Spanish Prime Minister Pedro Sánchez on Monday unveiled a new public investment vehicle which he said would generate up to €120 billion and help address Spain’s long-running housing shortage.
Housing affordability and limited supply remain among the main concerns for Spaniards, posing a persistent challenge in one of the world’s fastest-growing advanced economies.
The fund, known as ‘Spain is growing‘ and managed by the Instituto de Crédito Oficial (ICO), will co-invest alongside the private sector using a mix of loans, guarantees and capital instruments. It is designed to succeed the tens of billions of euros in EU post-pandemic recovery funding that has underpinned Spain’s recent economic expansion.
Sánchez said the headline figure — representing 7% of Spain’s annual economic output — would be sourced from a mix of public and private investment, starting with an initial €10.5 billion contribution from EU funds.
He added that the fund would ‘mobilise up to 23 billion euros in public and private funding to dynamise the housing supply’ and support the construction of around 15,000 homes a year, though he did not specify over what period this investment would take place.
Speaking at the fund’s presentation in Madrid, the socialist (PSOE) leader said the money would also be channelled into sectors such as energy, digitalisation, artificial intelligence and security.
Tourism remains a cornerstone of Spain’s economy. The country welcomed a record 97 million international visitors last year, as GDP grew by 2.8% — nearly twice the eurozone average. ALSO READ: Spain sets new tourism record with 96.8 million foreign visitors in 2025, spending €134.7 billion.
However, many residents argue that the growth of short-term tourist rentals has pushed up housing costs and reduced availability. According to property website Idealista, the average rental price per square metre has doubled over the past decade. ALSO READ: Spain to impose tougher rental regulations, including caps on room rents and limits on seasonal lets.
The Bank of Spain has previously warned that strong household formation combined with insufficient housing construction led to a shortfall of around 700,000 homes between 2021 and 2025. ALSO READ: Spain to spend €1.3 billion on ‘industrial construction of social housing’.
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Tenemos que construir más vivienda, pública y asequible.
— Pedro Sánchez (@sanchezcastejon) February 16, 2026
Por ello, el Fondo España Crece va a movilizar hasta 23.000 M€ públicos y privados, para dinamizar la construcción de hasta 15.000 viviendas al año.
Para construir un techo para la mayoría. pic.twitter.com/rsUG6ir9mB
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