The construction of officially protected residences, known as VPO, has increasingly become a feature of the real estate market. Statistics reflect a sharp decline over the past decade in the region. The price gap appears to be the dominant factor, prompting the Housing Ministry to suspend a forthcoming regulation that would update usable square meters while considering the municipality where a project would be built and the related construction costs. Stakeholders involved in shaping this regulation criticize the emphasis on rental and purchase subsidies, arguing that it reduces support for development.
Data released by the Ministry of Transport, Mobility and Urban Agenda show that VPO initiatives have faced a substantial setback in recent years, a trend not spared by the Alicante province. The numbers indicate that approvals to build such homes fell from 1,089 in 2011 to 94 in 2021. The era between 1996 and 2005, when annual approvals hovered around four thousand, is distant now. Consequently, sales have also declined, dropping from 481 to 51 over the same period.
What caused this drastic reduction? Jesualdo Ros, general secretary of the Real Estate Developers Association of the State of Alicante (Provia), cites several reasons, with prices at the top. He notes that the conditions placed on developers are unaffordable for many companies due to construction costs. He also points to rigid thinking and a lack of response to submitted projects, while the competition from rental and rehabilitation programs has pushed sales into the background.
Antonio Fernández, CEO of Maisa Promociones, adds that his company built alongside subsidized housing and has not built such homes for about 14 or 15 years. He attributes this pause to management decisions that heavily favored leasing and to the disappearance of buyout aid schemes. Moreover, autonomous regional authorities once managed the VPO segment and eventually exhausted quotas, resorting to leftovers from other areas. Fernández mentions that margins may be narrowed, but covering costs remains essential.
VPO, a nearly disappearing market
Regional authorities acknowledge the problem and are moving to replace existing rules with new guidelines. Alejandro Aguilar, Regional Secretary for Housing and Social Affairs, notes that public incentive schemes date back to 2007 and private regulations to 2009 and 2013, with a clear signal that price constraints had not kept pace. The current cap on price per usable square meter is set to rise from 1,819 euros to 2,200 euros, though the final figure will vary by municipality. Coastal areas described as most stressed are expected to bear higher rates, while the government remains focused on lease commitments and uses these prices to determine lease levels.
The organizers who contributed to drafting these proposals hope for timely approval, with Aguilar aiming for a year-end decision.
Reducing free housing promotions
The current difficult environment is likely to curb free housing promotions for the remaining part of the year. Jesualdo Ros explains that rising construction material costs and economic uncertainty will push many firms to delay projects. The sector has already adjusted expectations, with earlier projections of around 6,000 homes starting this year now appearing unlikely.
Antonio Fernández concurs, noting a cautious approach to starting new projects. Inflation, higher borrowing costs, and increased overall expenses complicate decisions for developers, who face the risk of delivering homes within a two-year window. The industry is recalibrating to preserve viability and sustain operations in a tougher market.