• At the 8th Real Estate Forum in Gibralfaro, Culmia presented its study “Access to Housing in Spain: Focus on Andalusia,” which estimates that the region will require 7,731 million euros in public investment to build some 200,000 new homes
• The province of Málaga requires one-third of the annual investment and housing units needed to address the housing shortage.
• The provincial capital—which ranks second in the autonomous community in terms of demand for affordable housing—will need to build 484 housing units per year, requiring an investment of 10 million euros
• The housing cost burden rate in the city of Málaga stands at 66.8%, and that of Andalusia at 49.3%, both well above the Spanish average of 34.5%
• The Andalusian Regional Government’s housing budget as a percentage of GDP (0.2%) falls short of the European Union’s target (0.4%) due to limitations in economic and productive capacity and the availability of land

July 5, 2024 – Culmia, a real estate platform that brings together all housing solutions on the market, has presented its report titled “Access to Housing: Focus on Andalusia” during the 8th Real Estate Forum in Gibralfaro, organized by FADECO. The report analyzes the housing affordability burden for families in Andalusia’s major provincial capitals, as well as trends in rental market prices and demand.

The report reveals that, in the current context, Andalusia needs a total of 160,000 housing units, divided between affordable housing and public housing, in addition to another 39,000 housing units that would require subsidies to encourage entry into the “Build to Sell” market. To meet this demand, public investment of 7,731 million euros would be required, which implies an annual expenditure of 386.5 million euros over a 20-year program, equivalent to 0.21% of Andalusia’s GDP.

In particular, the province of Málaga requires one-third of the investment and housing units needed to address the housing shortage, with an annual investment of 124.2 million euros. It is followed by Cádiz, with an investment of 74.6 million euros; Seville, with an investment of 68.2 million euros; Almería, with an investment of 45.2 million euros; Granada, with an investment of 26.9 million euros; Córdoba, with an investment of 23.3 million euros; Jaén, with an investment of 11.5 million euros; and Huelva, with an investment of 12.7 million euros.

With regard to affordable housing,the investment figure over a 20-year period stands at 1,248 million euros to develop 43,600 affordable housing units across all provincial capitals. This means that 2,180 affordable housing units will be needed annually, requiring an investment of 62 million each fiscal year.

Málaga Once again, Málaga stands out as the second-largest city in the autonomous community with the highest demand for affordable housing, as it will need 9,677 new affordable rental units over the next 20 years, representing an investment of 202 million euros.

If this investment is broken down by year, it would amount to a total of 10 million euros to develop 484 affordable housing units annually in the area. Málaga, also on an annual basis, ranks as the second-largest city in Andalusia in terms of demand for affordable housing and holds the same position in terms of the investment required.

When broken down by provincial capitals—also over a 20-year period— Seville ranks first in terms of the need for affordable housing, with 15,066 units. It is followed by Málaga, with 9,677 units; Granada, with 5,885 units; Córdoba, with 4,373 homes; Cádiz, with 3,526 homes; Almería, with 2,396 homes; Jaén, with 1,471 homes; and Huelva, with 1,196 homes.

In terms of investment, the city of Seville continues to rank first with an investment of 409 million euros, followed by Córdoba, with an investment of 208 million; Málaga, with an investment of 202 million; Almería, with an investment of 114 million; Granada, with an investment of 94 million; Jaén, with an investment of 87 million; Huelva, with an investment of 71 million; and Cádiz, with an investment of 63 million.

Málaga has a general affordable housing rate of 8.04 euros per square meter of usable floor area, which highlights the need to develop a financially viable plan for these projects—one that can attract investment and offer investors the potential to generate returns of over 8%.

Therefore, this report proposes a budget for the current general-purpose modules that would incentivize investment through a construction and financing assistance program for the public-private partnership housing segment, amounting to 22,500 euros.

This is particularly relevant because, with modules priced at 8 euros per square meter of usable area, the lack of additional financial assistance would result in long-term returns of 5 percent—a figure that falls below the market standard. However, factors such as optimizing product terms, support from the government and banks to secure optimal financing, and a tax system that promotes a stock of affordable housing at the national and regional levels will make it possible to achieve returns starting at 8%, which, in turn, will be attractive to the entire institutional sector seeking projects with sustainable and social impact.

As for the housing cost burden—that is, the percentage of household income spent on rent—the city of Málaga stands at 66.8% due to the increasingly acute shortage of housing supply and rising prices in the area. This figure exceeds the Andalusian average of 49.3% and is well above the Spanish average, which stands at a consolidated housing cost ratio of approximately 34.5%.

In fact, Málaga ranks among the cities with the highest percentage of residents on low incomes and rising prices. This data underscores the growing need to address this challenge in the short term through new solutions, such as affordable rent or public housing, which refers to housing with a monthly rent of around 500 euros.

The report also notes that, although the target for public spending on housing development should be around 0.45% of GDP—in line with the European Union—this percentage in Andalusia is lower, at around 0.2%. This is mainly due to limitations in production capacity and the availability of land.

Although the autonomous community’s investment in housing amounts to approximately 400 million euros, those resources are being allocated to other purposes. This highlights the need to increase the Andalusian Regional Government’s budget so that it aligns with more efficient policies related to the development of public-private partnership plans that are economically viable, thereby attracting investors capable of managing them.

According to Francisco Pérez, CEO of Culmia, “the findings of this report reveal a concerning situation regarding access to housing in Andalusia, which underscores the need for every stakeholder in this sector to contribute, within their respective spheres, to bringing these affordable and public housing projects to fruition. “We must recognize that these are social projects, which until now have been viewed as investment projects.”

General Context

In a context where housing production in Spain has fallen by 86% from its all-time high in 2006 (80,000 homes are built annually), the national market ranks at the bottom of Europe in terms of public housing construction, and is now the fifth country in the entire European Union with the smallest stock of public housing. Of the total housing production, only 10% consists of affordable housing, and of that percentage, the majority (80%) comes solely from private investment.

In Spain, 150,000 new households are expected to be created each year in the most populous municipalities; therefore, if the current trend in housing development continues, there will be a shortfall of 20,000 affordable homes each year.

When analyzing the housing cost burden rate by income group, households with incomes between 1,000 and 2,000 euros are currently the most vulnerable, with a disproportionately high housing cost burden rate exceeding 50% in some cases. It is precisely this group—which accounts for 41% of rental households—that is the primary target of this new affordable rental program.

In terms of its preparation, the methodology used in the report—which covers a 20-year time horizon—highlights that the current sector lacks the capacity to produce the necessary number of housing units and does not have sufficient land available within a shorter timeframe.