As Albania, Macedonia and Croatia sit poised to receive possible confirmation of their acceptance into the North Atlantic Treaty Organisation (NATO) in April, property prices and confidence in the respective property markets is expected to grow significantly.
Although NATO is a military alliance, this is a welcome sign to international investors that their money, and property, would be relatively safe inside these countries in the near future from possible political turmoil - in a region plagued by war and internal strife in the mid to late 1990s.
NATO’s security umbrella now extends right around the Balkans, surrounding Serbia and the breakaway republic of Kosovo, covering Greece and Turkey - and possibly Albania, Croatia and Macedonia in the forthcoming weeks.
The three potential new comers to NATO are already members of the Adriatic Charter, established in 2003 to help boost their respective chances of membership to the Alliance.
Since conflict erupted in the 1990s, property construction in these areas slowed to a halt and industry analysts believe that real future development will only come with participation in international institutions.
“The main obstacle that every foreign investor will cite when you talk about the Balkans is political instability,” said Rob Schweizer, Merrill Lynch’s director of global principal investment in an interview with Reuters at a real estate conference in Serbia. “With the Kosovo situation, the political stability will become issue number one for every investor.”
OPP Knowledge, the largest consumer survey of its kind, found that 45.8% of British and 48.6% of Irish buyers rate political instability as either somewhat, or very important factors in their decision not to invest in an emerging market.
Nebojsa Radenovic, MD of Zagreb-based GIM properties, believes that although Croatia has been on the international investors radar for a few years, NATO membership will attract a different buyer group to the country.
“I think it is important for the country’s security and political situation and is a very positive image that will be projected to British investors - hopefully it will send more our way. They are the ones that have the biggest concerns over security worries, not the Germans or Italians, they are our neighbours and already know what Croatia offers. We had quite a steady year in 2007 with growth of 7% - with NATO it can only go upwards.”
Property prices in Macedonia have already started to rise, especially in the capital, as owners expectant of membership in April see the opportunity.
“There is the opinion that membership will increase foreign investment and lead to the development of bigger foreign-built resorts,” said Dejan Duracoski, GM of Macedonia-estates.com. “I guess it will be viewed as a progression of our standing in Europe politically and some people, especially in the capital Skopje, have already raised their prices.”
Milena Miloseska, owner of Pin-project, a real estate agency in Skopje, added: “People are withdrawing their apartments from the market, because they believe there will be another price boom if we enter NATO.
Currently we have increased demand not only from foreigners but also from local clients - and have comparatively little on the market. The most interested are Slovenians who are looking for good locations.
They buy apartments in Ohrid without any hesitation, good locations with lake views, and price is not a barrier. They have high standards,” she added.
Albanian opportunity The Albanian market is attracting a lot of attention and has been touted as the main country to fully maximize the potential of NATO membership and the ensuing foreign investment. Currently there are no restrictions on foreign ownership, and no capital gains, inheritance, wealth or transfer taxes on property.
According to the World Travel & Tourism Council, tourism in Albania generated more than €1.5billion of economic activity in 2007 accounting for 13.8% of GDP and providing nearly 140,000 jobs - 11.2 % of the total workforce.
It has also been suggested that US investors and holidaymakers could start to enter Albania as the dollar falls against the Euro, with US buyers favouring investment in a European country with its own currency.
Canadian developer TriGranit, one of Central and Eastern Europe’s largest property development companies, has realised the country’s potential for growth and is reportedly planning to build a large mixed-use tourist resort on Albania’s North West coast.
Ismet Terziu, MD of Albania Properties, told OPP that there is a ground swell of momentum building up around Albania and possible NATO membership would play a big role in its future development.
“We were one of the first to start selling there, in the beginning people didn’t know about it,” he said. “Once we advertised property there the explosion started straight away. NATO membership would boost the country’s credibility and provide security to individuals, showing that Albania supports foreign investment. Last year we sold about 70 apartments to the UK buyer. This year we are expecting 200.
“The majority of buyers here are British and Irish, with some Germans and Scandinavian interest and the Israelis are active as pure investment buyers. The French have also started to make their presence felt and seem to be buying large tracts of land around the country. A number of Macedonians and Kosovars holiday here and many Italians and Greeks as well. Prices are cheap compared to their countries and with easyJet flying to Corfu [located off the coast of Albania] later this year, this will only increase,” he added.