Monday, 2 October 2023, 10:37
The city of Malaga is becoming too small to meet its housing needs. The continuous influx of people and companies, together with the tourist boom and the appetite for investment, is straining the market to a worrying degree. And this is not only claimed by local groups or political parties, but also by real estate consultants such as Savills, which in its annual report 'Visión Málaga', warned that it is vital to achieve "a greater accommodation capacity for people and companies in line with the socio-economic expansion of the city" and predicted that prices, which have shot up, will continue to rise if this does not happen. José Félix Pérez-Peña, director of Savills Andalucía, said 1,300 new homes are being marketed in Malaga city every year, but demand is estimated at around 3,000. In other words, the city needs to more than double the number of homes that are being launched on the market.
Pérez-Peña has advocated "incorporating the metropolitan area" as a "vital strategy to consolidate Malaga's development". "The city must integrate the attraction and generation of talent as a key value for the future and provide the necessary spaces to maintain the level of quality of life that has made it one of the most attractive cities to live and work in southern Europe."
"The need for housing is urgent in all its aspects: new construction, second-hand and rental. Companies from all sectors are looking for quality space to set up or continue to grow. Two new universities are arriving and we have also become one of the most desirable destinations in the world for nomadic professionals, in other words, we attract talent and generate it," Pérez-Peña added.
The housing market situation maintains the trend of high demand and a shortage of new construction supply. A staggering "63% of the new residential supply launched on the market this year has already been sold despite the price increase, the greater supply and the tightening of financing costs, so there is a clear shortage of new developments to meet the current rate of demand," said José Luis Bravo, head of the residential sector at Savills. The forecast for new housing in the city in the future totals 43,625 new units. Of these, 18,656 units are already approved to gradually enter the market over the next few years.
The report highlighted how Malaga is positioned as the second coastal province with the second highest number of sales in 2022 after Alicante, with 35,300 and 41,800 transactions respectively, and as the sixth most expensive province in Spain. It is also noteworthy that 45% of homebuyers in Malaga did not need a mortgage.
The average price in the city for new multi-family housing stands at 3,969 euros per square metre, 18% higher than in 2022. The districts with the highest prices per square metre are Malaga East (5,574 euros per square metre), Carretera de Cádiz (5,148) and the city centre (3,606). The most affordable are Churriana (2,371), Alhaurín de la Torre (2,972) and Rincón de la Victoria (3,028) for multi-family housing.
The study devoted attention to the luxury or 'prime' segment, which has grown in recent years "to become the leading market by number of assets for sale above 3 million euros". This segment, which is less affected by economic fluctuations, shows "great potential" due to the scarcity of product and the increased attractiveness for new national and international demand, who are beginning to look to Malaga city as one of their favourite locations, along with Marbella and Benahavís.
In terms of the rental market, Savills noted that supply in the city has experienced a "significant decline" due to its reallocation for sale or as short-stay rentals. The average rental income in the city stood at 1,140 per month in 2022, up 16% on the previous year.
The report looked at a relatively new product in the Malaga property market: 'build to rent', which are residential buildings developed specifically to be rented out. Currently, Malaga has 1,500 units planned in this format, a "promising but still insufficient" figure according to Savills.
Savills pointed out that land on the market in the city is being sold on average in just 12 months. "The market continues to be buoyant, with a 10% increase in residential land sold compared to the previous year. This will allow us to promote a supply of more than 3,500 homes. This good number of transactions has been carried out due to the structural need for housing and the strong national and international investor appetite," said José Luis Sanz, associate director of the consultancy firm, who warned that investor interest faces "a lack of managed land in the city and its immediate surroundings".
The Cortijo Merino and Distrito Z projects, already under development, and above all, Repsol and Rojas Santa Tecla are the most important focuses of real estate supply in the short and medium term. Between these four sectors, with more than 570,000 square metres of new housing will be put on the market.
Another option, according to Sanz, is "the promotion of land sectors in neighbouring municipalities, where it would be possible to create quality housing at more affordable prices, as happens in other cities, expanding the metropolitan area and providing it, not only with more housing, but also with more services".
Malaga will incorporate 35,000 square metres of new office space from 2025, expanding the city's insufficient stock and generating new quality alternatives. Until then, companies "are looking for alternative solutions" to find a place to locate in the city. This explains, in part, the boom in coworking or flexible spaces.
Malaga, according to Savills in its latest report, has just over 500,000 square metres of stock and an availability rate of just 5.6% (31,500 metres). In addition, most of the space currently available is in peripheral areas or lower quality spaces that do not meet the current requirements of companies. "This situation complicates the search for headquarters for many companies that want to set up or expand their space in the city," said Aranzazu García, an associate in the office sector.
The number of hotel beds in the city has increased by more than 20% since 2019. "The city has a balanced forecast of new supply, with 21 projects that will enter the market between 2023 and 2027, totalling more than 1,900 beds. A large part, around 27%, of them will be five-star and five-star luxury," the report reflects.
"The outlook for the province in the short and medium term maintains the trend of growth, driven by the improvement in the quality of supply, and the increase in investor interest in the face of a profitability that continues to improve despite the slight drop in occupancy," added Savills.
With the increase in economic and tourist activity in Malaga city, the upward trend continues in the main shopping areas. Prime rents have already returned to 2019 levels and the availability of empty premises is reduced to 2% in the main streets. The prime area (Calle Larios) has recovered its maximum rent, exceeding 300 euros per square metre per month. And Calle Nueva is making a comeback, reaching 100% occupancy and setting historical maximum rents of 112 euros.
In addition, areas such as the northern part of the Alameda Principal and the first stretch of Calle Granada are already experiencing the good evolution of the sector and the interest of operators and investors in this area.
Slight increases have been recorded in the secondary axes, recovering up to 12% in some of the areas most affected by the pandemic.
The Savills report concluded that raising logistics standards in Malaga and its area of influence is "key" to the proper functioning of the city and its future development. The 'stock' of pure logistics land in Malaga is just over 300,000 square metres, with an occupancy rate of close to 100%.
According to Savills, the arrival of two new universities and the evolution of the current educational offer mean that 1,000 more beds will be needed in the city, despite a 56% increase in the number of places in the last three years.
In addition, new educational formats are expected to join the university, such as vocational training, postgraduate schools and 'longlife learning', which will require space to develop their activity.
Residences and hospitals
Savills pointed out in its report that the expansion of hospital and geriatric beds is still "a pending issue for both the public and private sectors". Currently, the municipality of Malaga has more than 2,400 beds in homes for the elderly, plus a further 500 under development. As for hospital beds, the current number is 3,400, spread over 17 centres. To meet the ratios recommended by the World Health Organization (eight to ten beds per 1,000 inhabitants), it would be necessary to create between 1,180 and 2,300 additional beds.
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