Addressing affordability in the UK and Spain
Freelance writer Lois Jones explores the role of PATRIZIA Sustainable Communities – PATRIZIA’s impact investing strategy – in providing more affordable housing in the UK and Spain.
Alex* was home at last. After nearly four years on the social housing waiting list, Alex, who works for the UK's National Health Service (NHS) in Milton Keynes, was able to open the front door and walk into his new home.
Alex and his wife, a warehouse worker, are among the first tenants to move into one of the homes in Milton Keynes developed thanks to PATRIZIA Sustainable Communities – PATRIZIA’s impact investing strategy. They can now call one of the 70 affordable new builds their own and start planning for a family. “Rents here are high so it has been hard to find a home that allows us to plan for a family… until we found this home,” he says.
The project is the result of PATRIZIA’s GBP 100 million partnership with Man GPM to build energy-efficient sustainable homes in the London commuter city, while also investing in community spaces and green infrastructure.
The Elephant & Castle neighbourhood in London is next on the list. PATRIZIA and Fabrix have launched a joint venture called Sustainable Communities UK (SC UK) in the dynamic London district, backed by over GBP 100 million in investment firepower. This will be fuelled into repurposing underused urban land and buildings to provide alternative housing solutions.
The project aims to tackle the severe lack of affordable housing in the UK capital, where tens of thousands of families are priced out of the market by rising rents and remain on social housing waiting lists. This stark picture is brought into sharp focus in data shared by the UK’s Office for National Statistics (ONS), which shows that an average home in the capital was unaffordable for all income types in 2024 – see Figure 4 here.
Social housing may be very established as a concept in the UK but there is a snag. “There is not enough social housing and stock has also been going down,” comments Marleen Bekkers, PATRIZIA Sustainable Communities Fund Manager.
In addition, a lot of people on the waiting list ‘fall between the cracks’ because prices and rents in the private rental market and private ownership market have risen significantly, points out Marleen.
“There’s a very big group that falls between the social housing system and those who are able to pay rent or mortgage for their own home. That group is who we try to create homes for, with a focus on key workers who cannot find a home near their place of work.”
Marleen Bekkers,
PATRIZIA Sustainable Communities Fund Manager
In other words, SC UK targets key workers and median income households who are low priority for social housing and just above the income threshold.
To add to the housing pressure, the UK also suffers from a dearth of student housing, with 400,000 students competing for just 100,000 dedicated beds. A shortage of high-quality rental accommodation for young professionals exacerbates the situation, emphasising the need for additional alternative housing models.
The situation is particularly critical in London, where only 660 affordable homes were created in the last 12 months, which Marleen notes is “extremely low” based on historical evidence.
SC UK will respond to this need by transforming a redundant 1980s office building in Elephant & Castle into 23 affordable homes, alongside 283 purpose-built student accommodation beds. In addition, it will develop 5,000 sq ft of retail space, a 6,200 sq ft community garden and a 2,600 sq ft community kitchen, all of which aim to foster a sense of social inclusion and community.
CGI image of the planned development in Elephant & Castle
Spotlight on Spain
Spain has also been a focal point of interest for PATRIZIA. The company recently set up a joint venture with Urbania (Sustainable Communities (SC) Spain), a Spanish real estate development, investment and management company, to invest more than EUR 130 million in developing sustainable, affordable housing across Spanish cities.
SC Spain plans to develop around 320 social housing units across five sites in and around Alicante, Valencia, accessing public land on a 75-year leasehold and delivering high-quality, energy-efficient homes.
Construction is due to start soon and people should be able to access their new homes in summer 2026.
“A lot of international people want to buy a house on the coast in the Alicante area,” Marleen explains.
“So the housing market is overburdened, prices have increased and rents have risen because of tourism and all of this buying activity. Lower- to middle-income locals have been pushed out of the market because of this internationalisation trend.”
The public-private partnership aims to address a critical need for affordable and sustainable housing for low- and middle-income households in Spanish metropolitan areas.
As in the UK, SC Spain will focus on creating social homes for key workers, located close to their place of work. The homes will also be energy-efficient, earning green credentials, with community areas that aim to foster a sense of social inclusion and connect people in the community.
The JV is also currently acquiring a second portfolio in Zaragoza. Urbania has already won the tender for this project.
“We have one project up and running in Spain already and we’re looking at the second one,” Marleen shares. “There’s a lot more to do in the country because of the tenders that are now increasingly being issued.”
CGI of the social housing planned in Alicante
Currently, local governments in Spain are issuing land to create social housing, which can be won via tenders. Most of the tenders have certain requirements besides income levels. For example, housing may be allocated first to those with young families or single parent families. “We analyse the market and see who is really in need to focus on the people who need the homes the most,” Marleen says.
Overall, SC Spain plans to address a dire need in the Spanish housing market. According to the Bank of Spain, the country has a shortage of 500,000 homes, particularly in metropolitan areas. And access to affordable housing is limited. Public housing makes up only 2.5% of total stock, compared with an average of 9% in the EU.
“Spain is a market that has little social housing in general,” Marleen observes. “It’s a very ownership-focused market.
A force for good
As well as acting as a positive force for good by creating green, affordable homes in inclusive communities, PATRIZIA Sustainable Communities’ strategy allows it to generate a healthy financial return, which remains stable due to a low turnover in rental occupants. And when someone does leave, they are quickly replaced by someone on the waiting list.
The projects also benefit from government support, which helps to mitigate any risk, accelerates planning permission and allows housing to be sold earlier than anticipated. In addition, many governments provide financial incentives, such as grants, loans and tax cuts, to encourage the private sector to invest in affordable housing.
The strategy is central to PATRIZIA’s plans with the ambition to ‘become a leading global impact investor in the real assets sector with a meaningful part of our assets under management in impact investments by 2035’ - one of the company’s four corporate sustainability goals. Looking ahead, Marleen says: “We see a lot of investment opportunities in the pipeline.”
*Name changed for privacy reasons