A sprawling corruption investigation involving over 70 individuals, including Mayor Giuseppe Sala, has cast doubt over Milan’s remarkable real estate transformation, raising questions about the integrity of Italy’s property market.
The Investigation
Italian prosecutors are examining alleged misconduct in Milan’s property development sector, focusing on accusations that developers paid municipal architects and planning consultants to secure favourable project approvals. The year-long probe included 24 raids, wiretaps, and device seizures, resulting in house arrests and ongoing detention requests.
Manfredi Catella, CEO of major developer Coima Sgr, faces potential arrest alongside five others. Coima, which manages over €10.6 billion in assets and developed the prestigious Porta Nuova district, denies wrongdoing and has prepared extensive documentation to counter prosecution claims. Additional firms under scrutiny include Kryalos Sgr (partially Blackstone-owned) and Castello Sgr.
Milan’s Property Transformation
Over the past decade, Milan has undergone extraordinary change, converting former industrial zones into gleaming developments. The Porta Nuova district, featuring César Pelli’s UniCredit tower and the Bosco Verticale towers with €25 million apartments, highlights this transformation.
Property values have surged 52.5% since 2016, reaching €5,532 per square metre—2.5 times the national average. This contrasts sharply with Rome’s modest 3.4% increase over the same period.
Milan’s appeal stems largely from Italy’s favourable tax regime for foreign earnings, charging wealthy newcomers €200,000 annually on unlimited overseas income. This policy has attracted thousands of international residents, particularly following the UK’s elimination of its non-domiciled tax status.
Commercial property values have similarly thrived, with international investors like Blackstone and Amundi acquiring prime office buildings.
“The Milano System”
Prosecutors describe widespread corruption within the city’s planning apparatus, terming it “the Milano system.” The 420-page investigation document alleges systematic misconduct involving illegal permits for speculative projects that violated building height and environmental regulations.
Specific accusations include fast-tracked approvals in exchange for payments, suggesting coordinated rather than isolated corruption across multiple developments and extended timeframes.
The scandal has triggered calls for Mayor Sala’s resignation ahead of the 2027 election. Sala, denies all allegations and has proposed national legislation to address regulatory issues.
The investigation has introduced market uncertainty, with some international funds suspending investments pending clarity. Authorities have seized over 100 construction sites representing nearly €12 billion in investments, leaving 13,500 prospective buyers in limbo.
Milan’s boom has created significant affordability challenges for locals, with housing costs outpacing wage growth. Critics argue that policies prioritising international investment over local needs have contributed to gentrification and displacement in working-class neighbourhoods.