Business area Project Development

Slowdown in the housing market

Business area Project Development, which comprises Housing Development and Property Development, creates sustainable and vibrant urban environments with residential, commercial and public property.

Key ratios

2022 2021
2022 2021
Net sales, MSEK Nettoomsättning, Mkr 8,661 9,497
of which Property Development varav Fastighetsutveckling 494 521
of which Housing Development varav Bostadsutveckling 8,167 8,976
Operating profit, MSEK Rörelseresultat, Mkr 1,127 1,237
of which Property Development varav Fastighetsutveckling 187 231
of which Housing Development varav Bostadsutveckling 940 1,006
Operating margin, % Rörelsemarginal, % 13.0 13.0
of which Property Development varav Fastighetsutveckling 37.9 44.3
of which Housing Development varav Bostadsutveckling 11.5 11.2
Capital employed at the end of the period, MSEK
Sysselsatt kapital vid periodens utgång, Mkr
 15,632 13,523
Orders received, MSEK Orderingång, Mkr 6,019 9,981
Order backlog, MSEK Orderstock, Mkr 5,447 6,555
Operating cash flow, MSEK Operativt kassaflöde, Mkr -690 249
Number of employees 1) Antal anställda 1) 255 242

1) Calculated on rolling 12 months

Project Development 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’s ambition is to be a forerunner in sustainable urban development which entails investing in safe neighborhoods that are alive with places for people to meet, climate and environmentally adapted buildings and sustainable communications, everything to improve and simplify everyday life where people live and work. Our new, own developed apartment buildings in Sweden and Norway are certified according to the Swan ecolabel. In Finland similar measures are being taken to increase energy efficiency and reduce climate impact. In addition, the Group is working on developments in energy, construction material and construction tech solutions so that we can offer products and services that reduce our climate impact.

Peab is one of the largest housing developers in Sweden and has a strong position on the market. Operations are spread throughout the country which provides good local and regional knowledge about the different market conditions in Sweden. In Finland Peab is represented in Helsinki and a number of 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 boroughs in collaboration with municipalities and other partners. The business is primarily focused on the big city areas throughout the Nordic region.

Net sales and profit

Net sales for 2022 in Project Development decreased and amounted to SEK 8,661 million (9,497). The decrease is attributable to Housing Development. Operating profit amounted to SEK 1,127 million (1,237) and the operating margin was 13.0 percent (13.0).

Capital employed in Project Development at the end of the year amounted to SEK 15,632 million (13,523). The increase is primarily due to higher investments in project and development property.

Capital employed

MSEK Dec 31
2022		 Dec 31
2021
Mkr 31 dec
2022		 31 dec
2021
Operations property Driftsfastigheter 83 52
Investment property Förvaltningsfastigheter 36 36
Project and development property
Projekt- och exploateringsfastigheter
 12,943 10,628
of which housing development rights varav bostadsbyggrätter 7,246 6,629
of which commercial development rights varav kommersiella byggrätter 739 613
of which unsold part of ongoing housing projects varav osåld del av pågående bostadsprojekt 2,493 1,549
of which ongoing rental projects
varav pågående hyresrättsprojekt
1,422 727
of which ongoing commercial projects
varav pågående kommersiella projekt
462 483
of which completed property varav färdigställda fastigheter 173 123
of which other varav övrigt 408 504
Participation in joint ventures Andelar i joint ventures 2,573 2,371
Loans to joint ventures Utlåning till joint ventures 1,494 1,177
Working capital and other Rörelsekapital och övrigt -1,497 -741
Total Summa 15,632 13,523
of which Property Development varav Fastighetsutveckling 4,585 4,265
of which Housing Development varav Bostadsutveckling 11,047 9,258

Net sales

Per geographic market, 2022

Housing Development

Peab offers a broad range of housing forms including apartment buildings with tenant-owner apartments, condominiums and apartments for rent. Demand in all three Nordic countries during the first half-year was good but it declined during the second. The measures taken by the central banks to curb inflation by raising interest rates contributed to slowing demand on housing and property markets. Rising construction costs also brought down demand on the markets.

Peab’s development rights portfolio is well spread geographically and every year Peab starts new projects all over the Nordic region. A substantial portion of our large housing projects are part of urban development projects where collaboration between different partners is key to success and creates added value where our other business areas are involved.

In Sweden one such housing development project is Varvstaden in Malmö that Peab owns together with Balder in the company Fastighets AB Centur. Around 2,500 new homes are under construction in close cooperation with Malmö City. This type of urban development gives Peab the opportunity to offer the market new homes in attractive areas over the course of several years. Projects in Varvstaden have a clear sustainability and climate profile and reusing material from the old shipyard is an important component. During the year the first block of homes, Varvskajen with 128 apartments, was completed.

Peab has housing developments in most of Sweden. In Skellefteå, where there is a huge housing shortage due to extensive industrial investments, Peab started Brf Framtiden with 87 tenant-owner apartments. There is an urban development project at Öster Mälarstrand in Västerås where Peab together with other actors is developing a completely new city borough. During the year two projects with a total of 65 new apartments were launched. Housing Development purchased land on Tjörn with a unique shoreline location where we will develop some 50 new tenant-owner apartments in a 14 story high rise. In Karlstad Peab launched a project with 133 new tenant-owner apartments at Tullholmsviken on the shore of the Klar River. Two centrally located development rights were acquired in Vellinge Municipality where Peab will build 170 new apartments, 100 rental apartments and 70 tenant-owner apartments. Land was also acquired in Sandbyhov in Norrköping for 75 new apartments.

In the past year Housing Development has developed several of our property acquisitions in the Stockholm region. In Järfälla we are developing Veddesta, a complex project with many different components in a limited area with various housing forms and commercial space in a location that will also be a mass transit hub. On Lilla Essingen in Stockholm we are developing a new city borough of over 40,000 m2 GFA.

We started a number of new housing projects on the Finnish housing market around the country, among them 122 apartments in Turku, 101 apartments in Vasa and 71 apartments in Jyväskylä. All the projects are being built with energy class A. We established a joint venture in Finland with Slättö to develop and manage newly produced green housing properties. The partners have a shared ambition to expand the portfolio focusing on major cities in Finland. The initial acquisition consists of two housing projects in Vanda respectively Turku for a total of 178 apartments and 705 m2 commercial space in locations with good communications. All the properties will be environmentally certified. Peab will build the properties on its own balance sheet until completion at the end of 2023 and then recognize them in revenue upon divestment.

The housing market in Norway has not been affected to the same extent by the slowdown in demand although sales declined in the latter part of 2022. In Moss, just south of Oslo, Peab has started production of 52 apartments. In Ålesund we started production of 57 apartments focusing on energy efficiency in central locations close to nature. The fourth stage of Tunkvartalet in Oslo was launched with 52 apartments making a total of 405 homes that Peab owns together with USBL.

Strategic land acquisitions are vital to Peab’s continuous development in housing development. In Finland we acquired development rights in Espoo in the Helsinki region right next to the Ainoa Mall and Hagalund subway station. Peab will build around 120 new apartments in the area.

Net sales and profit

Net sales amounted to SEK 8,167 million (8,976). Net sales decreased in all countries due to the market has become more wary, which meant fewer production starts and dwindling rate of homes sold. Operating profit amounted to SEK 940 million (1,006) and the operating margin was 11.5 percent (11.2).

The number of start-​​ups of our own developed homes during the year amounted to 1,810 units (3,020), of which 203 (426) have been converted from rentals. The number of sold homes was 1,643 (3,047). At the beginning of the year sales were relatively good in all three countries but in the second half of the year demand for housing has diminished. The number of own developed homes in production at the end of the year was 4,539 (4,702). The portion of sold homes in production was 69 percent (76). The number of repurchased homes per December 31, 2022 was 105 (144) and most of them are in Finland. Production started on 526 homes (676) in rental apartment projects on our own balance sheet during the year. The number of homes in rental apartment projects that have been sold and settled during the year amounted to 66 (91). The number of homes in rental apartment projects in production was 1,179 (922) at the end of the year. Of these 866 are under contract to be sold upon completion.

There is still a substantial underlying need for homes but rising interest rates and the uncertain economy reduce demand on the housing market for all kinds of homes. A slow rate of home sales has a negative effect on the conditions for production starts going forward.

Capital employed has increased at the end of the year and amounted to SEK 11,047 million (9,258). The increase is mainly explained by acquisitions of development rights, several ongoing apartments for rent projects and the unsold part of ongoing tenant-​owner apartment projects.

Housing development rights

Number, approx. Dec 31
2022		 Dec 31
2021
Antal, cirka 31 dec
2022		 31 dec
2021
Development rights on our own balance sheet Byggrätter i egen balansräkning 21,800 19,500
Development rights via joint ventures Byggrätter via joint ventures 4,700 4,600
Development rights via options etc. Byggrätter via optioner m.m. 8,900 10,500
Total Totalt 35,400 34,600

Own housing development construction

Jan-Dec
2022		 Jan-Dec
2021
Jan-dec
2022		 Jan-dec
2021
Tenant-​owner associations, ownership and residential limited companies Bostadsrätter, ägarlägenheter och bostadsaktiebolag
Number of production-started homes during the period
Antal under perioden produktionsstartade bostäder
 1,810 1) 3,020 1)
Number of sold homes during the period
Antal under perioden sålda bostäder
 1,643 3,047
Total number of homes under production, at the end of the period
Totalt antal bostäder i produktion, vid periodens slut
 4,539 4,702
Portion of sold homes under production, at the end of the period
Andel sålda bostäder i produktion, vid periodens slut
 69% 76%
Number of repurchased homes on our balance sheet, at the end of the period
Antal återköpta bostäder i egen balansräkning, vid periodens slut
 105 144
Rentals Hyresrätter
Number of production-started homes during the period
Antal under perioden produktionsstartade bostäder
 526 676
Number of sold homes during the period
Antal under perioden sålda bostäder
 66 91
Number converted to tenant-owner associations during the period
Antal under perioden konverterade till bostadsrätter
 203 426
Total number of homes in production, at the end of the period
Totalt antal bostäder i produktion, vid periodens slut
 1,179 2) 922 2)

1) Includes 203 (426) homes which have been converted from rentals

2) Of which 866 (638), corresponding to 73 percent (69), are contracted to be sold upon completion

Timepoint for completion of ongoing own housing development projects 1)

1) Refers to Swedish tenant-owner associations and own single homes, Norwegian condominiums and share housing and Finnish residential limited companies.

According to the trade organization Prognoscentret, Swedish homebuyers awarded Peab the highest level of customer satisfaction after two years of living in their homes, known in the trade as the warranty phase. The survey for 2022 also showed that Peab Bostad is ranked far above the industry benchmark in the quality factor reliability and at the top in the quality factors home, environmental adaptation and price worthiness during the warranty phase.

Property Development

Property Development refines and develops locations and land for commercial building. 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 or encompass long-term development of an area. Property Development also develops various public buildings independent of whether the investor is public, private or an association (as in sports facilities for instance).

During the first half of the year the leasing market for office buildings in Nordic big city regions was relatively stable but it weakened due to uncertainty on the market during the second half of the year. The trend continues to head towards more flexible offices that are a place where people meet and exchange ideas. At the same time part of the market continues to want more traditional office space. Rent levels have more or less remained on the same level as in 2020.

During the year several property development projects were started up and concluded. Among them, Baldershallen in Sundsvall was completed and 14,000 m2 new and renovated sports areas were turned over to Fastighets AB Balder. In central Bankeryd Peab is developing a Group Home for the Disabled of 420 m2 for Humana. Peab and Annehem Fastigheter signed a contract with Sundsvall Logistics Park to acquire about 58,000 m2 of land in Sundsvall Logistics Park. Work on developing the property is permeated with an environmental and sustainability perspective and follows the sustainability program CEEQUAL. Peab and Annehem Fastigheter plan to further develop the area and will maintain a high environmental profile and environmentally certify their projects. In Lund we acquired land to build a 9,000 m2 office building on and in Malmö we acquired 20,000 m2 for logistics purposes.

Furthermore Peab continues to develop property in Swedish and Norwegian mountainside regions with SkiStar where we jointly own properties together with the company Skiab Invest AB. Work on Sadelbyn 7 in Åre with 42 apartments has continued over the year and in Lindvallen 20 apartments have been started on in Timmerbyn.

Net sales and profit

During 2022 net sales were SEK 494 million (521) and operating profit was SEK 187 million (231). Capital gains from property divestitures amounted to SEK 85 million (218). The year included divestment of a logistic facility in Södertälje to Annehem Fastigheter and a sports arena in Sundsvall was sold to Balder. The previous year included the divestiture of office buildings in Helsingborg and Solna to Annehem Fastigheter. Our partially owned companies continue to develop well and profit contributions from partially owned companies increased and amounted to SEK 134 million compare to SEK 92 million last year.

Capital employed was SEK 4,585 million (4,265) at the end of 2022. A large part of the capital employed is shares in partially owned companies and loans to partially owned companies.

The table below presents the ongoing property projects per December 31, 2022. During the year Peab made the decision to invest SEK 101 million in a new office building in Jönköping. The project is expected to be completed during the fourth quarter 2023.

Property projects

Type of project Location Kontor Rentable area in m2 Degree rented, % Recognized value, MSEK Total investment at completion, MSEK Timepoint of completion
Level of completion, %
Typ av projekt Ort Uthyrningsbar
yta, m2		 Uthyrningsgrad, % Bokfört värde, Mkr Beslutad investering, Mkr Tidpunkt färdigställande
Färdigställande-
grad, %
Office building Kontor Malmö Malmö 7,400 55 223 331 Q1-2023 67
Office building Kontor Jönköping Jönköping 3,200 100 27 101 Q4-2023 26
Office building Kontor Gothenburg Göteborg 13,100 0 239 535 Q3-2024 45
Total Summa 489

Significant joint ventures

Peab’s significant joint venture companies Fastighets AB Centur, Fastighets AB ML4, Point Hyllie Holding AB, Skiab Invest AB and Tornet Bostadsproduktion 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. Regular 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 affect booked values in the 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
Geography: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties December 31, 2022 1): SEK 7,872 million (7,497)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 653 million (573)
Major ongoing projects: Gjuteriet Varvsstaden, Malmö, renovation of around 4,600 m2 (tenant Oatly) and renovation of Snickeriet of around 2,500 m2 (tenant Lindahls)

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
Geography: Lund
Recognized value on properties December 31, 2022: SEK 1,940 million (1,991)
Major ongoing projects: No major ongoing projects

Point Hyllie Holding AB

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
Geography: Hyllie, Malmö
Recognized value on properties December 31, 2022: SEK 1,403 million (1,385)
Major ongoing projects: No major ongoing projects

Skiab Invest AB

Develop, own and manage commercial property and housing in the Scandinavian mountains.

Peab’s share: 50 percent
Partner: SkiStar
Geography: Scandinavian mountains
Recognized value on properties December 31, 2022 1): SEK 2,526 million (2,093)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 56 million (16)
Major ongoing projects: Sadelbyn 7 with 42 tenant-owner apartments in Åre and 20 tenant-owner apartments in Timmerbyn, Lindvallen in Sälen

Tornet Bostads­produktion AB

Develop, own and manage attractive and environmentally friendly rentals in larger cities in Sweden.

Peab’s share: 33 percent
Partner: Folksam and Balder
Geography: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties December 31, 2022 1): SEK 5,748 million (5,649)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 350 million (417)
Major ongoing projects: LP Parken, Gothenburg 11,200 m2 rentable area, Tallbohov, Järfälla 5,700 m2 rentable area, Tamarinden, Örebro 11,000 m2 rentable area, Rödängs Trädgårdar, Umeå 12,600 m2 rentable area and other apartment building projects in Helsingborg and Lund

1) Valued at market price in joint venture companies. The market prices on properties that affect the recognized values in the joint venture companies are not included in Peab’s accounts.

Key ratios 2022 significant joint ventures 1)

MSEK Fastighets AB Centur Fastighets AB ML4 Point Hyllie Holding AB Skiab Invest AB Tornet Bostadsproduktion AB
Mkr Fastighets AB Centur Fastighets AB ML4 Point Hyllie Holding AB Skiab Invest AB Tornet Bostadsproduktion AB
Net sales Nettoomsättning 428 134 85 119 232
Profit for the year Årets resultat 315 25 4 114 -107
Total assets Balansomslutning 8,036 2,214 1,428 2,632 6,070
– of which recognized value of properties – varav bokfört värde fastigheter 7,872 1,940 1,403 2,526 5,748
Peab’s portion of unrecognized fair value exclusive tax Peabs del av oredovisade verkliga värden exklusive skatt 653 56 350

1) Refers to the recognized value of joint venture companies for January – December 2022 and per December 31, 2022. Since Fastighets AB Centur, Skiab Invest AB 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.