The Plan Vive, an initiative by the Comunidad de Madrid, aims to construct over 8,300 affordable rental homes, demonstrating the success of public-private partnerships in the housing sector.

The Plan Vive is a pioneering effort in Europe, designed to transform underutilized public land into affordable housing. This program utilizes over 1 million square meters of public land, allocated through private sector concessions. This approach ensures legal security and profitability for investors while balancing public and private interests. Once the concession period ends, the properties revert to government ownership. The homes are constructed using industrial methods to maintain high quality and energy efficiency standards and are offered at rental prices approximately 40% below market rates. The Plan Vive promises attractive returns for investors, with projected yields between 6.5% and 7%.

Recognizing the potential of a similar approach, Lisbon's municipal government is exploring ways to replicate Madrid’s success. Lisbon has identified land for the construction of over 7,000 homes. By adopting a model similar to Madrid’s, the city aims to develop 9,000 new homes in the next decade, with 4,000 of these projects involving private developers. Public-private partnerships are essential to achieve these ambitious housing goals and prevent a shortfall in housing availability. Lisbon plans to invest 800 million euros in public housing over the next ten years, but the success of this initiative hinges on forming effective partnerships with private entities.

In Porto, the municipality is also making strides towards similar goals, despite having less public land available. The city currently has nearly 1,000 affordable homes under construction through its Porto com Sentido program, which includes a Build-to-Rent (BTR) component. Although contracts are still being finalized, there is considerable interest from institutional investors. Additionally, Porto has launched public-private partnership projects like Monte Pedral, offering land for the construction of up to 752 affordable homes. These initiatives aim to increase the proportion of affordable housing in Porto to 10% of the municipal total by 2030, a significant rise from the current 2%.

The strategies being implemented in Madrid provide a valuable blueprint for Portuguese cities to follow. By embracing public-private partnerships, focusing on the efficient use of land, and ensuring attractive returns for investors, Lisbon and Porto can significantly expand their affordable housing stock. These efforts are crucial to meet the growing demand for affordable housing and ensure sustainable urban development.

Madrid's successful Plan Vive initiative serves as a powerful example of how innovative housing policies can effectively address urban housing challenges. As Portuguese cities like Lisbon and Porto look to the future, adopting similar models can help them achieve their housing goals, provide affordable living options for residents, and foster long-term urban sustainability. The collaboration between public authorities and private investors, the efficient use of land resources, and the commitment to high-quality, energy-efficient construction are key elements that can drive the success of affordable housing initiatives across Portugal.

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes