If the state aims to build mass housing that aligns with the park-like scale seen in other European Union countries, as promised by the Head of Government, it will require substantial spending or the backing of large international investment funds. In the election cycle, Pedro Sánchez has highlighted ambitious housing goals around Spain, citing a target of roughly 300,000 public rental homes. A recent Esade study indicates that public rental housing accounts for about 2.5 to 3% of households, versus 9.3% across the Eurozone. This places Spain below the European average and frames the scale of the challenge ahead. Esade’s findings also note ongoing construction activity, even as the executive emphasizes expanding access to the park by 20% within two decades, a target that many observers deem almost unattainable. Sareb plans to allocate between 10,000 and 15,000 affordable rental homes at the state level, though this excludes regional or local communities. Sepes, the State Land Establishment, plans to develop 36,000 floors on both Department of Defense land and its own holdings, but the timeline for most sites hinges on extended urban planning processes that can stretch for years.
How much would it cost to build all these houses?
Public companies and the Ministry of Transport are studying a framework for deploying all contracted units through public-private cooperation. This includes concession models where the Administration provides the land and a private company handles construction and ongoing management, earning rental income for a defined period of 40 to 60 years. Real estate sector sources quoted by El Periódico de España (Prensa Ibérica group) say Sepes is already engaging with international infrastructure funds that are interested but are seeking concession adjustments to fit investment criteria.
Conversely, Carolina Roca, president of the Madrid Real Estate Developers Association (Asprima), argues that if the state abandoned private partners and pursued everything with public funds, it would need to invest roughly 120,000 euros per resident just to cover construction costs. Additional capital would be required to urbanize land, finalize sites, and begin construction.
For housing alone, Sareb and Sepes have projected a starting requirement of 6,100 million euros to commence work. Asprima’s latest report notes that this expenditure surpasses the 2023 education budget allocation, underscoring long-standing tensions between housing needs and public spending priorities. The association contends that housing never received the same level of budgetary priority as education, health, or employment promotion, contributing to a stock that falls short of demand.
Public-private cooperation
While public-private cooperation remains a centerpiece in election rhetoric, the real estate sector stresses the need for pragmatic measures. It is not a universal cure for housing access issues. Autonomous communities and municipalities that embarked on these models faced numerous hurdles and must solve substantial challenges to keep projects moving.
At present, even if investor appetite exists in the private sector, the path to closing financing is uncertain amid a landscape of rising interest rates and competitive tenders. The recent housing act, aimed at steering funds that have already invested in prior years, may also influence willingness to participate in new arrangements.
In the Community of Madrid, the Plan Vive aimed to deliver 15,000 units but ultimately awarded only 6,600 subsidies and drew bids from two international funds. Political leadership faced difficulties in attracting candidates during the first round, and funding challenges were highlighted as a critical obstacle, with one lot eventually withdrawn. A second tender drew only a single bid.
In the Valencian Community, a general plan to build about 1,100 affordable rental homes failed on the first call due to low profitability for bidders. The second tender, which incorporated Next Generation Funds, shifted specifications mid-process and ultimately attracted only one interested party, the joint venture Visoren-Urbania.
The City of Madrid launched a tender for the development of 2,000 flats, but key executives from major players, including Axa Insurance’s real estate division and Avalon Properties, did not participate. North American fund Ares had acquired two plots in the Community of Madrid, yet the project ultimately relied on developers who would later transfer the residences to third parties.
One notable project involved a company formed by the City Council and the Barcelona Metropolitan Region with Neinor Homes and Cevasa to deliver 4,500 houses. Although the award occurred in May 2021, construction has not yet begun. A handful of promotions were expected to start over the summer, with others awaiting licensing.
Legal timelines emerged as a key drawback. Transfers of heritage assets require public tenders, followed by months of evaluation before licensing, which can delay delivery. In conventional construction, projects might finish in two and a half to three years, but in these arrangements, even longer timelines prevail owing to site finalist land acquisition and related steps.
Despite these frictions, such policies can still benefit public coffers by reducing upfront costs and expanding housing access for middle- and low-income residents. In some cases, successful bidders pay an annual fee, and the administration retains ownership of land and housing assets once contracts expire, creating a lasting public legacy.