What is the average return on investment in Albania
One of the key factors in an investment decision is its expected return.
Nowadays, finding a property with a relatively low price and a high rate of return is a difficult task. Based on the analysis of a specific example, we will show you how profitable investments in Saranda can be.
Consider an apartment from the secondary market, with a sea view, 400 meters from the beach.
The purchase price of this property in Albania is 100,000 euros. Operating costs (electricity, water, maintenance of the building, cleaning up after guests) are an order of magnitude of 3,000 euros/year.
The annual increase in the value of real estate, according to market research, is in the range of 10-15%. We assume a less optimistic option, namely 10%.
Let's now analyze the potential revenue from seasonal rentals.
The season in Saranda runs from April to October. Real occupancy by month is as follows:
April - 5 days
May - 10 days
June - 15 days
July - 30 days
August - 30 days
September -15 days
October - 10 days
According to the above statement, we can assume an occupancy of 125 days (round up to 120 days), which is about 30% of the entire calendar year.
Rental income, taking into account the change in prices at different times of the season, can be assumed at about €12,000.
We will now calculate profitability taking into account the change in the value of the property over time. ROI - return on investment, return on investment.
ROI = [(Annual rental income - Operating costs + increase in property value over time) / property purchase cost] x 100%
ROI = [(12000 - 3000 + 100000 × 0.1) / 100000] x 100% = 19%.
The return on investment is therefore 19%. This means that the investment in Saranda yielded a profit of 19% per year. This is a really attractive result!
If we ignore the increase in the value of the property, the yield settles around 9%.
However, overlooking this factor will be a mistake, as one of the main assets that determines the attractiveness of investment in Albania is the high growth in the value of real estate over time.
We hope that with this material we have answered in a clear and understandable way what the average return on investment in Saranda looks like.
We can only add that, in our opinion, it is realistic to assume a rate of return between 12-15%. For comparison, in Poland such a rate oscillates around 8%.
Of course, you can find Polish properties performing better, as well as much worse.
If you have questions about the average return on investment in Albania we are at your service at 693 652 649.
Until we hear from you!
