A report in the UK Financial Times highlights an issue which affects property investment markets around the world - corruption.  This was reported today:

"Marisol Yagüe, the mayor of Marbella, and 18 other advisers, lawyers and town councillors were arrested yesterday in connection with alleged corruption and profiteering from the property boom in the Mediterranean resort.

Marbella has become a byword for corruption as town hall officials trade building permits for kickbacks and other favours.

Ms Yagüe is the second Marbella mayor to be arrested for alleged town planning violations. Her predecessor, Julián Muñoz, and six town councillors were convicted last year of improperly awarding building permits for a resort called Banana Beach.

Both Ms Yagüe and Mr Muñoz were protégés of the late Jesús Gil, a notorious property developer, football club owner and former mayor of Marbella who ruled over the resort like a mafia boss between 1991 and 2002.

During that period, Mr Gil granted more than 1m illegal building permits. Prosecutors estimate almost half of Marbella's housing stock has been built illegally. Mr Gil died in 2004.

Spain's 10-year property boom has become a source of temptation for cash-strapped town councils, as building permits and the reclassification of land became their main source of income.

Landowners multiply the value of their properties many hundreds of times when their "rural holdings" are reclassified as "urban plots" - or available for residential development - and they have been more than willing to share some of their gains with friendly town councillors.

Property developers, rat-her than the needs of local residents, now dictate the authorisation of new suburbs, "luxury resorts" and residential tourism developments. Local residents are not consulted and town plans are not made public.

According to the Organisation for Economic Co-operation and Development, Spain's construction frenzy and the land reclassification racket has become a main source of corruption in municipal governments."

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