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Land and Shelter Challenges in Albania

Yan Zhang ( Urban Economist Europe and Central Asia Region

What’s interesting?
Bank Involvement: Evolution of Approaches
First Generation: Community-based upgrading Second Generation: A holistic approach to tackling urbanization challenges Informed by lessons learned from the first generation project and ESWs

Albania’s UrbanSector
A (surprisingly) success story of informal sector meeting unprecedented demand for land and housing A strive for setting the parameters right for the formal land and housing market, which includes mainstreaming the informal market.

Caveat: NOT a story about Tirana


Albania – the Big Picture
•Population: 3.1 m (42% urban) •GDP: $8.38 bn •GDP growth: 5.5% •GNI per capita: $2570•Unemployment: 15.2% •Informal sector: 40-45% GDP •Remittances: 14% GDP (2005 data)

Albania – since the fall of communist regime
•1/5 of population emigrated •Urban population increased: 35%-42% •1/3 of HHs receive remittances •37% HH used remittances for building/improving houses


Land and housing hastily privatized, with conflicting and constantlychanging legal framework

Decentralization (2000) Asymmetric arrangement: local governments given responsibilities but not adequate resources


Two Parallel System of Land & Housing Markets
90 80 S h a re o f T o t a l P o p u la t io n 70 60 50 40 30 20 10 0 1945 1950 1955 1960 1969 1979 1989 2001 Census Year
21.3 20.5 27.5 30.9 32.3 33.5 42.1 35.5 % Rural 78.7 79.5 72.5 69.1 67.7 66.564.5 57.9 % Urban

A formal market within the existing institutional framework as they underwent restructuring An informal market with smaller scale activities operating within networks and processes outside the formal system

Challenges •Chaotic” urban development: emergence of large informal settlements •Weak financing capacity, particularly at the local level •Acute shortage of infrastructureand services

Fier 2005


Informal settlement in Durres

Informal settlement in Skodra

Urbanization Trend
Urbanization has gone through 3 phases since transition:
Early ‘90s – Informal sector as main phenomenon; spontaneous, little gov’t intervention Late ‘90s – Consolidation of informal development and beginnings of a formal real estate market Current – Consolidation of formalsector and regularization of informal sector


Bank Involvement in Albania’s Urban Sector – Operations
First Generation “Emergency Operation”: Urban Land Management Project (1995-2005)
Focused on providing much needed infrastructure and social services Community participatory upgrading (including capital investment planning) Pilot, enjoyed exempt from restitution to ex-owners informalsettlements adjacent to Tirana

Assessment and Lessons Learned
Successful in meeting the infrastructure and service needs Moderate Institutional and policy impact (limited local government involvement) Need to scale up and tackle a broader range of issues
• Security of tenure • Country-wide reform in urban planning and management • Structural fiscal constraints of the local government

BankInvolvement in Albania’s Urban Sector – Studies: Urban Sector Review (2006)
Demographic and Economic Dynamics
Demographic and urbanization trends – Albania continues on the move Emerging geography of opportunities Fiscal challenges facing local governments

Urban Planning and Land Management
Emerging real estate market – implications for efficiency and welfare Informal settlement Legal frameworkgoverning urban development


Main Findings of the Urban Sector Review
Refute Mythical Urban Perceptions and Policies
Urban development has been chaotic Surprisingly good result from the benign negligence of public sector
• formation of urban agglomeration • largely accommodating the needs of migrants • relatively compact and efficient urban form

Tirana is too big and too crowded –...
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