Crisis in the real estate market in Kosovo is warned

The former president of the Kosovo Chamber of Commerce, Safet Gërxhaliu, has raised the alarm about a serious risk that is challenging the construction sector in Kosovo. According to him, the real estate market in Kosovo is being driven by speculative goals and not by the real need for housing.

The construction sector in Kosovo is facing a silent, but potentially very dangerous, crisis.

The former president of the Kosovo Chamber of Commerce, Safet Gërxhaliu, has raised the alarm about a growing bubble in the real estate market, warning that the lack of development policies, the speculative investment trend and the decline in real demand for housing are leading the economy towards deepening instability.

Gërxhaliu says that construction, traditionally seen as an engine of economic development, is losing its substantial role due to deviations in financial access.

According to him, this sector is not supporting sustainable development, but is fueling an economic model where money is locked up in unused properties.

"If finance does not serve the real economy, then development is only a superficial illusion," declared Gërxhaliu, adding that capital is being channeled towards property purchases for speculative purposes, rather than for housing or productive development.

"The growing demand for credit, especially mortgage credit, does not necessarily reflect an increase in well-being, but an attempt to quickly profit from rising prices in the housing market. Many of these properties are not used, but are stored in anticipation of further increases in value, a behavior that creates a closed capital cycle and stops the circulation of money in vital sectors of the economy."

Supply has exploded, demand is declining

Official data from the Kosovo Agency of Statistics confirms this worrying trend.

According to the 2024 Population, Household and Housing Census, there are a total of 581,095 dwellings in Kosovo, of which 207,165, or 35.7%, are unoccupied. These include dwellings intended for sale, rent, or other uses, that are currently not occupied by anyone.

In a country of about 1.6 million inhabitants, this figure raises serious questions about the real structure of the housing market. More than one in three homes is empty, while construction continues at a high rate. In the last 13 years, the number of homes has increased by 43 percent, a pace that exceeds the natural increase in population.

With the increase in youth emigration and the lack of young families in many areas of Kosovo, the need for new housing is declining.

Prices don't stop, but is this sustainable?

Despite the high number of unoccupied apartments, prices in the housing market have not fallen — on the contrary, they are constantly increasing.

In Pristina, according to data from real estate agencies, one square meter of housing currently costs between 1,200 and 2,500 euros, depending on the area and quality of the building.

The most expensive areas remain the city center, the “Arbëria” and “Pejtoni” neighborhoods, where prices often exceed 2,000 euros per square meter. While in other areas such as Prishtina e Re or B and C streets, prices range from 1,200 to 1,700 euros per square meter.

This phenomenon is occurring even though, according to the same official data, 96% of families in Kosovo own the homes they live in, which implies a saturation of the primary housing market.

This further increases suspicions that home purchases are no longer for housing, but for investment, often driven by fear of losing the value of money or the lack of safe investment alternatives.

Rising construction costs, another factor in high prices

The Kosovo Agency of Statistics has also recorded an increase in construction costs. According to the Construction Cost Index for the first quarter of 2025, prices in this sector increased by 1.7 percent compared to the last quarter of 2024 and by 6.5 percent compared to the same period last year.

The increase was driven by the increase in the cost of construction materials (1.9%), employee salaries (2.4%), and other operating expenses (1.8%). This directly impacts the increase in new housing prices and the ongoing pressure on the market.

Safet Gërxhaliu believes that if banks continue to finance speculative projects instead of productive sectors, the country risks entering a dangerous economic cycle. He calls for immediate intervention in the direction of capital.

"It's not wrong for banks to seek profit - that's natural. But if the focus remains on short-term profit through real estate, then we are moving away from sustainable economic development."

He calls for the orientation of financial resources towards sectors that create real value: local production, agriculture, small businesses, and construction for real and affordable housing.

All the data — from the number of unoccupied housing units, high prices, rising construction costs, the lack of a secondary market, to demographic changes — point to a serious imbalance in the real estate market in Kosovo.

Kosovo currently has a total of 581,095 dwellings, of which 356,959 are occupied, while 207,165 dwellings, or 35.7%, are unoccupied. The latter include dwellings intended for sale, rental or other uses./Monitor