Balancing supply and demand in the Malaga construction sector

In a province where tourism is the main economic driver and source of employment, construction remains a key sector for maintaining the strength of Malaga and the Costa del Sol as a tourist destination. For this reason, the future challenges facing the property market in Malaga carry significant weight in meeting the high expectations the province generates in global markets.

Spain’s National Institute of Statistics (INE) recently confirmed that the current property boom and market interest are set to continue in the coming years: Malaga is projected to be the province with the highest growth in housing stock. The forecast suggests 211,000 new homes will be built in this period, representing 35% of all new housing in Andalucía.

At present, the construction sector in Malaga city and along the Costa del Sol is facing a challenging paradox: the demand for new housing is growing faster than the industry’s capacity to supply it, making it harder to strike a necessary balance between supply and demand. This imbalance is contributing to one of the most pressing issues today - the unsustainable rise in property prices.

Recently, during the presentation of the Visión 2024 report, the director of Savills in Andalucía, José Félix Pérez-Peña, stated that the province must triple its current rate of construction “to halt the housing crisis affecting the city”. To address this imbalance, he proposes a minimum annual output of 12,000 homes (8,000 free-market and 4,000 subsidised). It’s a significant challenge, considering that the current construction rate in Malaga city is only 4,000 homes a year.

The Official College of Architects of Malaga echoed similar concerns in its review of the construction sector’s performance in 2024. It highlighted the urgent need to address the housing crisis by boosting the development of new social housing projects. The report confirmed the sector’s continued growth, with 8,902 homes approved in the province in 2024 - a new record and the highest figure since 2008. This represents a 27.5% increase compared to the previous year.

Meanwhile, the regional associations of developers and builders, grouped under Fadeco - the body representing property developers across Andalucía and chaired by Malaga-born Ignacio Peinado - welcomed the new Andalusian Housing Law being developed by the regional government.

As reported by Jesús Hinojosa in SUR, the law is seen as a step in the right direction. Key changes include increasing the number of homes by 20% and building capacity by 10% for residential projects on urban land earmarked for social housing. These projects will also be eligible for more public funding if located in designated priority areas. The law will also allow social housing to be built automatically, without the need to amend urban plans, on tertiary, tourist and private amenity land.

Fadeco insists that the ongoing shortage of land for construction remains the root of the housing crisis. The body believes the new law presents an ideal opportunity to revive the IMPASS project - a framework for accelerating the sustainable development of certain plots. The aim is to not only include these in the regional government’s fast-track planning office but also allow for more housing than originally planned, ideally prioritising social housing.

Malaga is also spearheading projects that place the province at the forefront of sustainable housing development. For their work on Villa Ayantam, José Luis Manceras and Betina Roscano of OÖD Architects were awarded the prestigious Breeam prize for the most sustainable residential building in Spain. The 1,800-square-metre home, located in the Cascada de Camoján development in Marbella, is Spain’s first certified zero-carbon villa.