Is it worth buying an apartment to rent out?

In recent years, the number of individuals investing in the purchase of real estate has increased.

Exact data is lacking, but real estate agencies estimate that 10-15% of purchases are made for investment purposes. You can rent out the property, or wait for the price to increase and sell it again.

The rapid increase in apartment prices in recent years, while rents remain low, is making buying with the intention of renting it out increasingly unprofitable.

Stella Dhami, of Colliers International, says there is no benefit to buying an apartment as an investment vehicle to rent out.

"Although it depends on the area, the return is very slow and fluctuates between 15-20 years." This period is considered very high, while the average to evaluate this type of investment as profitable is 10-12 years.

She adds that the only investment that is worthwhile is resale.

The Bank of Albania reported that the average price of homes sold during the second half of 2024 increased by 23.6% compared to the previous half, and by 44.5% compared to a year earlier.

An apartment in a relatively good area of ​​the capital costs an average of 2000-2500 euros/m², or 180-225 thousand euros for an area of ​​90 m².

In Vlora, the cheapest purchase price is 1300 euros/m² in Orikum, up to 3500 euros/m ² on the city's first line. The most expensive daily rent according to AirDNA is 80-95 euros in June - August, and then drops to 50 - 60 euros.

In Durrës, in the Golem area, prices on the first line have reached up to 2000 euros/m2² and 900-1300 euros/m² on the second line, according to data from coastal real estate agencies.

In Golem, according to AirDNA, the highest daily rent reaches 80 euros in June - August and then fluctuates between 40-70 euros.

To assess whether purchasing real estate is a good investment for rental, there are several factors that need to be considered, according to Jonian Antoni, executive director of "Century 21 Albania", starting with the area.

"If the annual rent is above 5% of the property value then it makes sense to invest."

Below 5% is not considered good business.

Another benefit is related to the value of the property over time. "If, on the other hand, the property cost, say, 100 lek, and you received 3% per year in rent, then after 10 years you have collected 30%.

Meanwhile, if, for example, the price has increased by 30%, then after 10 years you have received 30% property value and 30% rent and it can be called a good investment", claims Mr. Antoni.

According to these calculations, if you buy a 90 m² apartment in Vlora, at a price of around 300 thousand euros, the average annual income, if you rent it out daily, does not exceed 10 thousand euros per year (from 40 0/ euros per month at the beginning of the year to 1800 euros per month in the summer, when the daily price reaches up to 90 euros, according to AirDNA), or about 3% of the property value.

This is gross profit, not including expenses such as water, electricity, depreciation, and maintenance, which take away at least 10% of the value earned from the rental.

It also does not take into account buying a house with a long-term loan, which further increases expenses.

In Tirana, for an apartment near the center, an average of 225 thousand euros is needed, while from daily rental, the income is less than 9 thousand euros (460-900 euros/month, depending on the season), with a gross rate of around 4%.

Again, the costs of electricity, water, maintenance, and the loan for purchasing the apartment are not taken into account here./Monitor