Spanish Prime Minister Pedro Sánchez announced on Monday that a new sovereign investment fund will support the construction of up to 15,000 affordable rental homes annually.

The fund, named “España Crece” (Spain Grows), is projected to channel €23 billion into housing projects, with €14 billion from public funding and an additional €9 billion from private investors, Sánchez stated.

“We have to build more housing, more public and affordable housing, and lack of financing cannot be another obstacle. We will roll out the red carpet for private investors, but not to speculate with a constitutional right -- rather to build homes for citizens who struggle to access housing,” he said.

The government intends to kickstart the fund with €10.5 billion in unused loans from the EU’s post-pandemic recovery program, plus €2.8 billion in grants. Officials expect the fund’s capital to expand through debt instruments and private investment, potentially reaching €120 billion in total.

Housing will be a key focus of the fund, alongside business competitiveness, the energy transition, and digitalisation. The government also plans to utilise EU recovery funds before their 2026 expiration and to stimulate investment amid a budgetary deadlock.

The announcement comes amid growing concerns over housing costs in Spain. A January 2026 poll by the CIS public opinion institute found that 42.6% of respondents identified access to housing as the country’s most pressing issue, up three points from December.

Eurostat data shows that Spanish housing prices climbed 12.8% year-on-year in the third quarter of 2025, among the highest increases in the European Union and well above the bloc’s average annual gain of 5.5%.

Opposition parties have criticised the plan, claiming it functions more as an expanded state lending agency than a true sovereign wealth fund.

Indeed, the conservative Popular Party accused the government of using it to mask mismanagement of EU funds and to preserve part of the unused recovery loans.

The government, however, maintains that the fund will help maintain investment momentum once the European recovery program concludes later this year.

This sovereign wealth fund, announced in mid-January but delayed following the train accident in Adamuz (Córdoba), represents Moncloa’s major bet on Spain’s near-term future, Diario Sur reports, especially at a critical moment when the country is operating without a formal budget and cannot rely on funds from Brussels.