Spain’s Large Cities Are Running Out of Land for New Homes

18 February 2018 – La Vanguardia

Spain’s large cities, led by Madrid and Barcelona, are running out of developable land on which to build homes, primarily due to administrative obstacles, according to experts, who warn that this shortage is pushing up final prices.

The urban planning regulations establish very long turn-around times and are very rigid when it comes to changing the use of land to be able to adapt plots to the demands of citizens, according to the Managing Director of the property developer association Asprima, Daniel Cuervo.

Moreover, the political changes in the town halls typically involve changes in the development plans for cities, which means more delays in the land management process.

In his opinion, the regulations need to be simplified, to make them more agile, and legal certainty needs to be strengthened.

Cuervo has advocated placing the responsibility for large city urban planning in the hands of a body of independent experts who would decide what is best for citizens, without their decisions being affected by political ideologies.

Currently, in Madrid, there is developable land ready for the construction of around 20,000 homes, according to Cuervo, who points out that, although there are lots of plots, they cannot be used because they have “legal problems” and are indivisible, which complicates their use as sites for house building.

“In Madrid and the metropolitan area of Barcelona, there is land under development but the political decisions of the town halls to suspend urban developments is leading to an increase in the prices of buildable land and, therefore, in house prices”, he added.

The President of Quabit, Félix Abánades, underlines that the shortage of land and tensions in prices “are happening only in certain areas of the large cities” and recalls that, currently, the average price of land is less than half the value it reached in 2007.

“In general, as property developers, we are being more rigorous in our purchases”, said Abánades, who indicates that Spain currently has enough buildable land for approximately 1.5 million homes.

At the current and forecast rates of construction, “that land will supply the market for the next 8 to 10 years”, but in some very specific areas, such as Madrid, Barcelona, Málaga, Bilbao and certain coastal towns, land needs to be developed as a priority.

In his opinion, if there is a shortage of land today it’s because, during the years of the crisis, all of the urban planning management processes were suspended. Moreover, “absolutely essential” projects are still being blocked in cities such as Madrid, including the Castellana Norte project and several developments in the south-east of the capital.

“It is essential that the administrations streamline urban land management, and facilitate and promote the processing of new urban plans”, he said.

Property developers are facing enormous difficulties in the generation of buildable land and there is a paradox in that the areas with the most acute shortages of land are precisely those where demand for housing is highest. Ultimately, that is hurting buyers the most because homes are becoming more expensive, according to sources at Neinor Homes.

The stoppage caused by the crisis led to a mismatch between the creation of buildable land by the authorities and the absorption of that land by the property developers, say sources at the property developer.

“It should be possible to reach an agreement between the politicians, businessmen and technicians to enable a more efficient way of managing the land”, according to Neinor.

The CEO of Aedas Homes, David Martínez, added that, as demand recovers and the stock of homes decreases, inflationary tensions are arising in terms of the available land.

The urban transformation process in Spain (from land not suitable for development to developable land) is tremendously complex, causing processing times to lengthen beyond what is “reasonable and desirable”, increasing the investment required to build homes (…).

Spain is a country where new-build homes suffer from “lots of administrative obstacles” says the Head of Research at Pisos.com, Ferran Font, who laments that the municipal administrations do not facilitate the creation of suitable new products for the consumer, given that they forecast less demand, which, in turn, puts upward pressure on second-hand house prices.

To avoid that “it would help to have greater openness and more dialogue on the part of the municipal administrations, given that new build properties could help to decongest the most central districts of our cities and move pressure away from them towards peripheral neighbourhoods, whose expansion is being compromised by excessively slow decision making”, he added.

Original story: La Vanguardia

Translation: Carmel Drake

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