Malaga risks ‘being devoured’ as local shops and ground-floor businesses are being converted into flats at an alarming rate, locals have warned.
According to the latest figures, some 800 premises have been made into flats over the past three years, or at a rate of more than five per week.
Business owners are being motivated by a perfect storm of struggling local retail and sky-high property prices and rents, meaning an apartment is worth much more to them than a bar or shop.
Hundreds of commercial units are now sitting empty, while demand for housing keeps rising.
The result is that former shops, clinics and offices are being reborn as flats – which will likely be unaffordable for many locals given their prime location.
One Malaga local fumed on X: ‘Tourist apartments are devouring the city and displacing its residents.
‘The city has become a torture chamber of unaffordable rents, political inaction, and an exodus of thousands of Malaga residents to towns 50km away.’
While a moratorium on tourist flats means no new Airbnb-style listings can be made in the city, this does not seem to be halting the conversions.
In 2025 alone, Malaga City Council processed 274 change-of-use applications to convert commercial units into residential properties.
But developers have warned the problem runs deeper than empty shopfronts.
According to Violeta Aragon, secretary general of Malaga’s Association of Developers and Builders (ACP), the city’s housing deficit is growing by around 700 homes per year.
Based on data from the Bank of Spain and the National Statistics Institute (INE), Malaga city adds roughly 1,500 new households annually – yet only about half that number of homes are being built.
It means Malaga already needs around 25,000 homes to balance supply and demand. If current trends continue, the deficit could exceed 30,000 homes within a decade.
Urban planning data confirms the conversion boom trend continues month after month.
In November alone, ten conversions were approved. In December, another 14. Add to that the transformation of three office units into eight flats in the final two months of the year.
Last year saw 390 change-of-use approvals. Over the past three years, around 800 commercial properties have been converted into homes for sale or rent.
For many property owners, the motivation is profit.
According to Malaga Hoy, two brothers who bought a ground-floor unit in Nueva Malaga for €60,000 plus VAT reportedly divided it into apartments and sold them for between €106,000 and €110,000 each.
According to property portal Idealista, converting commercial property into residential use can generate returns 86% higher than keeping it as retail space and around 80% more than renting it as offices.
Until Malaga introduced a moratorium on registering new tourist flats, commercial premises were especially attractive for short-term rental conversions. Ground-floor units often have independent access and utilities, making them ideal for holiday lets.
So popular was the practice that Mayor Francisco de la Torre floated the idea of forcing converted properties to be rented long-term for at least a year before being allowed to operate as tourist accommodation – a measure that ultimately proved unnecessary once the moratorium came into force.
Under current rules, no new tourist rentals can be registered in Malaga.
Malaga’s Urban Planning Councillor Carmen Casero has defended the approvals, insisting that all authorised conversions comply strictly with the city’s General Plan.
‘We respect the planning regulations. Every conversion approved is permitted under the plan,’ she said during a recent Urban Planning Council meeting.
Read more Andalucia news at the Spanish Eye.
