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soared. While Albania’s economy as
a whole, especially the tourism sector, was hit by the pandemic, real estate activity expanded by 5.5% in 2020.
“In Vlora, criminal groups have allegedly invested in the tourism sector, including in luxury hotels at
the seaside. Prices have increased from €600 to €700 per square metre in 2017 at the waterfront to €1,000 to €1,200 in early 2021. Experts have argued that this increase could not be explained by higher demand from the real economy or the growth of formal revenue, but instead is largely driven by cash from organised crime and corruption which has been invested in construction and real estate,” says the report “In Tirana, additional luxury projects are currently planned in the city centre which do not reflect market forces.”
The report quotes an estate agent in Albania, who claimed that a large percentage of people who buy luxury apartments “use illicit money and pay in cash”. Even when payments are not paid in cash, according to experts, verification of the source of the funds is “rather sporadic”.
Serbia’s real estate industry also experienced “unusually high growth” between 2018 and 2020, even though many of the new builds remain empty.
“Similar to Albania, the construction industry continued to grow during
the COVID-19 pandemic despite the contraction of the general economy. An example is the increasing employment and procurement of materials for the Belgrade waterfront project,” says Global Initiative. Prices per square metre have kept rising even in a market seen as saturated.
“Experts argue that this increase is most likely the consequence of a significant amount of illicit funds being injected into the market. They suggest that the Serbian real estate market has become the regional hub for money laundering through real estate."
In Montenegro, Global Initiative estimates that the Kavac and Skaljari
clans own property with a conservative estimated value of €27mn. Bosnia’s real estate market, particularly in Sarajevo, “has not only attracted local criminal actors, but also internationally operating drug-trafficking groups and Arab investors ... [this] confirms the broader vulnerability that the Western Balkans offer an attractive location
for foreign businesses to launder their money,” according to Global Initiative.
Kosovo too saw a boom in the construc- tion sector in several cities 2016 and
Southeast Europe I 47 2019. “A large part of these investments
are allegedly funds generated through criminal activities, including corrup- tion, tax evasion and drug trafficking,
by people close to the ruling elite,” says the report. Following a similar boom in North Macedonia, there are several open investigations into money laundering through the real estate industry, includ- ing one linked to fugitive former prime minister Nikola Gruevski.
Looking at how money is laundered through the sector, the report notes
Comparative real-estate prices of selected cities across the Western Balkans region
Source: Information was obtained from local real-estate agencies, national statistical offices and media analyses.
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