Tuesday

19th Mar 2024

Dirty money driving up rent in big European cities, MEPs told

  • Amsterdam's residential real-estate market is worth some €135bn (Photo: Bert Kaufmann)

Money-laundering is helping drive up property prices in some big cities, with local authorities now seeking help from the European Union.

On Tuesday (5 February), an official from the Amsterdam mayor's office told MEPs in Brussels that they want a network of authorities at various levels across Europe to tackle the phenomenon.

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"We will discuss this option with the Commission together with a number of cities," the official, who was not named in the speaker agenda, said.

Amsterdam's residential real-estate market is worth some €135bn. In 2017, €12bn was invested in Amsterdam property alone, second only to London.

The Dutch city is attracting investors from around the world, including some whose money cannot be traced or accounted for, she said.

Other big European cities like Barcelona and Berlin have also been targeted by money laundering, and tax-evasion schemes, that often go unpunished.

Some are linked to Golden Visas, a scheme whereby states sell visas to wealthy foreign investors.

Janet Sanz, vice-mayor of Barcelona, said around 30,000 were sold in Spain alone - netting almost €1bn in foreign direct investments, according to Transparency International.

"Then there is the deregulation of rent as well, and that does have a direct impact on the city and on the daily lives of citizens," she said.

She said investment funds were also engaged in speculation, further driving up property prices with money that is difficult to trace, noting one fund had purchased a hotel for €14m and then sold it for €150m around three years later.

"It is absolutely essential that we have clear rules that shines the lights on these economic transactions," she said.

Similar issues were raised about Berlin.

Christop Trautvetter, a public policy expert at the Tax Justice Network, said rough estimates suggest around €100bn is laundered in Germany alone every year.

Of that sum, he said German authorities manage only to confiscate some €200m.

He said share companies and complex investment structures are mostly behind the €100bn black hole, further driving up the real estate market prices.

He said most of this is shuffled through with the help of banks.

"In most of the cases that I have looked at, there is always a 'captured' bank in the beginning. So a bank owned by the fraudsters or even a shell registered somewhere on an island," he said.

Another problem appears to be the lack of data.

Unlike in the UK, Germany does not have any figures when it comes to the number of share companies owning real estate.

"I know of one company in Berlin that is owned on paper by a Cypriot law firm, who owns 7,000 apartments in Berlin," he said.

Trautvetter also noted that the ex-wife of Turkmenistan's former dictator Saparmurat Niyazov has managed to buy up property in Berlin without any real investigation into whether the money was legitimate.

He said dirty money has also possibly driven up UK property prices by some 20 percent.

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