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| Durrër Port Project |
The agreement between the Albanian government and the consortium of Eagle Hills Real Estate Development, Albanian Seaports Development Company, sh.a., and Nshmi Development L.L.C., for the strategic investment project "Durres Marina & Yachts" is expected to generate 3.2 billion euros during the operation of for 20 years, according to the business plan provided by Monitor.
According to the plan, the gross floor area of the building (Gross floor area - GFA) will be 1.36 million square meters, which can reach up to 2 million m2 in the best scenario, in a net area of about 440 thousand m2.
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| Table of revenues from the Port of Durrës project according to Monitor |
Of the construction area in the first scenario (1.36 million m2), about 93% will be residential area and 3.5% will be hotels and commercial areas, respectively.
Of the total amount of income, 2.26 billion euros, or 70% of the total income, will be generated from the sale of apartments. The first phase of the construction of the apartments is expected to start in the first quarter of 2023. In the first phase, the construction floor area (GFA_Gross Floor Area) is expected to be 400 thousand square meters and the second phase 864 thousand square meters.
Details regarding maximum building height, underground/above ground, and floor numbers are subject to design development and finalization of the detailed Master Plan for the project especially Phase 2. Planned building height, subject to approvals, starts from G+ 2 and can go up to G+18 for the construction of the Landmark Building in the Master Plan. In total, is planned the construction of nearly 13,000 apartments (4,000 in the first phase and about 8,600 in the second phase)
The project envisages the construction of five-star hotels and another four-star hotel with more than 850 rooms. Design work for the first hotel is expected to begin in the first quarter of 2023 and construction in the last quarter of 2023. The rest is planned in phases, based on market uptake, according to the business plan.
The project envisages 80 thousand m2 of green spaces, up to 700 m of beach length, and up to 280 places for yachts.
The second largest item of income, after the sale of apartments, is from retail trade, amounting to 344 million euros. Revenues from hotels are estimated at around 311 million euros and from parking lots around 250 million euros.
In terms of expenses, the plan foresees almost 2 billion euros in so-called hard and soft costs, infrastructure costs 387 million euros, marketing costs around 60 million euros, and administration 39 million euros.
The profitability rate of the project is estimated at 20%.
The estimated net profit for the project period is 854 million euros.
The state will earn 280 million euros, but how much "forgiveness"...
Based on the agreement, the state that is a shareholder in the strategic investment through the Albanian Seaports Development Company (ASDC) is a shareholder of the Strategic Investor with 33% of the shares and will therefore receive 33% (thirty-three percent) of the realized profits from the sale of real estate developed in the Project Square, as well as from the performance of other ongoing business activities. Based on the estimated profit of 854 million euros, the Albanian government will collect about 280 million euros.
But, in the meantime, the Strategic Investor will have the right to convert the developed Building Plots into freehold (full ownership) for the nominal payment of 1 (one) Euro to ASDC, once the conditions regarding the conversion are met and the Strategic Investor has submitted his complete request and any relevant payment to the relevant Cadastre Office.
The state has given the investor a land area of 812,000 square meters of free construction land for development. According to real estate experts consulted by Monitor, in Durrës it is difficult to estimate how much a square meter of land costs since there are no vacant spaces, but the minimum is 500 euros per square meter. As a result, the project land alone has a value of around 400 million euros. While the owners who provide space for construction in Durrës receive 30% of the construction area, say real estate agents.
Meanwhile, the strategic investor will not have an infrastructure tax, nor the part that should normally go to the social housing fund, as this will be called a state contribution. This is, on the other hand, a strategic investment, and the government, according to the agreement, will provide the necessary infrastructure up to the premises of the Port. While from the infrastructure and social housing tax forgiveness (respectively 4% and 3% of the sale value) the state has made 150 million euros available for strategic investment (7% of the estimated amount that will be collected only from the sale of apartments).