The real estate and construction sectors are being used to launder illicit money from the drugs trade and migrant trafficking in the Western Balkans, leading to a hike in property prices, according to a report by the Global Initiative Against Transnational Organised Crime. 

Laundering money through construction and real estate businesses “is popular because it remains relatively easy and can absorb large amounts of capital”, says the report, “Spot Prices: Analyzing flows of people, drugs and money in the Western Balkans”. 

Property “can be a place to store a significant amount of capital, potentially appreciate in value and enhance the quality of the criminal’s lifestyle” says the report. It notes earlier research showing that investments in construction and real estate “have a long history of absorbing illegal revenue in the Western Balkans, given that the sector is both meaningful in terms of economic share and poorly regulated”.

“Residential property is generally recognised to be at greater risk than commercial property because of its turnover potential,” it says “In fact, many property markets across the region have been skewed by laundered money as prices are artificially driven up by criminals who want to launder their assets there. Although real estate prices dropped across the region in 2020 due to [coronavirus] COVID-19 …  many places still showed gains since 2017.”

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