Real Estate Growth and Housing Challenges in Malaga

Malaga’s housing market has been increasingly characterised by high prices and limited availability, driving the creation of new real estate businesses in the last ten years. With a shortage of new construction planned, housing scarcity is an ongoing discussion in the Málaga region.

Over the past decade, Malaga’s real estate market has surged, with 790 new companies expected by the end of 2024. This growth, driven by high demand and limited housing availability, underscores the dynamic nature of the province’s property sector. According to the Institute of Statistics and Cartography of Andalusia (IECA), the number of real estate companies registered in the first half of 2024 is 111% higher than a decade ago.

This figure surpasses the 373 companies registered by mid-2014 and significantly exceeds the 244 companies formed during the height of the real estate boom in 2008. With the increasing growth of the real estate industry in Malaga in the past years, 20% of new companies created belong to the real estate sector, with realty agencies and construction firms accounting for 30% of all new business registrations.

Malaga’s Real Estate Boom & Housing Scarcity

The property market in Malaga experienced a notable boom following the coronavirus pandemic. The health crisis led to a shift in housing preferences, and the city’s technological advancements, favourable climate, and robust infrastructure attracted new residents. As pandemic restrictions eased, the real estate market rebounded to pre-pandemic activity levels, with 2021 already reflecting figures comparable to 2019. This growth trend continued into 2023, setting new records with 812 new real estate companies registered in the first six months and prices continuing to soar in 2024.

Following protests on 29 June, the town hall of Málaga has highlighted a pressing need for housing, noting that approximately one thousand residents require immediate accommodation. The growing economy of the region seems to be creating more job opportunities and a resulting increase in housing demand that current building trends are not projected to meet.

This housing scarcity has made the market more profitable, attracting more real estate businesses, but it also highlighted the significant issue of housing supply creation not keeping pace with demand. Over the past three years, construction firms have increased by 69%, making up 10% of new business registrations in the first half of 2024. However, this is still below the numbers seen a decade ago.

Causes and Controversy of Malaga’s Housing Shortage

Malaga’s housing scarcity highlights the ongoing contentious debate over the impact of holiday tourism rentals on housing availability. Recent protests in Málaga highlighted that many continue to believe the number of holiday rentals to be the cause of the shortage.

Carlos Pérez-Lanzac, the president of the Andalusian association of holiday rental professionals (AVVAPro), believes that Airbnb-style holiday rentals are unfairly being blamed when the reality is that such rental properties make up just over 2% of housing stock in Málaga City. Perex-Lanzac contends that the problem stems from the 15% of empty properties across the Málaga region. Another contributing factor is likely to be the rights attributed to long-term renters in Spain, which also deters owners from renting long-term.

In recent years, local governments have increasingly imposed restrictions on new holiday rental properties, particularly in blocks with shared entrances. Marbella town hall has also asked the University of Málaga to research and suggest how they should manage rental properties, as nearly 7% of homes fall into this category, ranking it fourth in Spain for the number of holiday rentals.

Calls to Action

Malaga’s town hall urges more European funds to build housing and streamline urban planning processes. The Mayor has emphasised the need for a metropolitan approach to housing, highlighting the tension between job growth and housing availability, leading to an undersupply and pushing prices. The Spanish Housing Minister, Isabel Rodríguez, encourages the town hall to do more, noting that her government is trying to give community boards more power to ban holiday rentals, which currently requires a 60% majority.

Some protestors and commentators argue that current policies favour housing speculators and tourists over residents, exacerbating the housing crisis. Meanwhile, spokespeople for property owners and local businesses are urging governments to undertake an in-depth analysis of the economy and housing situation rather than react to popular opinion. Mahos, the restaurant and bar owners’ association in Malaga, recently issued a statement expressing concern over turning against tourism without considering how it affects the economy as a whole.

Conclusion

The real estate sector in Malaga has more than doubled over the past decade, driven by increasing demand from a growing economy and low long-term rental stock. Whatever the cause, the ongoing housing shortage remains a critical issue, underscoring the need for continued investment in research and infrastructure to meet the growing needs of Malaga’s population.

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