Report/ Skopje overtakes Tirana as the mid-sized city with the cheapest costs for investors in Europe

2025-03-09 08:37:00, Ekonomi CNA

The report “European Regions of the Future 2025” recommends that Western Balkan cities should focus on developing infrastructure, creating fiscal incentives, promoting technology and clean energy industries, and improving their skilled workforce. Through these measures, they can become more competitive destinations for foreign investors and better integrate into the European economy.

The report “European Cities and Regions of the Future 2025” by FDI Intelligence analyzes Foreign Direct Investment (FDI) trends in Europe, identifying the most attractive cities and regions for investors.

Skopje, North Macedonia, has been ranked as the most cost-effective city among medium-sized cities in Europe. This ranking indicates a favorable business climate and low operational costs for investors, making it an attractive hub for new projects.

Tirana is in the same table, but is in eighth place. Overall, Skopje has a more attractive environment for international investors compared to Tirana, mainly due to lower costs and more business-friendly policies.

Skopje has lower living and operating costs. Lower rental prices for businesses and a more competitive labor force make Skopje more attractive to foreign investment.

Skopje has invested more in the development of urban and industrial infrastructure to attract new investments. The Macedonian government has also offered more favorable tax schemes and incentives for businesses investing in Skopje.

According to the report, the main factors that influence the qualification of a city with low operating costs for businesses are:

1. Labor cost. Average salary in different sectors and comparison with other European countries.

2. Cost of commercial properties and leases – How affordable are the prices for business space, including offices, warehouses, and manufacturing centers.

3. Taxes and fiscal incentives – Includes tax rates for businesses, tax exemptions for foreign investments, and administrative incentives.

4. Cost of services and infrastructure – Includes the price of energy, water, transportation, and other services necessary for business operations.

5. Cost of transportation and logistics – The city's connection to major markets and the costs of transporting goods.

6. Productivity and qualification of the workforce – The ratio between labor costs and its efficiency in different sectors.

7. Exchange rate and economic stability – Countries with stable currencies and low inflation have a greater advantage for long-term investments.

Leskovac, Serbia, has also been included among the most cost-effective micro-cities in Europe, reflecting its advantages for industrial investment and low-cost production.

Among other cities in the Western Balkans, Kakanj, Bosnia and Herzegovina, is ranked among the best micro-cities for foreign investment strategy. This shows the commitment of the local government to attract investment and create a favorable business climate.

Novi Sad, Serbia, has been rated as one of the most business-friendly cities in the small city category in Europe. The city has attracted a large number of foreign investments, especially in the technology and service industry sectors.

Report/ Skopje overtakes Tirana as the mid-sized city with the cheapest costs

How can the Balkans attract more investment?

The report recommends that Western Balkan cities should focus on developing infrastructure, creating fiscal incentives, promoting technology and clean energy industries, and improving the skilled workforce.

Through these measures, they can become more competitive destinations for foreign investors and better integrate into the European economy. The main steps recommended are:

1. Improving infrastructure – One of the main factors influencing the attraction of foreign investment is the development of modern infrastructure. Cities such as Debrecen (Hungary) and Wroc?aw (Poland) have attracted large investments by creating industrial zones equipped with good roads, sustainable energy and easy access to European markets.

2. Lower business costs and provide tax incentives – To compete with Europe’s largest cities, Balkan cities need to offer fiscal benefits, lower taxes for businesses, and competitive labor costs. Skopje and Novi Sad already have an advantage in this regard, but they could follow successful models like Dublin, which attracts large companies due to its low tax rates.

3. Focus on strategic sectors – The report shows that investments are concentrated in certain sectors such as technology, renewable energy and data centers. Balkan cities should follow the example of Vilnius and Basel, which have become major centers for fintech and pharmaceuticals, by creating business incubators and support programs for startups.

4. Promoting education and a skilled workforce – Investors are looking for cities with skilled talent in fields like engineering, technology and applied sciences. Debrecen and Wroc?aw have upgraded their universities and formed partnerships with international companies to train local workforces, a strategy that could also be followed by Tirana and Pristina.

5. Support for the green economy and renewable energy – While investments in oil and gas are declining, the renewable energy sector is growing significantly. Balkan cities should invest in solar and wind energy projects, taking an example from cities like Barcelona and Copenhagen, which have created clear policies to attract investment in this sector.

6. Strong investment promotion strategies – Cities that have clear strategies for promoting foreign investment have had more success. The Paris Region and Northern Ireland are good examples of how investment agencies can attract capital by collaborating with foreign companies and simplifying bureaucratic processes. / Monitor Magazine