Investment Plan in Spain: European Investment Bank and Valencia city council join forces to build more than 320 new affordable housing units

• The EU bank will provide up to €27 million to finance the construction of affordable rental units, the majority to be in near-zero-energy buildings.
• Employment impact: over 450 jobs per year will be created during the construction phase.
• The project is part of the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.

The European Investment Bank (EIB) will be supporting Sociedad Anónima Municipal Actuaciones Urbanas de Valencia (AUMSA), a municipal company owned by the city of Valencia, with a loan of up to €27 million to promote affordable public rental housing. Specifically, the EIB loan will finance the construction of 323 new units, 85% of which will be in near-zero-energy buildings, and the rehabilitation of four existing ones across different locations in the city of Valencia. These investments will constitute a 54% increase in AUMSA’s existing stock of affordable public rental housing.

The financing, under the framework of the European Fund for Strategic Investments (EFSI) as part of the Investment Plan for Europe, will help to create more than 450 jobs per year during the implementation phase.

Thanks to the support of the EIB and EFSI, AUMSA will enhance the flexibility and functionality of the housing market in Valencia, offering more options for low- and medium-income groups, thus helping a segment of the population that can have difficulty accessing housing. The operation will also contribute to the overall reduction of rental prices in the city, which have increased by 40% between 2015 and 2019, and will encourage the creation of businesses and additional activities, resulting in improved services and quality of life for residents.

The agreement, the first signed with AUMSA, targets different urban regeneration’s objectives, including integrated urban development, social inclusion, energy efficiency (by reducing energy consumption and using renewable energies in the homes,) and climate action. The award criteria of the affordable public rental housing units will follow gender and social equality criteria.

European Commissioner for the Economy, Paolo Gentiloni, said: “I warmly welcome this financing agreement between the EIB and the Valencia City Council, which is backed by the Investment Plan for Europe. This construction and rehabilitation project successfully demonstrates how targeted investment can help tackle several pressing issues at once: creating new jobs and making available affordable, socially inclusive and energy-efficient housing options.”

EIB Vice-President Ricardo Mourinho Félix, who is responsible for the Bank’s operations in Spain and Portugal, said: “One of the EIB’s main objectives is to promote social cohesion. For this reason we are proud to be joining forces with Valencia city council to help people with limited resources or in situations of vulnerability to access affordable housing in these particularly difficult times. This operation demonstrates the EIB’s commitment to improving quality of life for low-income families, generating high-quality employment and helping to ensure sustainable and inclusive economic recovery in the region.”

The Deputy Mayor of Valencia Sandra Gómez stated that the financing of 327 homes with the AUMSA plan “fulfils one of the most important duties of local government, namely to guarantee access to housing. Through this plan, which has a total budget of €54.54 million, we are providing planning solutions for many areas of the city and extending the offering of affordable public rental housing. The rental price for the new builds will be kept within €4 and €5 per square metre, which is well below the market rate. Thanks to the EIB, we are going to be able to finance a basic plan to guarantee access for families and people who face difficulties when accessing housing, such as young people and older people living alone, single-parent families, and victims of domestic violence.”

The operation has been approved as part of the social and affordable housing investment platform in Spain approved by the EIB Board of Directors in June 2018, following similar approvals for Madrid, Zaragoza, Malaga and Seville.

Background information

European Investment Bank

The European Investment Bank (ElB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy objectives.

European Fund for Strategic Investments (EFSI)

The European Fund for Strategic Investments (EFSI) is the main pillar of the Investment Plan for Europe. It provides first loss guarantees enabling the EIB to invest in riskier projects. Thanks to the support provided by EFSI to date, 531 000 affordable homes have been built or renovated throughout the EU Member States. The projects and agreements approved for financing under EFSI have so far mobilised €546.5 billion in investment.

Sociedad Anónima Municipal Actuaciones Urbanas de Valencia (AUMSA)

Sociedad Anónima Municipal Actuaciones Urbanas de Valencia (AUMSA) is a local public-sector company belonging to Valencia city council whose mission is urban development, construction, urban rehabilitation, planning studies and project management.