Business area Project Development

Collaboration is the key to sustainable urban development

Key ratios

2019 2018 2017
2019 2018 2017
Net sales, MSEK Nettoomsättning, Mkr 7,784 7,844 8,343
of which Property Development varav Fastighetsutveckling 786 738 1,013
of which Housing Development varav Bostadsutveckling 6,998 7,106 7,330
Operating profit, MSEK Rörelseresultat, Mkr 966 785 804
of which Property Development varav Fastighetsutveckling 305 170 98
of which Housing Development varav Bostadsutveckling 661 615 706
Operating margin, % Rörelsemarginal, % 12.4 10.0 9.6
of which Property Development varav Fastighetsutveckling 38.8 23.0 9.7
of which Housing Development varav Bostadsutveckling 9.4 8.7 9.6
Capital employed on 31 December, MSEK
Sysselsatt kapital per 31 december, Mkr
 15,964 12,984 9,986
Orders received, MSEK Orderingång, Mkr 6,164 6,681 8,496
Order backlog on 31 December, MSEK Orderstock per 31 december, Mkr 5,027 7,134 8,198
Number of employees on 31 December
Antal anställda per 31 december
 343 379 361

Project Development, which comprises Housing Development and Property Development, creates sustainable and vibrant urban environments with both residential and commercial property. The business area is responsible for the Group’s property acquisitions and divestitures as well as project development which generates contract work for the other business areas. Project Development works through wholly owned projects or in collaboration with other partners in joint ventures.

Peab is one of the largest housing developers in Sweden and has a strong position on the market. Operations are spread throughout the country with a number of offices divided into four regions. In Finland Peab is represented in Helsinki and seven other large regional cities. In Norway operations are located in the Oslo area, Tromsø and Ålesund.

Property Development develops offices, premises and sometimes whole city districts in collaboration with municipalities and other partners. The business is primarily focused on the big city areas.

NET SALES AND PROFIT

Net sales for 2019 in business area Project Development amounted to SEK 7,784 million (7,844) and operating profit was SEK 966 million (785). The reduction in net sales stems from Housing Development. In Property Development Peab’s partially owned company Acturum divested a number of properties in the second quarter. The divestitures had a positive effect of SEK 170 million in profit contributions from partially owned companies.

Capital employed in Project Development at the end of the year amounted to SEK 15,964 million (12,984). The increase is due to investments in project and development properties, more ongoing housing projects in Norway and Finland, investments in rental projects as well as investments in operations properties in Property Development. The increase also included additional IFRS 16, Leases per December 31, 2019 of SEK 328 million.

Capital employed

MSEK Dec 31‚ 2019 Dec 31‚ 2018 Dec 31‚ 2017
Mkr 31 dec 2019 31 dec 2018 31 dec 2017
Operations property Driftsfastigheter 1,332 915 1,036
Investment property Förvaltningsfastigheter 558 589 871
Project and development property
Projekt- och exploateringsfastigheter
 11,623 9,685 7,612
of which housing development rights varav bostadsbyggrätter 5,841 5,394 5,116
of which commercial development rights varav kommersiella byggrätter 556 656 627
of which ongoing housing projects in Norway and Finland varav pågående bostadsprojekt i Norge och Finland 3,126 2,034 1,173
of which ongoing rental projects in Sweden
varav pågående hyresrättsprojekt i Sverige
 846 925 134
of which ongoing commercial projects 
varav pågående kommersiella projekt 
 445 302 249
of which completed property varav färdigställda fastigheter 391 14 170
of which other varav övrigt 418 360 143
Participation in joint ventures Andelar i joint ventures 1,978 1,019 912
Loans to joint ventures Utlåning till joint ventures 1,106 1,466 1,383
Working capital and other Rörelsekapital och övrigt -633 -690 -1,828
Total Summa 15,964 12,984 9,986

Net sales

Per geographic market, 2019

Housing Development

Peab’s position on the Swedish market is strong. Our range of housing forms is broad; tenant-owned apartments, condominiums and apartments for rent as well as homeowner or tenant-owned single homes.

After the decline in the housing market in the Stockholm region in 2018 prices have stabilized in 2019 and sales on the succession market have accelerated. There are still a large number of newly produced tenant-owned homes on the market and the volume of new projects being started is relatively low. There are geographical variations in sales around Sweden and in demand among municipalities. For instance, demand in southern Sweden has been good while it has leveled out in the Gothenburg area. Demand in smaller places has been stable because of the widespread scarcity of housing in Sweden. In general, there has been an increase in demand from investors in newly produced apartments for rent in 2019.

Peab strives to be a forerunner in sustainable urban development which includes creating vibrant and safe neighborhoods with meeting places. All our new, own developed apartment buildings are certified according to the Swan ecolabel with Bra Miljöval (Good Environmental Choice) labelled electricity.

The development rights portfolio for the Swedish business is well spread over the country. Several major housing projects in Sweden are urban development projects where collaboration between a number of partners is an important success factor. In Lindholm’s historical shipyard in Gothenburg, Peab is working closely with businesses and the City of Gothenburg to develop an attractive urban environment with a clear environmental profile. During the year the Swan ecolabeled apartment building project Brf Lindholmskajen was completed. At the same time Brf Lindholmsvarvet is under construction producing another 129 Swan ecolabeled apartments. More than 200 homes were completed in Partille in 2019, the first stage of around 800 homes in one of Sweden’s largest housing projects, Partille Port. In Malmö sales of Brf Varvskajen, which will comprise 128 apartments in total, began in April 2019.

Price development in the Norwegian housing market was stable in 2019 although there are significant regional differences. The strongest growth in prices was in the Oslo region. Peab is advancing as an actor on the housing market in Norway and production of 350 apartments began in 2019. The largest project is in Lørenskog outside Oslo where Peab started up construction of 105 homes. All in all the project comprises 380 homes. In Tromsø construction on the second stage of the Skir project began where 100 homes are expected to be completed in the fourth quarter 2021.

A substantial number of housing projects started up in Finland in 2019. Sales have been satisfactory all over the country while demand in Helsinki has been high. The largest housing project start-ups were Helsingin Sumppari with 128 homes and the Helsingin Silhuetti with 72 homes in the Kruunuvuori area, both in Helsinki. Construction began on 79 homes in Oulu in the Mestari Block and on 75 homes in the Pappila area in Tammerfors. Several projects were also completed during the year such as the new block Itikanmäki with 294 apartments in a growing Seinäjoki and the fourth and final apartment building with 251 homes in the new district Klemettilänpuisto in Vasa.

Housing development rights

Number, approx. 31 Dec‚ 2019 31 Dec‚ 2018 31 Dec‚ 2017
Antal, cirka 31 dec 2019 31 dec 2018 31 dec 2017
Development rights on our own balance sheet Byggrätter i egen balansräkning 20,300 21,300 20,700
Development rights via joint ventures Byggrätter via joint ventures 4,600 5,000 4,800
Development rights via options etc. Byggrätter via optioner m.m. 9,500 9,100 7,100
Total Totalt 34,400 35,400 32,600

Own housing development construction

2019 2018 2017
2019 2018 2017
Number of housing starts during the year Antal under året produktionsstartade bostäder 2,067 2,213 3,048
Number of sold homes during the year Antal under året sålda bostäder 2,709 1,825 2,734
Total number of homes under construction, at year-end Totalt antal bostäder i produktion vid årets slut 4,616 6,231 6,333
Share of sold homes under construction, at year-end Andel sålda bostäder i produktion vid årets slut 69% 63% 72%
Number of repurchased homes on the balance sheet, at year-end Återköpta bostäder i egen balansräkning vid årets slut 253 104 33

Net sales and operating profit

Net sales decreased to SEK 6,998 million (7,106). Operating profit amounted to SEK 661 million (615) and the operating margin amounted to 9.4 percent (8.7). Operating profit and operating margin contracted slightly in Sweden but were for the most part countered by more turned over projects in Norway and Finland.

The number of start-​ups of our own developed homes amounted to 2,067 units (2,213) with aAt the end of December 2019 the level of capital employed rose due to investments in project and development property along with rental projects in Sweden. The rental projects may be converted into tenant-owned housing or be sold on the investor market. The level of capital employed has also risen due to increased activity in our own developed housing projects in Norway and Finland, which remain on our balance sheet until they are finished. The diagram shows when in time the housing projects in Norway and Finland are expected to be completed. The total number of ongoing own housing developments in Norway and Finland was 1,662 (1,446) per December 31, 2019. good geographic spread in all countries. The number of sold homes was 2,709 (1,825). Sales are at a good level in all three countries. Greater sales efforts in Stockholm led to higher sales during the year compared to 2018. The number of own developed homes in production has decreased and was 4,616 (6,231) at the end of the year. The level of sold homes in production was 69 percent (63). The number of repurchased homes per December 31, 2019 was 253 (104). Most of the repurchased homes relate to Sweden and Finland. Peab develops and builds housing all over Sweden and in large parts of Norway and Finland. Our housing is primarily in the medium price segment and we see that there continues to be a considerable need for new production of housing in this range.

When in time ongoing homes in Norway and Finland will be completed

Teleterassen in Farsta comprises a total of 186 apartments. Construction on the project began in the second quarter 2019 and is divided into three stages. It is Swan ecolabeled and quality certified according to Trygg BRF. Occupation will begin in the third quarter 2021. Teleterrassen is centrally located close to both the center of Farsta and the subway. Demand for these homes has been very good.

Peab started sales of Brf Varvskajen containing 128 modern apartments with distinct interior designs produced for the area in April 2019. The apartments are strategically located in the middle of the city in the old shipyard area in central Malmö. Demand has been very high. The Varvkajen Block is Swan ecolabeled.

On Nadderudveien 1 in Bekkestua in Bærum, just outside Oslo, Peab is building 58 apartments and nine terraced houses. The residential area is directly connected to bus and train lines. The apartments are an average of 100 m2 in size. Construction began in the first half of 2019 and is expected to be finished in the second quarter 2021.

The triangle formed Goldfinger, with 109 apartments, is being built in Jätkäsaari, one of the areas most in demand in Helsinki, close to the sea and mass transit. The top floors have a metal coating that makes Goldfinger stand out from its surroundings by shining like gold. Occupation is planned for March 2020. For residents the area has been fitted for modern waste management via underground pipelines.

Brf Turbinen is being built in Trollhättan and occupation is planned for December 2020. The project comprises 69 apartments that maintain the historical heritage of the industrial building in the form of noticeably reused bricks, large glass façades, steel columns and high ceilings. Since construction began in September 2018 Peab has worked intensively to create exclusive homes that unite industrial history with modern architecture.

Property Development

Property Development has broad, extensive expertise in refining and developing locations for commercial properties. It is primarily geared to run development projects based on development rights on our own balance sheet. Collaboration with partners via joint ventures may occur at different times during a project. In 2019 the market for office buildings in Swedish big city regions was strong and so was the transaction market. The market for office rentals and real estate prices are expected to have a stable development.

During the year Peab completed several major property projects in Sweden including the new Peab Center in Ulriksdal, Solna. This is where Peab has gathered all its offices in the Stockholm region and it was ready for occupation in November. The new office building in Solna is the first of a total six planned buildings. The second one of around 3,000 m2 contains eight floors with a total of 475 parking spaces, offices and a gym on two floors. It is rented to the wellness chain Actic and is expected to be ready in the summer of 2020. Construction of a third building has begun and it will be completed in the autumn of 2021. Most of the building of around 4,500 m2 is already rented to medtech company Carmeda.

Construction on the new Peab Center in Hyllie in Malmö continued. Peab has gathered all its offices in the Oresund region here under one roof. The new office building with around 5,000 m2 office space is the first of a total five buildings in the project The Gate. The opening was in March 2020. Construction on the new Peab Center in Helsingborg also began in 2019. The building comprises about 3,000 m2 office space, of which Peab has around 2,200 m2. During 2019 Peab worked to complete The Point, Malmö region’s highest office building with around 20,000 m2 office space. It was ready for occupation in January 2020. The project is a joint venture with Volito Fastigheter.

Varvstaden, which is a joint urban construction project with Balder in central Malmö, continued to develop in 2019. During the year Skeppshyttan, which is a long-stay hotel of about 4,200 m2 run by Forenom, was completed.

Growth in the Finnish economy contributed to an active real estate market during the year. The office market in Finland is expected to be positive in 2020 as well. During the year the second stage of Ultimes Business Garden, in Sockenbacka Business Park in Helsinki, which comprises around 7,900 m2 rentable office space and 150 parking spaces, was completed. A total of six office buildings are planned for the area.

The office market in Norway is developing stably with a continued good balance between supply and demand. In Oslo 3,600 m2 commercial space in the Carl Berner Torg project is under construction and is expected to be completed in the autumn of 2020. Nadderuveien 1 in Bekkestua outside Oslo, a joint venture where Peab has a 50 percent participation, started up at the end of 2018. The project consists of 67 homes and about 3,500 m2 commercial space, all of it rented out to Norgesgruppen. The entire project is expected to be completed in 2021.

Net sales and operating profit

During 2019 net sales were SEK 786 million (738) and operating profit was SEK 305 million (170). Our partially owned companies continue to develop well and profit during the year from partially owned companies amounted to SEK 266 million (101), of which SEK 170 million refers to divestitures in Acturum. In December 2018 Acturum signed a contract with Fastator and Offentliga hus to sell all its remaining property with the transfer in the second quarter 2019. Acturum was founded by Peab and FAM – The Wallenberg Foundations’ holding company – as equal partners in 2013. The company acquired a property portfolio in Södertälje from AstraZeneca and has since then developed a number of properties. The divestitures had a positive effect of SEK 170 million in the second quarter in profit contributions from partially owned companies. No other major property transactions have taken place during the year.

In cases where no divestiture is planned properties can remain in the Group for a considerable length of time in order to garner rent and appreciation revenue or a combination of both. Capital employed in Property Development includes operations property for a recognized value of SEK 1,332 million (915), of which SEK 105 million is additional IFRS 16, Leases and SEK 558 million (589) is investment property, of which SEK 58 million is additional IFRS 16, Leases. The tables below show our major property projects per December 31, 2019.

In addition to the ordinary dividend, in February 2020 Peab’s Board proposed an extra distribution of all the shares in a newly formed company holding Peab’s wholly owned, fully developed commercial properties. As a result of the spread of the coronavirus and its effects on external circumstances and financial markets Peab’s Board decided on March 24, 2020 to withdraw the proposal to the Annual General Meeting concerning an extra distribution of all the shares in the newly formed real estate company. For more information, see Extra distribution of a real estate company .

Ledvolten is an office building of about 4,500 m2. The building contains five floors and a basement. It will be built with commercial space on the ground floor and four flexible open office floors which the medtech company Carmeda has rented and will move into during the fourth quarter 2021.

Peab’s new office in Hyllie, Malmö was ready in the beginning of 2020, making it the first office building of five in the project The Gate. It is in a communicative area close to both the city, countryside and communications.

Peab is developing an entire new city district in Ulriksdal in Solna. Attractive and vibrant urban environments are being created with both residential and commercial properties. An important component is the pneumatic waste collection system that cuts down the amount of transportation in the area. In the summer of 2020 the wellness chain Actic will move its headquarters and gym to a building characterized by innovative architecture.

Property projects

Completed projects Location Area in m2 Degree
rented, %
Recognized value, MSEK
Färdigställda projekt Ort Uthyrningsbar
yta, m2		 Uthyrningsgrad, %
Bokfört värde, Mkr
Businesspark Ängelholm Företagspark Ängelholm 63,500 81 241
Businesspark Ljungbyhed Företagspark Ljungbyhed 75,300 55 119
Offices Solna Kontor Solna 12,400 100 450
Offices Helsinki Kontor Helsingfors 9,300 85 273
Offices Helsinki Kontor Helsingfors 7,600 80 267
Retail and offices Gothenburg Handel och kontor Göteborg 6,300 97 163
Offices Sigtuna Kontor Sigtuna 3,600 74 65
Other completed projects
Övriga färdigställda projekt
 138
Total Summa 1,716
of which operations property varav driftsfastigheter     1,038
of which investment property varav förvaltningsfastigheter     500
of which project and development property varav projekt- och exploateringsfastigheter
     178
Ongoing projects Location Area in m2 Degree
rented, %		 Recognized value, MSEK Total investment at completion, MSEK Timepoint of completion
Level of completion, %
Pågående projekt Ort Uthyrningsbar
yta, m2		 Uthyrningsgrad, % Bokfört värde, Mkr Beslutad investering, Mkr Tidpunkt färdigställande
Färdigställande-grad, %
Office building Malmö Kontor Malmö 5,000 74 156 185 Q1-2020 84
Office building and parking Solna Kontor och parkering Solna 2,900 89 211 279 Q2-2020 76
Retail Oslo Handel Oslo 3,600 100 144 186 Q4-2020 77
Office building Helsingborg Kontor Helsingborg 2,900 77 33 109 Q2-2021 30
Office building and shops Solna Kontor och butiker Solna 4,300 81 16 194 Q3-2021 8
Other ongoing projects Övriga pågående projekt 74
Total Summa 634
of which operations property varav driftsfastigheter     189
of which project and development property varav projekt- och exploateringsfastigheter     445

Significant joint ventures

Peab’s significant joint venture companies Fastighets AB Centur, Tornet Bostadsproduktion AB, Fastighets AB ML4 and Point Hyllie Holding AB are developing well and via them Peab has built up considerable indirect holdings in investment property and development property for both commercial and residential purposes. Ongoing returns are in the form of shares in the profit from joint ventures recognized in operating profit and interest income on lending. Changes in market values that effect booked values in joint venture companies are not included in Peab’s accounts.

Fastighets AB Centur

Own, manage and develop commercial property and housing.

Peab’s share: 50 percent
Partner: Balder
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties December 31, 2019 1): SEK 6,621 million (6,085)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 421 million (353)
Major ongoing projects: Lyckholms Gothenburg, Rentable area 6,400 m2 

Tornet Bostads­produktion AB

Build and manage attractive and environmentally friendly rentals in larger cities in Sweden.

Peab’s share: 33 percent
Partner: Folksam and Balder
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties December 31, 2019 1): SEK 4,300 million (3,428)
Peab’s portion of unrecognized fair value exclusive tax 1):  SEK 260 million (212)
Major ongoing projects: Munkebäck, Gothenburg Rentable area 10,900 m2, Kungsängen, Upplandsbro Rentable area 8,900 m2,, LP Parken, Gothenburg Rentable area 15,000 m2, Tallbohov, Järfälla Rentable area 10,500 m2 and several apartment building projects in Västerås and Helsingborg

Fastighets AB ML4

Own and manage the research facility Max IV. The facility is rented to Lund University.

Peab’s share: 50 percent
Partner: Wihlborgs
Location: Lund
Recognized value on properties December 31, 2019: SEK 1,870 million (1,849)
Major ongoing projects: Research building 6,400 m2

Point Hyllie Holding AB

Develop, own and manage the office property The Point as well as own and manage the hotel property Värdshuset 5 (Operator Quality Hotel View).

Peab’s share: 50 percent
Partner: Volito
Location: Hyllie, Malmö
Recognized value of properties December 31, 2019: SEK 1,279 million (1,008)
Major ongoing projects: 29 floor office building, The Point, Rentable area 20,000 m2

Key ratios 2019 significant joint ventures 1)

MSEK Fastighets AB Centur Tornet Bostadsproduktion AB Fastighets AB ML4 Point Hyllie Holding AB
Mkr Fastighets AB Centur Tornet Bostadsproduktion AB Fastighets AB ML4 Point Hyllie Holding AB
Net sales Nettoomsättning 368 151 97 35
Profit for the year Årets resultat 244 152 15 3
Total assets Balansomslutning 6,891 4,457 2,058 1,341
– of which recognized value of properties – varav bokfört värde fastigheter 6,621 4,300 1,870 1,279
Peab’s portion of unrecognized fair value exclusive tax Peabs del av oredovisade verkliga värden exklusive skatt 421 260
1) Refers to the recognized value of joint venture companies for January – December 2019 and per 31 December 2019. Since Fastighets AB Centur and Tornet Bostadsproduktion AB apply the market value of properties, the values in the table above differ from the values presented in the Peab Group for joint venture companies in note 19.