Affordable Housing Is a Top Concern for 3 Iberian Peninsula Mayors

Attributes such as a sunny climate, accessible beaches and an overall welcoming culture have long made Spain and Portugal magnets for expatriates from across the globe. Northern Europeans are especially drawn to these areas, seeking refuge from cold, damp weather and short days that can be typical in northern regions.

But according to the mayors of three Iberian Peninsula cities, with this appeal comes intense demand for housing, not just from tourists looking for extended stays or second homes, but also from full time workers focused on building lives and raising families.

At this year’s ULI Europe meeting held in Madrid, Spain, three municipal leaders spoke about the challenges they face in providing affordable housing in their communities and they extended invitations to all the developers at the conference to help them build affordable units. The municipal leaders also discussed some of the steps they are taking to make their cities more affordable and accessible to people of all ages and socioeconomic levels.

Francisco de la Torre Prados, mayor of Malaga, Spain, characterized his city as one with “a good climate, light and landscape,” that provides access to Mediterranean beaches. The city’s seaport also accommodates container vessels supporting commercial trade and logistics, as well as passenger cruise ships that buoy recreational offerings.

Malaga is the birthplace and childhood home of Pablo Picasso, a fact that de la Torre Prados said the city has leveraged to increase tourism. In addition to tourists, he added that the municipality has worked on strategies to attract tech companies, and success in both areas has increased demand for housing.

Commenting on Malaga, Joan Clos, a former mayor of Barcelona, noted that 45% of the city's housing demand comes from Europeans from outside of Spain. “The attractiveness that [the Iberian Peninsula] represents to the rest of Europe in terms of the southern climate and quality of life [is making us] in one way or another a kind of Florida of Europe,” Clos said.

“In Barcelona, 20% to 25% of our housing demand is from Europeans that want to buy a house in Barcelona,” Clos said. He added that “we have a lot of demand for housing, especially for affordable housing.” He explained that in Barcelona, the real estate market — in terms of housing production and sales — is skewed. High quality, expensive housing “is booming.” But he said that development of affordable housing is very challenging and “that is presenting some social challenges in our cities.”

On the supply side, Malaga mayor de la Torre Prados said that obtaining approvals and permits to build housing takes a great deal of time and “requires answering many questions.” With approvals needed from various levels of government, he called for a simplification of the process so more housing can be built, which would help lower prices.

In Barcelona, Clos said that a contributor to the lack of supply there [and across Spain] is a hangover from the global financial crisis. He said that the 2008 housing bubble in Spain was bigger than it was in most European countries, “because in Spain alone, in 2006, we were building more houses than the rest of Europe [combined], some 700,000 units of housing, which is huge.”

Additionally, the Spanish government created a “bad bank” to sanitize the accounts of the banking sector because it was plagued with nonperforming mortgages. The bank took on loans and foreclosed assets from various Spanish lenders. This bank is still not doing very well, Clos said, adding that last year, it needed another infusion of funds from the central government to balance its books. The housing crisis was very significant, Clos said, “and that generated a kind of fear in our institutions,” resulting in a decrease of real estate activity. “This is dramatic because now, we need supply in the sector.”

Rui Moreira, mayor of Porto, Portugal, echoed the comments of his fellow mayors, saying that the attractiveness of cities like Malaga, Barcelona and Porto has resulted in an influx of people. “We are unable to build to keep up the supply due to limited government resources and too much regulation,” Moreira said.

He said that Porto has attracted tech companies as well, and they are “bringing their people to live in Porto.” Moreira added that some of those tech workers are Portuguese citizens who were students that left during the COVID crisis to work in Britain and Germany, that now want to come back.

In terms of public housing for the very poor, Moreira said “we have a good situation in Porto.” Public housing accounts for 2% of the total housing stock in Portugal, he said, but 13% of Porto’s total stock is for low-income residents.

“The problem we have is in the middle class and [with] the young generation, because for them, they must [rent from the private sector]. And when they [do that], the rents they are paying account for more than 35% of their net earnings.” To address this, Moreira said Porto revised its municipal plan to allow for more private development. He added that building permission is granted, if, among other concessions, developers allocate a portion of what they build toward affordable housing.

Climate change was cited as an area of concern by all three mayors. Moreira indicated that Porto is shifting toward the use of clean energy to power its transportation fleet. They are investing in new public transit that includes two new underground metro lines and two new Bus Rapid Transit (BRT) lines that will be operated by hydrogen vehicles from hydrogen produced in the city. Additionally, they are replacing all city buses with new electric ones.

They are also offering free and deeply discounted transit fares, Moreira said. “We have far too few individuals who use public transport, so we are now offering public transport for free to kids and university students.” He added that Porto is also “offering metropolitan transport at a very competitive rate. People pay one Euro, and they can use any [mode of] transport from bus to train to underground to private bus.”

Moreira said another thing the city has been doing is looking at public spaces. “These days, cars have taken over public space, and our citizens want to claim public space for their use; to walk, for parks, for their kids.” Porto is focused on reconfiguring roads so that bikes, public transport and cars can share them safely.

Commenting on the current trend of building dedicated bike lanes, Moreira added “our city's not big enough for us to build bike lanes everywhere,” because to change the streets would require demolishing buildings, “which we really don't want to do.”