Avalon Properties acquires land in San Sebastián de los Reyes (Madrid) for Spain’s biggest affordable rental housing development—over 550 subsidised homes. Discover why this marks a milestone for real estate investors in Spain and Europe.

Avalon Properties to Develop Spain’s Largest Subsidised Rental Housing Project in San Sebastián de los Reyes, Madrid

Avalon Properties, a leading REIT owned by the US fund Ares Management, has acquired a prime parcel of land in the Dehesa Vieja area of San Sebastián de los Reyes, Madrid. The transaction, brokered by global consultancy JLL, paves the way for the construction of over 550 subsidised rental homes—making it the largest affordable housing development of its kind to date in Spain.

A Strategic Acquisition in a High-Demand Area

The newly acquired plot boasts more than 34,000 m² of buildable area and is earmarked for development under the Limited Price Public Protection Housing (VPPL) regime. Located just 20 km north of central Madrid, San Sebastián de los Reyes is one of the region’s most sought-after residential areas, benefiting from robust local demand and direct access to the Spanish capital.

Avalon Properties’ project is a direct response to the ongoing need for affordable quality housing in Madrid’s metropolitan area. The initiative is expected to provide a substantial boost to local housing supply while offering stable, long-term rental opportunities for residents.

Regulatory Innovation Unlocks New Housing Potential

This landmark operation was made possible by the recent Law 3/2024 of the Community of Madrid. The law enables the conversion of land previously classified for tertiary uses into protected residential zones designated for rental. This progressive legislation addresses one of Madrid’s key challenges: increasing the supply of affordable, quality housing in growing urban areas.

By securing this land and pivoting its use to meet local housing needs, Avalon Properties reinforces its commitment to sustainable urban development and supports municipal efforts to expand access to affordable homes.

Investor Confidence in Spain’s Living Sector at an All-Time High

JLL underscores the broader significance of the Avalon-Neinver deal, highlighting it as evidence that Spain is firmly establishing itself as a top destination for Living sector investment in Europe. “The combination of solid demographic fundamentals, a still limited housing supply, and the ongoing formalisation of the rental market suggests exceptional growth prospects for the sector,” JLL states.

The consultancy forecasts that investment across the Living sector—which encompasses multifamily housing, student accommodation, healthcare, and senior living—could reach €5.3 billion by year’s end. This would mark an 80% increase over 2024, underlining the booming appetite among international investors for Spanish residential assets.

Why Investors Should Watch Avalon Properties and Madrid’s Residential Market

• Strategic Location: The Dehesa Vieja area of San Sebastián de los Reyes is among Madrid’s fastest-growing residential hubs, offering excellent connectivity and high quality of life.
• Institutional Scale and Quality: Avalon Properties, backed by global investment leader Ares Management, brings institutional standards of management and development, enhancing long-term asset value.
• Sustainable Rental Growth: Continued housing demand, limited supply, and supportive regulatory frameworks drive strong, stable returns for rental-focused investments.
• Market Leadership: The project establishes Avalon as a front-runner in Spain’s affordable rental housing market, setting a new benchmark for scale and impact.

Avalon Properties’ acquisition and planned development in San Sebastián de los Reyes represent a landmark in Spain’s ongoing residential transformation. With supportive legislation, demographic growth, and unprecedented investor interest, Spain’s Living sector—and Madrid in particular—remain top priorities for real estate investors seeking stable returns and responsible growth in the heart of Europe.

Stay tuned for further updates as Avalon’s project progresses and for more opportunities to invest in Spain’s thriving residential real estate market.