mixed-use resorts in Albania, where hotels operate alongside privately owned apartments and villas. Residential space may account for no more than 40% of the total built floor area, rather than the land plot. The remaining 60% must be used for tourist accommodation and related services, according to analysts at International Investment.

New projects must obtain preliminary certification before applying for a building permit. Developers are required to distinguish residential from hotel premises and justify how the total floor area is allocated. Certification alone does not authorize construction. The November 5 decision provides for the rules to enter into force following official publication and establishes transitional arrangements for previously approved projects.

The restrictions do not prohibit the sale of apartments in resort complexes. However, units intended for tourist accommodation must operate under a common management system. Converting residential premises to hotel use requires approval for a change of designated purpose. Buyers need to examine the property documents and the agreement with the management company in advance: the unit's legal status affects whether it can be rented out and the return it can actually generate.

Tax Risks

Potential changes also affect taxation. On October 29, the Foreign Investors Association of Albania (FIAA) called for a review of proposals in the 2027 fiscal package. The association warned that increases in business taxes in Albania without sufficient consultation or a transition period could undermine long-term planning.

The business community is calling for an advance assessment of the consequences and clear explanations of the need for the proposed measures. Investors have long pointed to frequent rule changes, inconsistent interpretations of tax provisions and delays in VAT refunds. Predictability of costs is particularly important for companies financing construction or establishing production facilities over several years.

Property-rights protection, administrative procedures and the availability of skilled workers also remain concerns. In the FIAA's 2025 survey, foreign companies rated Albania's business environment at 45 out of 100, down from 49 a year earlier. Strong investment inflows have not eliminated these constraints: the amount of capital entering the country and the quality of its business environment remain distinct indicators.

Outlook for Investors

Analysts at International Investment believe Albania retains the potential to attract foreign capital through the development of tourism destinations, infrastructure upgrades and closer alignment with EU economic standards. However, the concentration of more than half of direct investment in a single sector leaves the market exposed to changes in housing demand. Rapid property-price growth does not in itself guarantee stable rental income or a profitable resale.

The new requirements for resort complexes could reshape development along Albania's coastline. A business model based mainly on apartment sales is becoming less attractive because a substantial share of floor space must generate revenue from hotel operations. This could strengthen the position of larger companies with their own operators and sufficient capital while reducing opportunities for smaller developers. The market may consequently become harder for new entrants to access, even as the quality of tourism projects improves.

A contradiction remains in Albania's investment policy. The government is offering incentives to attract foreign capital, but uncertainty over future tax rules could weaken their impact. Real estate's persistently high share of investment indicates that funds are still concentrated in a limited number of sectors. As a result, the new incentives may increase overall investment without changing its industry composition.

Frequently Asked Questions About Investment in Albania

How much foreign direct investment did Albania attract in 2025?

€1.64 billion, according to the Bank of Albania.

What share of foreign investment went into real estate in the first half of 2026?

53.3%, or €609.6 million.

How much did prices for new homes rise in Durrës?

By 24.1% over the year, to €1,650 per sq. m.

How much floor area can be allocated to housing in a mixed-use resort?

No more than 40% of the total built floor area.

Has Albania adopted the new investment law?

No. The draft was submitted for public consultation on October 21, 2026.