Don't remember the grit of sandpaper -- probably over 600-800. And it does depend on how far the viewing distance is. My model is about 6" from the front of the layout. The impression of stucco is clear from that close. Here's an right up there photo of it:
Painting the sandpaper does smooth out the surface as the paint fills in between the grit. Using too-fine sandpaper on a structure far from the edge may just look like a smooth surface. Sandpaper is cheap; you can buy several grades in the range that looks good to you and test them in place to get the results you want.
Also, adding a light dusting of black chalk (
very light!) will bring out the texture of the "stucco."