Out of the Darkness: Re-Allocation of Confiscated Real Estate Mafia Assets

In an effort to tackle criminal groups, the Italian State allows the confiscation of properties belonging to individuals convicted for mafia-related crimes and their reallocation to a new use. This policy is considered both as an anti-mafia measure and as a way to partially compensate the society for the harm made by the criminal organisations. Whether and how this measure has had an impact on the local areas where it is implemented, however, has not yet been investigated. We test the hypothesis that the policy contributes to the regeneration of urban spaces by assessing its impact on the value of buildings in the vicinity of confiscated/re-allocated properties. To this aim, we perform difference-in-differences analyses, both at the level of local housing markets and at the level of individual buildings, investigating the externalities of the policy across the whole Italian territory. The results unveil a positive and significant effect of re-allocations of confiscated real estate assets on house prices, declining with distance from the re-allocation site. The impact is larger in cities with stronger mafia presence and in more deprived neighbourhoods. This suggests that the policy contributes to add value to the territory where it is applied and favours processes of urban revitalisation. These findings have important implications for the development of deprived urban areas characterised by a strong presence of criminal organisations.