Rising construction costs, scarce land and lengthy planning delays are making affordable homes increasingly difficult to deliver in Malaga, property executives have warned.

Speaking at the Simed property fair, representatives from Urbanitae, Savills, Gilmar and Dils Lucas Fox described a market still attracting investment but struggling to meet local housing needs.

Jose Felix Perez Peña, Savills’ executive director for Andalucia, said construction costs made it virtually impossible to build in Malaga for less than €1,900 per square metre.

Labour shortages and a lack of younger workers entering the industry were also restricting development, he said.

Planning delays remain another major obstacle. Perez Peña cited Malaga’s Rojas Santa Tecla development, which has been around 45 years in the making, with infrastructure works expected to begin next year.

Savills estimates that investment in land for primary residences in Malaga city will reach around €500million this year.

However, Perez Peña said many developments were aimed at buyers moving into the area rather than existing residents.

He identified Cartama, Campanillas and Pizarra as locations with potential to accommodate more affordable housing.

Urbanitae’s direct investment director, Carlos de Garnica, said demand continued to outstrip supply, but expensive land and unpredictable planning timescales increased developers’ costs and risks.

Those pressures ultimately affected both the returns investors demanded and the prices buyers paid.

As residential investment yields narrow, investors are exploring alternatives including flexible accommodation, hotels and logistics properties.

Meanwhile, Gilmar’s new-build director, Oscar Ochoa, reported a slowdown in completed deals over the past year, alongside greater availability of properties.

Demand for main homes remained strong, he said, but many prospective buyers lacked the purchasing power to proceed. Second-home sales were also showing signs of slowing.

At the premium end, buyers were becoming more selective.

Paloma Perez Bravo, residential CEO at Dils Lucas Fox, said transactions involving foreign buyers had fallen 13% so far this year, although average purchase values and prices per square metre continued to rise.

She described international demand shifting towards distinctive, higher-value properties offering hotel-style services, wellness facilities and high-quality materials.

Branded residences were gaining prominence, while Marbella was competing with destinations such as Dubai for wealthy international buyers.

For these purchasers, she said, the appeal increasingly lies in long-term appreciation and a property’s future saleability, alongside personal use and the services provided.