The housing shortage in Spain has become one of the biggest social and political problems for the country. The persistent lack of residential real estate on the market is forcing many political and public figures, as well as the real estate sector itself, to look for new ways to help and support the population. One of these ways is converting vacant office spaces into rental apartments.
The rental segment of the market is now one of the most rapidly growing, and above all, it needs new offers. Madrid and Barcelona are likely to become major players in this initiative. A large part of the office stock in these areas can be effectively converted into residential premises right now. Over the next 20 years, up to 28,000 new residential properties could be created in these two markets alone.
The prospects of Madrid and Barcelona in this area are reflected in The Office Property Telescope, prepared by the consulting company EY. The report states that the two key Spanish cities currently have about 2.5 million square metres of office space that could be converted into housing. Madrid has about 1.8 million square metres, or about 20,000 potential residential properties. Barcelona has 763,000 square metres, or about 8,000 housing units.
According to the report, the market is ready to part with these offices, as they are unable to bring sufficient profit in the current situation. From January to July of this year, 40% fewer transactions were recorded in the Spanish office segment compared to the same period last year. The transactions totalled €743 million, while only 11.4% of all investments in the market were in the office segment. Conversion projects have appealed to investors who have chosen Spain in search of alternative investment assets in the local real estate market since such housing promises large returns on investment.