Business area Project Development
Business area Project Development, which comprises Housing Development and Property Development, creates sustainable and vibrant urban environments with residential, commercial and public 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 companies or in collaboration with other partners in joint ventures. Peab’s primary ambition is to work with development projects on our own balance sheet. Collaboration with other partners via joint ventures may take place from time to time during a project. The goal is to create capital efficient developments with partners that boost the business and thereby profitability.
Housing Development develops all kinds of homes on the Nordic market such as apartment buildings in tenancy ownership, ownership and rental form as well as single homes.
Property Development processes and develops office buildings, premises and sometimes entire city boroughs in collaboration with municipalities and other partners. Operations are primarily concentrated to the big city areas throughout the Nordic region.
Net sales and profit
Net sales for the first quarter 2023 decreased in Project Development and amounted to SEK 1,841 million (2,464). The decrease is mostly attributable to Housing Development. Operating profit amounted to SEK 127 million (289) with an operating margin of 6.9 percent (11.7).
Capital employed in Project Development at the end of the period amounted to SEK 16,226 million (13,624). The increase primarily refers to higher investments in project and development property.
Capital employed
| MSEK | Mar 31 2023 | Mar 31 2022 | Dec 31 2022 | |
| Mkr | 31 mar 2023 | 31 mar 2022 | 31 dec 2022 | |
| Operations property | Driftsfastigheter | 116 | 53 | 83 |
| Investment property | Förvaltningsfastigheter | 36 | 36 | 36 |
| Project and development property | Projekt- och exploateringsfastigheter | 13,662 | 10,919 | 12,943 |
| of which housing development rights | varav bostadsbyggrätter | 7,293 | 6,489 | 7,246 |
| of which commercial development rights | varav kommersiella byggrätter | 770 | 558 | 739 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 2,532 | 1,954 | 2,493 |
| of which ongoing rental projects | varav pågående hyresrättsprojekt | 1,469 | 794 | 1,422 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 544 | 575 | 462 |
| of which completed property | varav färdigställda fastigheter | 178 | 124 | 173 |
| of which other | varav övrigt | 876 | 425 | 408 |
| Participation in joint ventures | Andelar i joint ventures | 2,543 | 2,442 | 2,573 |
| Loans to joint ventures | Utlåning till joint ventures | 1,452 | 1,193 | 1,494 |
| Working capital and other | Rörelsekapital och övrigt | -1,583 | -1,019 | -1,497 |
| Total | Summa | 16,226 | 13,624 | 15,632 |
| of which Property Development | varav Fastighetsutveckling | 4,712 | 4,312 | 4,585 |
| of which Housing Development | varav Bostadsutveckling | 11,514 | 9,312 | 11,047 |
Key ratios
| Jan-Mar 2023 | Jan-Mar 2022 | Apr 2022- Mar 2023 | Jan-Dec 2022 | ||
| Jan-mar 2023 | Jan-mar 2022 | Apr 2022- mar 2023 | Jan-dec 2022 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 1,841 | 2,464 | 8,038 | 8,661 |
| of which Property Development | varav Fastighetsutveckling | 9 | 59 | 444 | 494 |
| of which Housing Development | varav Bostadsutveckling | 1,832 | 2,405 | 7,594 | 8,167 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 127 | 289 | 965 | 1,127 |
| of which Property Development | varav Fastighetsutveckling | -6 | 34 | 147 | 187 |
| of which Housing Development | varav Bostadsutveckling | 133 | 255 | 818 | 940 |
| Operating margin, % | Rörelsemarginal, % | 6.9 | 11.7 | 12.0 | 13.0 |
| of which Property Development | varav Fastighetsutveckling | -66.7 | 57.6 | 33.1 | 37.9 |
| of which Housing Development | varav Bostadsutveckling | 7.3 | 10.6 | 10.8 | 11.5 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 16,226 | 13,624 | 16,226 | 15,632 |
| Orders received, MSEK | Orderingång, Mkr | 143 | 2,495 | 3,667 | 6,019 |
| Order backlog, MSEK | Orderstock, Mkr | 4,165 | 6,910 | 4,165 | 5,447 |
| Operating cash flow, MSEK | Operativt kassaflöde, Mkr | -508 | 342 | -1,540 | -690 |
| Average number of employees | Medeltal antal anställda | 249 | 236 | 256 | 243 |
Brf Traversen
Trollhättan
Housing Development
The weak demand for homes throughout the Nordic area contributed to fewer sold homes and production starts of our own housing developments during the first quarter 2023. Net sales decreased and amounted to SEK 1,832 million (2,405) and the decrease is related to all countries. Operating profit amounted to SEK 133 million (255) and the operating margin was 7.3 percent (10.6). The operating margin for the latest 12 month period was 10.8 percent compared to 11.5 percent for the entire year 2022.
The market continues to be cautious regarding all kinds of housing as a result of rising interest rates and uncertain economies, which negatively affects the conditions for production starts. We have noted a definite decline in Finland during the quarter. In total, the number of start-ups of our own developed homes amounted to 298 (724) during the first quarter, of which 81 (724) were tenant-owner apartments/condominiums, where 36 (577) were new production and 45 (147) were conversions from previously started-up rental apartments, and 217 (–) were homes in rental apartments projects on our own balance sheet. The number of sold homes was 245 (800), of which 101 (800) were tenant-owner apartments/condominiums and 144 (–) were homes in rental apartments projects. Included in the homes sold in rental apartments projects was a project with 60 homes in Malmö that was divested to Annehem Fastigheter.
The total number of own developed homes in production at the end of the period was 5,061 (5,606), of which 3,854 (4,831) were tenant-owner apartments/condominiums and 1,207 (775) were homes in rental apartments projects. The portion of sold tenant-owner apartments/condominiums in ongoing production amounted to 68 percent (77). The number of repurchased homes per March 31, 2023 was 238 (134) and they were mainly in Finland.
There is a substantial underlying need for homes throughout the Nordic area but higher interest rates and inflation make it harder to make ends meet in calculations. We see continued interest in our own developed homes but the high cost of construction, interest rate hikes and concern about the economy in general make it difficult to assess future developments, especially in projects with a long time before occupancy. As far as Peab is concerned, we have a well-dimensioned development rights portfolio in attractive locations and while we wait for the market to recover we are further developing and preparing projects for the future.
Capital employed increased at the end of the period and amounted to SEK 11,514 million (9,312). The increase is primarily due to more rental apartment projects on our own balance sheet and a higher portion of unsold homes in ongoing housing projects compared to end of the same period 2022.
Net sales
per geographic market, rolling 12 months
Development rights for housing
| Number, approx. | Mar 31 2023 | Mar 31 2022 | Dec 31 2022 | |
| Antal, cirka | 31 mar 2023 | 31 mar 2022 | 31 dec 2022 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 21,500 | 20,100 | 21,800 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,700 | 4,600 | 4,700 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 8,600 | 9,900 | 8,900 |
| Total | Totalt | 34,800 | 34,600 | 35,400 |
Own housing development construction
| Jan-Mar 2023 | Jan-Mar 2022 | Apr 2022- Mar 2023 | Jan-Dec 2022 | ||
| Jan-mar 2023 | Jan-mar 2022 | Apr 2022- mar 2023 | Jan-dec 2022 | ||
| 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 | 81 1) | 724 1) | 1,167 | 1,810 2) |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 101 | 800 | 944 | 1,643 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 3,854 | 4,831 | 3,854 | 4,539 |
| Portion of sold homes under production, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 68% | 77% | 68% | 69% |
| Number of repurchased homes on our balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 238 | 134 | 238 | 105 |
| Rentals | Hyresrätter | ||||
| Number of production-started homes during the period | Antal under perioden produktionsstartade bostäder | 217 | – | 743 | 526 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 144 | – | 210 | 66 |
| Number converted to tenant-owner associations during the period | Antal under perioden konverterade till bostadsrätter | 45 | 147 | 101 | 203 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 1,207 3) | 775 3) | 1,207 | 1,179 |
1) Includes 45 (147) homes that have been converted from rentals
2) Includes 203 homes that have been converted from rentals
3) Of which 722 (638), respectively 60 percent (82), are under contract to be sold upon completion
Time of completion of our own ongoing housing development projects
1) Refers to Swedish tenant-owner associations and single homes, Norwegian condominiums and share housing and Finnish residential limited companies
Bergsgård
Halmstad
Property development
Net sales and operating profit from operations are derived from acquisitions, development, running and managing wholly owned property, shares in profit/loss from partially owned companies as well as capital gains/losses from the divestiture of completed property and shares in partially owned companies.
During the first quarter 2023 net sales were SEK 9 million (59) and operating profit was SEK -6 million (34). Capital gains from property sales amounted to SEK 1 million (13). Profit contributions from partially owned companies was lower compared to the same quarter last year and amounted to SEK 10 million (33).
Capital employed in Property Development was SEK 4,712 million (4,312). Most of the capital employed consists of shares in partially owned companies and loans to partially owned companies.
The table below presents the ongoing property projects per March 31, 2023.
Ongoing property projects
| Type of project | Location | 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 | Malmö | Kontor | Malmö | 7,400 | 55 | 257 | 331 | Q2-2023 | 78 |
| Office building | Jönköping | Kontor | Jönköping | 3,200 | 100 | 50 | 103 | Q4-2023 | 49 |
| Office building | Gothenburg | Kontor | Göteborg | 13,100 | 4 | 287 | 535 | Q3-2024 | 54 |
| Total | Summa | 594 |
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
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties March 31, 2023 1): SEK 7,908 million (7,612)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 629 million (591)
Major ongoing projects: Varvsstaden, Malmö, 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
Location: Lund
Recognized value on properties March 31, 2023: SEK 1,929 million (1,964)
Major ongoing projects: No major ongoing projects
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 on properties March 31, 2023: SEK 1,399 million (1,388)
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
Location: Scandinavian mountains
Recognized value on properties March 31, 2023 1): SEK 2,491 million (2,249)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 63 million (27)
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
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties March 31, 2023 1): SEK 5,883 million (5,850)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 371 million (420)
Major ongoing projects: LP Parken, Gothenburg 6,500 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.