A study published by the Friedrich Ebert Foundation in September 2025 sheds light on the worrying dimensions of money laundering in the real estate sector in Albania over the last decade.
The analysis conducted by Assoc. Prof. Dr. Adriatik Kotorri documents that a significant part of the construction boom in the country may have been financed from sources of dubious origin, writes factoje.al
According to the data analyzed in the study, during the period 2015-2024, construction permits were issued in Albania for 11.48 million square meters with an average market value of 16.238 billion Euros. Of this amount, only 7.108 billion Euros were identified as being financed from legal sources, specifically 5.521 billion Euros from bank loans and 1.587 billion Euros from foreign direct investments.
The difference of at least 9.13 billion Euros raises serious questions about the origin of the funds. While part of this difference may represent unsold land or financed by legitimate savings, researcher Kotorri argues that the most worrying indicator is related to illicit sources.
Foreign investments
One of the most important findings of the study is related to the dramatic increase in foreign investment from countries that have been or are currently on the grey list of the Financial Action Task Force (FATF), the international organization that monitors money laundering and terrorist financing.
The case of Turkey is the first. Investments from this country have increased from 86 million Euros in 2015 to 257 million Euros in 2024. Turkey was part of the FATF grey list until June 2024, a period that coincides with the intensification of its investments in the Albanian real estate sector.
Bulgaria represents the second case in terms of relative growth. From practically zero investments in 2015, this country reached 74 million Euros in investments in 2019 and continued with 28 million Euros in investments in 2024. Bulgaria was also part of the FATF grey list until recently.
Researcher Kotorri points out that even the United Arab Emirates, another jurisdiction with historically weak financial control, has increased investments from zero to a peak of 19 million euros in 2023.
The report argues that “these investment flows, from countries with weak financial controls, raise questions about the true nature of these investments and the potential risk they pose for money laundering in Albania.”
Penetration mechanisms
The study identifies several main routes through which illicit money infiltrates the construction sector, such as:
Establishment of companies with questionable capacities: From 2015 to 2023, the number of construction companies increased by 40%, reaching 6,955 companies. It is worrying that 82% of new companies have only 1-4 employees and do not have real capacities to carry out construction projects. According to the report, for the period 2017-2019, about 59% of companies that received permits for buildings over 6 floors did not have sufficient financial capacities.
Depositing funds in third countries: The method involves depositing funds in banks in countries with weak controls (such as Turkey, Bulgaria, and the UAE) and returning them to Albania as “foreign direct investment.” This scheme allows money of dubious origin to gain a “legitimate appearance” through the international banking system.
Cash payments and underpricing: The practice of declaring low values in contracts, while the rest is paid in cash, remains common. Although minimum reference prices were set in 2018, the difference between real and declared prices reaches up to 100% in elite areas.
Fragmented Deposit: Amounts are divided into small deposits to avoid automatic bank alerts (usually under 7,000 euros) and are then used for property purchases.
Market distortion
One of the most alarming findings of the study is related to the paradoxes that this phenomenon has created in the Albanian real estate market.
The paradox of quantity: During the period 2011-2023, while the population fell by 478,590 inhabitants, the number of housing units increased by 74,286 units. However, the number of homeless families increased by 88%, from 70,630 to 132,563 families. Albania today has more housing units than families, but more people without shelter.
Price paradox: Prices have increased by 139% (from 862 euros/m² in 2015 to 2,057 euros/m² in 2024) while supply has increased by 46%. This violates basic economic logic that increased supply should lower prices.
Impact on housing affordability: In 2015, it took an average earner 38 years to buy an apartment in the suburbs. By 2024, that time has increased to 47 years, a 23% increase. For a couple, the time has increased from 19 to 23 years.
Evasion
The study estimates that during the period 2015-2024, corruption and tax evasion generated at least 8.168 billion Euros in illegal income in Albania. These figures are based on data from ALTAX, which uses official sources including INSTAT, the Ministry of Finance, SPAK, KLSH, IMF, World Bank and Transparency International.
A significant portion of these funds are believed to have found their way into the construction sector. According to the report by the “Global Initiative Against Transnational Organized Crime”, estimated money laundering in Albania for the period 2017-2019 alone amounts to 1.6 billion Euros.
Paradoxically, while the phenomenon has increased local revenues through taxes and construction fees (from 12.9 billion lek in 2015 to 30.5 billion lek in 2022), it has created a dangerous dependency. The share of real estate-related taxes in total local revenues has increased from 37% to 51%.
performance
One of the strongest criticisms of the study is directed at the Financial Intelligence Agency (FIA). The analysis shows that FIA activity has declined dramatically over the past 5 years:
Cases sent to law enforcement agencies fell from 1,856 (2015-2019) to 1,204 (2020-2024).
On-site inspections were reduced from 806 to 550.
Blocked assets fell from 71.4 million euros (2015-2019) to just 15.8 million euros (2020-2024), a 4.5-fold decrease.
Particularly concerning is the observation that AIF activity declines in election years. With the exception of 2019 (when there was no electoral competition due to the boycott), all election years (2013, 2015, 2017, 2021, 2023) saw a decrease in frozen assets compared to the previous year.
For failure to declare amounts at the border, a key method of bringing illicit money from abroad, the AIF has only forwarded 26 cases over the decade, an average of 2.6 cases per year, with a marked decline in recent years.
The international dimension and the grey list
Albania has been part of the FATF grey list for a period of three years, being classified as a country with a low level of efforts to prevent money laundering.
The report emphasizes that the progressive shift of the Albanian economy towards the real estate sector, accompanied by institutional tolerance towards funds of dubious origin, has created a “favorable terrain” for operators aiming to integrate illicit capital into the economy.
Legal vacuum
Another important finding is related to the legal vacuum that characterizes the Albanian market. Unlike most European countries that have protective mechanisms for buyers of unfinished properties (such as Escrow accounts or bank guarantees), Albania offers minimal protection.
The “Promise of Sale” and “Transfer of Rights” contracts, which dominate the market, have no specific legal basis and rely on a general interpretation of the Civil Code. Researcher Kotorri argues that “the contracts by which the vast majority of real estate in Albania is sold are unfounded in law.”
“Cartel” Indicators
The report identifies signs of an informally controlled market, with characteristics similar to cartels:
Lack of competition between projects in the same area
Coordinated price increases in the same periods (spring and autumn)
Almost identical price for parking in all projects (at least 15,000 Euros)
Uniform increase in the common area added to the property (from 7-12% to 17-35%)
Conclusions
The report concludes that, “money laundering in the construction sector functions as a win-win system, where all actors involved, from buyers with dubious funds who legalize capital, to builders who secure quick financing, to real estate agents who receive commissions and the government who increases tax revenues, benefit from this phenomenon.”
Researcher Kotorri argues that this structure creates a strong resistance to reforms: the greater the benefits, the greater the opposition to combatting the phenomenon. The legal vacuum, the lack of guarantees for buyers and the role of real estate agents as key intermediaries in negotiations for “cash” payments have been identified as factors that facilitate the penetration of illicit money.
The analysis concludes that builders, through “cartel”-type agreements, have managed to dictate the market instead of it being dictated by buyers, undermining competition and artificially increasing prices.
Domestic buyers and investors, on the other hand, exhibit what the report calls “herd behavior” and fear of missing out (FOMO), buying not out of a real need for housing, but out of a perception of a steadily growing market.
Researcher Kotorri concludes that in this “dance” between various market actors, where speculators, builders and agents benefit, the only party that loses are families and young couples with real housing needs, who find it increasingly impossible to secure housing, despite the existence of a large stock of uninhabited apartments.