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Barcelona - The number of construction starts has crashed and rental prices are exploding

So why is there not enough construction in Barcelona? Don't the entrepreneurs recognize the great demand and the flight in rental prices? Do developers lack available land for construction? No and no, the answer is completely different - the policy of the Barcelona municipality headed by Ada Colao.

The failure to promote the start of construction in the city of Barcelona can be easily identified from the numbers published by the local planning committee of Barcelona (visados de obra nueva). In percentage terms, the number of projects approved by the committee dropped by 48% in 2022. In numbers, it is about 1,500 projects. This is the lowest figure in the last 8 years, and it has nothing to do with Corona.

The collapse in the amount of construction starts in Barcelona was caused by one reason only, the policy of the Catalan government and the municipality of Barcelona which was introduced in 2018. The policy forced the developers to allocate 30% of the construction to affordable housing, In each project starting from 600 sq.m. Which made most of the projects in Barcelona financially unviable and resulted in a drop in the number of projects. And did the municipality's policy bear fruit? Not really! The Association of Contractors (APCE) announced that only 52 affordable housing units were built in the last four years. So there is no great success for the policy here either.

Real estate investment in Barcelona
Real estate investment in Barcelona

The government's promises have come true

Ada Colao, mayor of the town of Barcelona, who led the policy in 2018, promised that the new plan will provide about 300-400 affordable housing units every year. Already in February 2020, Colau's deputy expressed disappointment with the results, but laid the blame on other factors. And in 2022, accusations have already been passed to the developers on the grounds that they are not initiating projects of over 600 square meters.

Of course, the actual results, producing 4000 affordable housing units per year, were far from the government's promises, if the predictions had come true we would have reached about 1600 housing units. In practice we stand at about 3% of this number. It is not for nothing that many define the plan as an acute failure, as it not only failed to provide affordable housing, but also caused a severe rental crisis in Barcelona.

The rental market in Barcelona

while the beginnings of construction crashed, The rental market in Barcelona is skyrocketing and is expected to continue to rise. In the last year, rental prices in Barcelona have increased by 25%. which is the highest growth rate in Spain. According to the data, the prices of cheap apartments have increased, while the prices of luxury apartments have actually decreased. So it can be said that the poor have become poorer, and the rich have become richer.

The housing policies of the authorities affect everyone. Including those who are considering investing in real estate in Barcelona. The public indignation over the rental prices may lead to political changes and remove Colao from the position of mayor, which she has been at the helm of the city for 8 years. As of the near future, there is no policy change on the horizon, and therefore most of the projects that are going to be implemented throughout Barcelona are smaller than 600 square meters.


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