TIRANA, December 26, 2025 – Albania’s decade-long construction boom, long portrayed as a sign of growth and urban renewal, is increasingly being scrutinized as a vehicle for laundering illicit capital. A new study by the Friedrich Ebert Foundation, combined with years of investigative reporting and analysis by Tirana Times, points to a troubling convergence of organized crime, corruption, and weak oversight in the capital’s real estate sector a convergence that now poses risks extending beyond the economy to national security.
The study, authored by economist Adriatik Kotorri, documents a vast gap between the scale of construction activity and identifiable legal financing. Between 2015 and 2024, building permits were issued for nearly 11.5 million square meters of construction, with an estimated market value exceeding €16 billion. Yet less than half of that amount can be traced to bank lending or foreign direct investment. The remainder, the report suggests, cannot be credibly explained by household savings or unsold inventory alone.
Crime Capital Finds a Safe Harbor
According to the study, the construction sector has become one of the primary channels through which proceeds from organized crime and systemic corruption are integrated into Albania’s formal economy. Tirana, with its concentration of high-rise developments and luxury residential projects, sits at the center of this process.
One key red flag is the growing role of capital flows routed through jurisdictions that have faced scrutiny for weak anti–money laundering controls. Investments originating from countries that have appeared on the Financial Action Task Force gray list have increased sharply during the same years Albania experienced its most intense construction surge. The study argues that funds are often deposited abroad, then reintroduced as foreign direct investment, acquiring a veneer of legitimacy through international banking channels.
At the domestic level, the sector has seen a proliferation of construction firms with minimal staff and limited financial capacity. Many have nonetheless secured permits for large projects, reinforcing concerns that they function primarily as vehicles rather than genuine developers. Cash transactions, under-declared contract values, and fragmented deposits designed to avoid banking alerts remain widespread practices, despite formal regulations.
Politics, Permits and Institutional Blind Spots
Beyond the financial mechanics, the analysis highlights a deeper structural problem: the political economy surrounding construction. Permitting decisions, zoning changes, and urban planning approvals are concentrated in a narrow institutional and political space, creating fertile ground for influence, favoritism, and collusion.
The report notes a consistent decline in enforcement activity by financial intelligence and supervisory bodies over the past five years, including fewer inspections, fewer referrals to law enforcement, and sharply reduced asset seizures. Particularly striking is the pattern observed during election years, when enforcement activity tends to fall further reinforcing perceptions that oversight is shaped as much by political cycles as by risk assessments.
This institutional tolerance has helped transform construction into a fiscal pillar for local governments, which have become increasingly dependent on permit fees and related taxes. While this has boosted municipal revenues in the short term, it has also created a form of dependency that discourages aggressive scrutiny of funding sources or market practices.
Distorted Markets, Rising Security Risks
The economic consequences are visible across Tirana. Housing supply has expanded rapidly even as the population has declined, yet prices have surged instead of falling. Apartments remain empty, affordability has collapsed for average wage earners, and access to housing for young families has worsened dramatically. These paradoxes, the study argues, are not market anomalies but symptoms of a sector driven less by real demand than by the need to absorb and recycle illicit funds.
More critically, Tirana Times analyses have consistently warned that the issue extends beyond housing policy or urban inequality. The systematic laundering of criminal proceeds through construction strengthens organized crime networks, deepens corruption, and undermines trust in state institutions. In this sense, the sector has become not just an economic distortion, but a strategic vulnerability.
As Albania seeks to consolidate its European path and demonstrate credibility in fighting organized crime and corruption, the construction boom stands as a test case. Without stronger transparency, enforcement, and political will, concrete and glass may continue to rise over Tirana — even as the foundations of governance and security quietly erode.
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