Stronger regions of Spain – including the Costa del Sol – are seeing rising demand for extra housing.

A private-equity investment firm from the US has announced plans to invest more than €500 million into the Spanish housing market to plug a gap created by soaring demand.

Despite there remaining an oversupply of unsold homes in some parts of Spain, billionaire-backed Lone Star Funds has identified regions where there is “solvent demand” for property driven by Spaniards and foreign buyers with the capacity and desire to buy…

John Grayken is the tycoon behind the firm, and he has already begun snapping up land in Spain for housing development. “Despite the glut of homes in Spain, there are areas where stock is running out and we aim to fill that gap,” said Juan Velayos, who is CEO of Neinor Homes, a unit of Lone Star that has designs on becoming Spain’s largest home builder. “We aim to build homes where there is solvent demand and where people can afford to and want to buy.”

Having endured a much-publicised slump, Spain’s residential market has strolled along the road to recovery with increasing confidence these past few months. And people are beginning to notice: not only are foreign transactions up, but US investors – such as Lone Star – have noted the changing sentiment. The company is planning on purchasing land in Madrid, Barcelona, the Balearics and along coastal regions where stock is depleted, including the Costa del Sol.

The Dallas-based company bought Neinor Homes from Spain’s Kutxabank SA last year for around $1 billion, and has purchased 230,000 square metres of land, with a view to constructing 2,050 homes in the first instance. The company has said that its target market is “middle-class homebuyers aged 40-50” – a demographic that is quickly regaining consumer capital both domestically and internationally.

“Their strategy has a very high chance of success as properties are really flying off the shelf in areas such as Madrid, Barcelona and popular coastal resorts,” said Madrid-based property consultant Fernando Rodríguez de Acuna. “Targeting that stratum of the population is very astute given that age bracket normally has stable employment, savings and already some equity in housing.”

Lone Star’s approach – to cherry pick the right regions and the right buyers – is an avowedly sensible one, Velayos added, because there remain regions in Spain where the oversupply of housing will never be sold. “There is simply no demand in some areas,” said the CEO. Spain has more than one million empty homes, but the country’s supply and demand is unbalanced.

“Madrid, Barcelona and good areas on the coast near Málaga are where we are seeing the most activity and the jump in transactions that we are seeing corresponds to those areas,” said Rodríguez de Acuna.