Background and current status of Andalusia’s affordable housing plan
Andalusia ended up not advancing its public private partnership plan to deliver 1,039 affordable rental homes. The regional government, through the AVRA housing and rehabilitation agency under the Ministry of Development, Regional Cohesion and Settlement, issued tenders for 13 plots to host 13 rental units under a surface rights arrangement, but no developers came forward to bid.
The parcels covered Cádiz (6), Huelva (4), Granada (2) and Málaga. AVRA aimed to transfer these sites to developers and investment funds who would finance the construction, then lease and manage the flats for 75 years. Real estate market sources note that after the initial lack of bids, AVRA has one year to pursue direct bidding if potential parties emerge.
Experts indicate the primary obstacle was the tight number of transactions in the current rate environment, despite subsidies from Next Generation EU. They add that the involvement of smaller players and secondary positions discouraged some investors from engaging in the project.
Officials say new operations are being developed by the Joint Ministry of Development and the Andalusian regional government and Housing authorities. Among the options under review are offering Next Generation funds to municipal buildings that can empower local housing entities to develop new projects on municipal land. Since 2019, the authorities report they have built 3,000 affordable homes through three rounds of calls by project owners.
What has occurred in Andalusia resembles a parallel initiative in the Valencian Community with similar features. In that region, 17 municipal parcels forming a total of 1,090 homes began construction, but the first bid did not result in an offer. After a later adjustment in the bid specifications, Urbania and the fund manager Visoren ended up bidding for the contract.
Financing needs
Projects of this kind face easier paths when central bank rate policies are favorable. The European Central Bank has tightened credit access since March last year, raising the cost of financing for such ventures. In Madrid, the initial phase of Plan Vive demonstrated the potential of public private partnerships when CaixaBank-backed loans of 400 million euros were extended at very favorable rates to successful bidders.
To address current financing challenges, Prime Minister Pedro Sánchez and the Official Credit Institute have proposed a 4 billion euro funding package drawn from European funds to support these kinds of projects on favorable, long-term terms. Progress on this measure has not yet been publicly disclosed, but it remains highly anticipated by the industry.
Among potential incentives within Next Generation funds are grants for social rental housing in energy efficient buildings. Each property could receive a grant of up to 50,000 euros. These supports have appeared in tenders issued by the Junta de Andalucía, the Málaga City Council and the Valencian Community. Other regions that have not yet deployed these aids, such as the Community of Madrid, plan to include them in upcoming tenders.
Related developments show that similar public private cooperation models can yield results. In Málaga, a recent consortium completed a tender for 530 units on property owned by the city. Two firms participated, Culmia, backed by the American fund Oaktree, and Lagoom. Lagoom is expected to oversee construction and subsequent management for the following 75 years, with total investment around 58 million euros and a Next Generation grant of 26.5 million euros. When the projects are finished, the goal is to offer three-bedroom apartments in the 500 to 600 euro per month range by the end of 2026, with ongoing municipal oversight.