“It is necessary to increase the production of affordable housing”
Grupo Salas is the leading social housing developer in Catalonia and one of the contractors for the third phase of the Plan Vive in the Community of Madrid. With over 30 years of experience and a team of more than 270 professionals, the company has delivered over 4,000 homes across the country. In this interview, Manel Rodríguez, CEO and shareholder of Grupo Salas, discusses the company’s social mission and the housing access problem, particularly for young people, one of the biggest challenges facing the real estate sector.
What are the main challenges the developer has faced in your three decades in the real estate market?
Over the years, the real estate market has experienced changes driven by sector-specific cycles, but it is also impacted by economic and financial fluctuations, such as interest rate hikes and mortgage credit restrictions. At times, external factors, such as the pandemic-induced halt, also affect us directly. In any case, the key is always to work with a long-term perspective and maintain financial strength to overcome these ups and downs.
What type of real estate developments do you carry out? What sets you apart from your competition?
We develop multi-family residential buildings for first-time homebuyers, either for rent or purchase. We specialize in affordable housing, which is our main differentiating factor. We do not develop luxury homes, single-family houses, or second homes. We always operate in the “central” market segment, catering to the middle class looking for “homes to live in,” which allows us to secure demand—an essential aspect of our positioning: we always have 90% presold!
For those considering buying a home, would you say it is a good time to do so or to invest in the real estate sector?
Buying a home is a significant life decision, which should not be viewed solely as a financial investment, but rather as a personal one. If it’s the home your family needs, it’s a good investment. Experience shows that real estate investments are always a good long-term investment: it is a safe asset, and in high-demand areas, prices always rise. Even after the 2007 real estate crisis, homes in genuinely sought-after areas quickly regained their value. Speculative purchases without real demand behind them are a different matter!
All experts agree that there is not enough housing to meet demand. What measures could alleviate the problem?
This is indeed one of the most complex problems society will face in the coming years. All studies show that housing production needs to double, especially affordable housing, not only to meet the demand driven by immigration and household formation but also to address the deficit accumulated over the past five years.
To increase the pace of production, several factors need to come together. First, the availability of urban land. The population increase creates a need: for example, the metropolitan region of Barcelona (stretching from Vilanova to Mataró, including Vallès) now exceeds 5 million people. We cannot continue “consuming” territory where there is none, so urban planning must become denser, and its processes must be expedited. Public administration must act as a large-scale urban developer, controlling windfall gains while ensuring the availability of final urban land.
Public administration, which controls the entire process, must also be agile, clear, and stable. Urban planning regulations, taxation, municipal building permits, land registration, occupancy certificates… The housing development process is highly regulated, and the sector needs clarity, stability, and agility: a long-term, cross-party state agreement for housing development.
“We need to densify urban planning and streamline its processes. The public administration must act as a large-scale urban developer.”
The availability of financing is also an important factor. The residential real estate sector consumes significant financial resources. Since the real estate crisis, credit has been reduced, which has been “healthy,” but now there is great investment capacity and borrowing power that must be utilized, at affordable interest rates. I’m talking about increasing developer credit and increasing mortgages for families.
Additionally, it’s important to highlight the significance of production capacity. Housing must be built—it’s not just a theoretical process but a material issue involving many agents. When we talk about doubling production, we’re talking about putting stress on one of the main productive sectors of the GDP. We need to train a lot of labor, which will have to be foreign, we need a lot of immigration, and above all, we need to support the industrialization of the sector, which continues to be a traditional production sector with outdated means.
Housing prices and rents are at historic levels. What measures should be taken to improve access to housing?
The key measures should aim to increase supply because the imbalance between supply and demand is the root cause of the current crisis.
On the other hand, to prevent a price surge, we support limiting the use of housing for economic speculation, such as in tourism. It makes sense, because if not, historic city centers in tourist areas will turn into theme parks.
“Real estate investments are always a good long-term asset, a safe haven.”
At the same time, we believe that, exceptionally and temporarily, while work is underway to increase production, temporary measures such as rent caps could be implemented. However, we must be aware that artificially limiting rents will be counterproductive in the medium and long term if the production of new supply is not corrected.
Solving the housing access problem for young people is one of the biggest challenges for the real estate sector. Could this be solved by increasing the stock of public housing at affordable prices? What percentage of social housing does Salas currently manage?
Grupo Salas dedicates 50% of its production to social rental housing and another 25% to social housing for sale. Only 25% of our production is free-market housing for sale. I believe many other actors need to increase the production of affordable housing because it’s what the country needs. Our role as developers is not just a financial issue: we are providers of a basic necessity, and we have a social responsibility in this regard. At Salas, this principle guides our growth and expansion plans.
The company mainly operates in Catalonia and Madrid. Do you have plans to expand into new geographic areas or markets?
Historically, we have also produced in the Balearic Islands, and we hope to return when conditions are favorable for producing affordable housing there. Later on, we will consider expanding our large-scale affordable housing production model to other locations, but for now, we will continue growing in Catalonia and Madrid.
What trends do you think will define the future of the housing market in Spain?
On one hand, we will see a price increase in the free-market housing sector in high-demand areas like Madrid, Barcelona, the Mediterranean coast, the islands, and the urban centers of large cities, turning this market into a luxury good.
On the other hand, we will see large-scale production of social and affordable housing, mainly for rent, which will be accessible to those who cannot buy. We will also see the production of other housing models, such as coliving, flex living, and senior living, which will define the future of housing in Spain. In terms of production, there will be a shift towards industrialization and, at the same time, an improvement in sustainability.