The rise in house prices is not a sign of a bubble but of a real supply problem that has now become "serious and urgent", ... the Savills consultancy agency says. "We have spent too long failing to take decisions at government level, thinking the problem wasn't that serious, and now we are talking about a housing emergency," the company's director in Andalucía José Félix Pérez-Peña says.
The city has a maximum residential potential of 30,000 homes over the next decade, of which 12,579 are earmarked as social or affordable housing, across a total area of residential land under development amounting to nearly five million square metres of buildable land.
Of this maximum residential capacity, "between 45% and 50" could actually be constructed within this timeframe and that is assuming a "favourable scenario", given that the interminable delays in planning procedures are compounded by other problems such as the availability of electricity supply, construction costs and a shortage of labour in the building sector.
We are therefore saying that, from an optimistic perspective, we can expect 15,000 homes to be built in Malaga city over the next ten years. This amounts to a quarter of the 60,000 homes which, according to Savills' calculations, the city will need to meet the projected population growth.
With an "effective reduction in planning lead times", it would be possible to bring between 8,000 and 10,000 additional homes onto the market, on top of those 15,000. However, as things stand at the moment, the estimate for the next five years is that only 10% of those 30,000 potential homes will be possible.
The assessment, therefore, is alarming. That is why Savills is making an "urgent" appeal to all public authorities to "get to work straight away" to speed up the construction of homes in Malaga by streamlining planning procedures, supporting public housing development and relaxing land-use restrictions in order to provide a "diverse supply capable of meeting different types of demand", because "a family with children is not the same as an elderly person, someone who has just got divorced, a student or a digital nomad".
"This must be at the top of the political agenda. Otherwise, it will not be resolved," Pérez-Peña says.
Meanwhile, the price of new homes continues to rise at double-digit rates: last year, it rose by a further 15%, reaching 5,555 euros per square metre. Perhaps this figure does not provide a clear picture of the level Malaga has already reached, as the average price of a three-bedroom property does: 800,000 euros.
In the near future, prices are "expected to continue rising, albeit at a more moderate pace", according to Savills, which forecasts an 8% increase by 2027. The Este district leads the way in terms of prices, at 9,678 euros per square metre, followed by Carretera de Cádiz, at 7,866 euros per square metre, and the city centre, at 5,257 per square metre. In comparison, Cruz del Humilladero stands at 4,173 per square metre, Campanillas at 3,793 and Ciudad Jardín at 3,842 euros.
The office market is moving to the next level
The growth of the office market in Malaga is a "clear-cut success story" for Pérez-Peña. There were fears that there would be no demand for the new buildings developed by Insur and Merlin, but not only is there demand, there has also been a "knock-on effect" as companies that previously had no presence in Spain have now set up operations here.
These new, state-of-the-art buildings have driven up the average office rent by 24%. It now stands at 26 euros per square metre and is forecast to reach a high of 27.5 per square metre this year.
Hotels
The report states that Malaga has increased its hotel capacity by 45% over the last decade and now has 155 hotels and around 7,400 hotel beds, compared with just over 5,000 in the middle of the previous decade.
"The increase has not been purely in terms of numbers. Nearly seven out of ten hotel rooms are now in the four-star category or higher," José Félix Pérez-Peña says. He still believes that Malaga needs more hotels. "We are still a long way behind Granada, for example," he states.
Calle Larios
The retail property market is experiencing a phase of "pressure, dynamism and growth", in which the consolidation of Calle Larios, with rents of up to 245 euros per square metre per month and very limited availability, is acting as a driving force for the surrounding area.
Consequently, Calle Nueva has absorbed some of the demand and is leading the rise with a 12% increase in rents. Alameda Principal, with a 6% rise in rents, is establishing as a natural alternative for attracting businesses requiring larger floor space.
Shortage of land for logistics
"The defining feature of the logistics market in Malaga is scarcity: a shortage of land, available stock and modern warehouses capable of meeting users’ current needs," the Savills expert concludes.
Over the last 12 months, this scarcity has increased pressure on rents and spurred interest in new developments. The logistics stock stands at 524,131 square metres and the average closing rent is 5.5 euros per square metre per month, but the availability of modern premises remains very limited.
Against this backdrop, users and investors have begun to broaden their focus. Assets with potential for expansion are proving increasingly attractive, as are certain secondary locations such as the freight transport centre, the northern arc and the A-7 corridor.
Project planning exceeds 336,000 potential square metres, with 73,580 due for handover in 2027. "Their development will be key to determining the extent to which Malaga succeeds in transforming existing interest into new logistics activity," the consultancy firm notes.