They have also pointed out that sorting out the mess is vital if the country wants to attract foreign real estate investors.
Since the fall of Communism in 1991, successive governments have tried to address the problem but with little success. Attempts to return property to former owners dispossessed after World War II has not clarified anything.
Land has been distributed to those living on it and some real estate has been returned to pre-war owners there are still disputes because of multiple and conflicting paperwork and unclear titles.
'Clear property titles and legal security are essential prerequisites for the prosperous development of the country, the attraction of foreign direct investment, social peace as well as for the country's European integration process,' said Helmuth Lohan, the EU envoy to Albania.
'Many interested investors have visited the Albanian coast after identifying its potential long ago. However, actual investments remain highly fragmented and minimal, precisely because of unresolved property issues,' he explained.
He added that disputes over ownership had not only caused violence but also led to courts becoming tied up with property cases that take years to resolve. The process is bogged down in red tape and there are concerns about corruption.
According to Lohan, tourism along Albania's Adriatic and Ionian Sea coasts, one of the country's main sectors for economic development, has been a victim of the land ownership disputes.
The construction of a euro 30 million Club Mediterranean resort on the Adriatic coast of southern Albania has been disrupted because of unresolved property and access issues. Local families claim they own the land which was bought from the Ottoman Empire in 1878.
However, Albanian officials do not appear worried by the warning. Prime Minister Sali Berisha said that the problem was not that serious and claimed that it does not discourage foreign investment.
