Malaga faces a critical housing challenge, with demand vastly outpacing supply. Experts call for tripling housing development to 12,000 units annually to address rising property prices, rental market pressure, and tourism-driven demand.
The Andalusian province of Malaga, renowned for its booming economy and allure as a tourist hotspot, faces a critical housing shortage. Over the past decade, the province has added only 3,000 to 4,000 homes annually, well below the levels needed to meet demand. Real estate consultancy Savills warns that this shortfall requires a tripling of annual housing development to approximately 12,000 units for the next five years. The challenge highlights the urgent need for robust solutions to stabilize Malaga’s real estate market and sustain its growth.
Demand Outpacing Supply
Housing prices in Malaga have surged, reflecting the growing imbalance. According to Idealista, the province saw an 11.9% rise in property prices over the past year, with a sharper 17.9% increase in Malaga city. To align supply with projected demand, Savills estimates that 7,500 new homes need to be introduced annually. However, addressing the decade-long deficit necessitates even greater action—approximately 12,000 new units per year across free housing and protected housing categories.
Looking ahead, Malaga is poised to lead Spain in housing development over the next 15 years, with an anticipated increase of 20,000 units annually by 2028.
Innovative Housing Models
New residential concepts, such as coliving and flexliving, are emerging to address the housing crunch. Malaga currently hosts 1,500 units under these models, with projections to add 3,300 more in the next four years. Similarly, student residences are gaining traction, with 3,225 beds currently available and 600 additional spaces expected by 2028.
Savills emphasises the importance of diversifying housing options to cater to a wide range of demographics, from students to young professionals and families. These developments are strategically planned for well-connected areas, aligning with Malaga’s economic growth and its appeal as a hub for businesses and universities.
Rental Market Pressures
Malaga’s rental market is also grappling with soaring prices. The province experienced a 10.1% increase in rental costs over the past year, with Malaga city seeing an even higher 13.2% rise. The report underscores the need to boost residential supply comprehensively to stabilize the rental market and alleviate pressure on tenants.
Expanding Hospitality and Tourism Accommodation
Malaga’s tourism sector further compounds the housing challenge. The city’s hotel capacity has grown by 14% since 2019, yet demand continues to outstrip supply. This summer alone, Malaga welcomed 6.2 million tourists, pushing hotel occupancy rates to nearly 91%, according to the Costa del Sol Hotel Association (Aehcos). Savills calls for an expansion in hotel infrastructure to accommodate the growing influx of visitors.
Tourist accommodations, particularly short-term rental properties, are also on the rise. The province now boasts over 41,000 homes available for tourist rental, making it the leading Spanish province in this sector. In the past year alone, nearly 6,000 new properties entered the market, according to data from the National Institute of Statistics (INE).
A Path Forward for Malaga’s Housing Crisis
The housing deficit in Malaga underscores the need for immediate and sustained action. Increasing residential supply, embracing innovative housing solutions, and expanding tourist accommodations are all critical steps in addressing the growing demand. As Malaga’s economy continues to thrive, the development of its housing infrastructure will play a pivotal role in ensuring the province remains an attractive destination for residents, businesses, and visitors alike.
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