Large-scale corruption investigation involves Milan mayor and developers

A large-scale anti-corruption investigation, covering more than 70 defendants, including Milan Mayor Giuseppe Sala and leading developers, has hit the Milan real estate market. Suspicions of opaque schemes could shake investor confidence, UNN reports, citing Bloomberg.

According to reports and documents reviewed by the publication, "prosecutors are investigating more than 70 people, including Mayor Giuseppe Sala, while the city's most prominent developer will be questioned by police and faces arrest."

As Bloomberg points out, the investigation has rocked the city, which is experiencing a real estate market renaissance amid the Winter Olympic Games, which the city will host in February.

Earlier this year, authorities began to crack down on permits issued for the reconstruction of existing buildings with an increase in their size. Against this background, one city official was placed under house arrest.

Now, investigators are reportedly trying to find out whether developers paid fees to architects and consultants working in the city council to get their projects approved.

This raises questions among institutional investors who want to bet on the Milan real estate market 

There is demand: Milan's labor market is attractive, while Italians abroad and wealthy foreigners are moving here due to low taxes. But international funds are paying attention to this and want some clarity on the rules. Some have suspended their investments 

On Wednesday, prosecutors said they wanted to "question and potentially arrest six people, including Manfredi Catella," CEO of Coima Sgr, one of Italy's largest real estate investors. Others include a city council member, architects, and developers.

In a statement to Bloomberg, Catella said that "an investigation is underway" into a project that Coima commissioned to an architect who, until last year, was a member of Milan's landscape commission. Investigators suspect that his role "may have influenced" this person's actions as a member of the commission.

We promptly provided what was requested and conducted internal compliance checks 

The statement says that Castello "has always acted with the highest professionalism and integrity" and will cooperate with the authorities. A Kryalos representative declined to comment.

Mayor Sala is not among those facing arrest, but his nine-year tenure as mayor of the city at the head of a center-left coalition has drawn attention to him. The 67-year-old denied all accusations to the local newspaper Corriere della Sera, which reported on these events on Thursday. A spokesman for the Milan City Council declined to comment.

This case has also attracted national attention, as right-wing parties are competing ahead of the next municipal elections in Milan, which will take place in the spring of 2027. Experts and politicians are demanding Sala's resignation. However, Prime Minister Giorgia Meloni was less unequivocal in an interview with Italian television on Thursday evening.

I have never been convinced that receiving a notice of investigation should automatically lead to resignation. I do not change my position because of the political affiliation of the persons under investigation 

Reference

Coima became known in Milan for developing the Porta Nuova district, a former railway station transformed into an amusement park that had been neglected for years. The development, supported by the Qatar Investment Authority, includes the UniCredit campus and other corporate headquarters.

According to information on the group's website, founded in 1974, it manages more than 30 real estate funds and controls assets worth about 10.6 billion euros (12.3 billion dollars).

Addition

The number of foreigners who have settled in Milan since the approval of a single tax on foreign income in 2017 reaches thousands, but this year their number will increase after the UK abolished the "non-dom" regime, which exempted foreign income from taxation.

For a city of 1.4 million inhabitants, where there is a shortage of luxury real estate on the market, this influx of wealthy foreigners — and Italians returning from abroad — has led to a sharp rise in real estate prices, displacing local residents.

The market is booming at the top. Just the other day, it took me one day to sell an apartment for 3 million euros (3.5 million US dollars) 

According to Immobiliare.it, an online real estate platform, the average purchase price of residential real estate in Milan at the end of June was 5,532 euros per square meter, which is 52.5% more than in 2016. In Rome, prices for the same period increased by 3.4% to 3,607 euros, according to the data.

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