Business area Project Development
Business area Project Development, which comprises Housing Development and Property Development, develops 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.
Housing Development offers a broad range of housing forms including apartment buildings with tenant-owner apartments, condominiums and apartments for rent.
Property Development 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
April – June 2024
Net sales in Project Development contracted by 54 percent in the second quarter and amounted to SEK 720 million (1,569). The decrease is due to the continued weak demand for housing throughout the Nordic region, which has affected activity in Housing Development. Operating profit amounted to SEK -33 million (114) with an operating margin of -4.6 percent (7.3).
January – June 2024
Net sales in Project Development contracted during the first half-year and amounted to SEK 1,775 million (3,410). The decrease is attributable to Housing Development. Operating profit amounted to SEK 213 million (241) with an operating margin of 12.0 percent (7.1).
Capital employed in Project Development at the end of the period amounted to SEK 18,408 million (17,351). The increase is primarily due to investments in housing development rights.
Capital employed
| MSEK | Jun 30 2024 | Jun 30 2023 | Dec 31 2023 | |
| Mkr | 30 jun 2024 | 30 jun 2023 | 31 dec 2023 | |
| Operations property | Driftsfastigheter | 41 | 138 | 146 |
| Investment property | Förvaltningsfastigheter | 36 | 36 | 36 |
| Project and development property | Projekt- och exploateringsfastigheter | 15,524 | 14,499 | 14,603 |
| of which housing development rights | varav bostadsbyggrätter | 8,714 | 7,642 | 7,981 |
| of which commercial development rights | varav kommersiella byggrätter | 1,011 | 830 | 901 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 2,003 | 2,758 | 2,461 |
| of which ongoing rental projects | varav pågående hyresrättsprojekt | 1,066 | 1,502 | 1,712 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 761 | 323 | 489 |
| of which completed property | varav färdigställda fastigheter | 869 | 399 | 165 |
| of which other | varav övrigt | 1,100 | 1,045 | 894 |
| Participation in joint ventures | Andelar i joint ventures | 2,407 | 2,660 | 2,820 |
| Loans to joint ventures | Utlåning till joint ventures | 1,433 | 1,484 | 1,498 |
| Working capital and other | Rörelsekapital och övrigt | -1,033 | -1,466 | -1,010 |
| Total | Summa | 18,408 | 17,351 | 18,093 |
| of which Property Development | varav Fastighetsutveckling | 4,703 | 4,952 | 5,034 |
| of which Housing Development | varav Bostadsutveckling | 13,705 | 12,399 | 13,059 |
Key ratios
| Apr-Jun 2024 | Apr-Jun 2023 | Jan-Jun 2024 | Jan-Jun 2023 | Jul-Jun 2023/2024 | Jan-Dec 2023 | ||
| Apr-jun 2024 | Apr-jun 2023 | Jan-jun 2024 | Jan-jun 2023 | Jul-jun 2023/2024 | Jan-dec 2023 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 720 | 1,569 | 1,775 | 3,410 | 4,087 | 5,722 |
| of which Property Development | varav Fastighetsutveckling | 21 | 65 | 44 | 74 | 504 | 534 |
| of which Housing Development | varav Bostadsutveckling | 699 | 1,504 | 1,731 | 3,336 | 3,583 | 5,188 |
| Operating profit, MSEK | Rörelseresultat, Mkr | -33 | 114 | 213 | 241 | 276 | 304 |
| of which Property Development | varav Fastighetsutveckling | 21 | 29 | 282 | 23 | 366 | 107 |
| of which Housing Development | varav Bostadsutveckling | -54 | 85 | -69 | 218 | -90 | 197 |
| Operating margin, % | Rörelsemarginal, % | -4.6 | 7.3 | 12.0 | 7.1 | 6.8 | 5.3 |
| of which Property Development | varav Fastighetsutveckling | 100.0 | 44.6 | 640.9 | 31.1 | 72.6 | 20.0 |
| of which Housing Development | varav Bostadsutveckling | -7.7 | 5.7 | -4.0 | 6.5 | -2.5 | 3.8 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 18,408 | 17,351 | 18,408 | 17,351 | 18,408 | 18,093 |
| Orders received, MSEK | Orderingång, Mkr | 13 | 60 | 640 | 203 | 573 | 136 |
| Order backlog, MSEK | Orderstock, Mkr | 1,213 | 3,080 | 1,213 | 3,080 | 1,213 | 1,620 |
| Operating cash flow, MSEK | Operativt kassaflöde, Mkr | -107 | -861 | 44 | -1,369 | -841 | -2,254 |
| Average number of employees | Medeltal antal anställda | 161 | 232 | 171 | 240 | 189 | 222 |
Housing Development
April – June 2024
Net sales decreased during the quarter and amounted to SEK 699 million (1,504). The decline is evident in all the countries we operate in. Operating profit amounted to SEK -54 million (85) and the operating margin was -7.7 percent (5.7). The negative operating profit is due to the fact that there have been no production starts during the quarter and that there are few housing projects in ongoing production.
Demand for newly produced homes with a long time before occupancy remains low and we did not start any new housing projects during the second quarter. Production started on 185 homes in rental apartment projects on our own balance sheet in the corresponding quarter last year. The number of sold homes was 136 (206), all of which were tenant-owner apartments/condominiums. Of a total of 206 homes sold in the second quarter 2023, 87 were tenant-owner apartments/condominiums and 119 were homes in rental apartment projects.
January – June 2024
The continued weak demand on the housing market throughout the Nordic region is clearly noticeable in Housing Development. Net sales decreased and amounted to SEK 1,731 million (3,336). Operating profit amounted to SEK -69 million (218) and the operating margin was -4.0 percent (6.5). The operating margin for the latest rolling 12 month period was -2.5 percent compared to 3.8 percent for the full year 2023.
Sales of our own housing developments remain at low levels but on a positive note we are selling at a steady pace and have noted some increased interest at the beginning of the year, mainly in Sweden’s major cities. During the period we started up three housing projects; one in Sweden, one in Norway and one in Finland. The total number of production start-ups of our own developed homes was 137 (483) during the period. All of these 137 (81) were tenant-owned apartments/condominiums. During the corresponding period last year there were also production start-ups of 402 homes in rental apartment projects on our own balance sheet. The total number of sold homes was 441 (451), of which 302 (188) were tenant-owner apartments/condominiums and 139 (263) were homes in rental apartments projects. The total number of homes in production was 2,366 (4,665), of which 1,504 (3,392) were tenant-owner apartments/condominiums and 862 (1,273) were homes in rental apartment projects. The portion of sold tenant-owner apartments/condominiums in ongoing production was 61 percent (67). The number of repurchased homes per June 30, 2024 was 266 (266) and they were mainly in Finland. There is a substantial underlying need for homes throughout the Nordic region but higher interest rates and the high cost of construction make it harder to make sound calculations. We see continued interest in our own housing developments but 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.
Falling inflation and expectations of lower interest rate levels in the future create better conditions for production starts of homes, even though recovery will take time. 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 13,705 million (12,399). The increase is mainly due to investments in development rights.
In December 2023 Peab signed a contract to acquire Folksam’s shares in Sicklaön Bygg Invest AB that partly and wholly owns development rights in Kvarnholmen in Nacka. The acquisition was concluded in January 2024 and Peab thereby increased its ownership from 50 to 100 percent. Peab has developed homes on Kvarnholmen since 2013. Sicklaön Bygg Invest AB has more than 270 zoning approved, wholly owned development rights for a gross area of 26,000 m2. In addition, the company owns 50 percent of the shares in Kvarnholmen Utveckling AB that has an ongoing zoning process for more than 120,000 m2 housing development rights. Half of them will be turned over to Peab.
Net sales
per geographic market, rolling 12 months
Development rights for housing
| Number, approx. | Jun 30 2024 | Jun 30 2023 | Dec 31 2023 | |
| Antal, cirka | 30 jun 2024 | 30 jun 2023 | 31 dec 2023 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 21,800 | 21,700 | 22,000 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,000 | 4,600 | 4,700 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 6,900 | 8,500 | 7,400 |
| Total | Totalt | 32,700 | 34,800 | 34,100 |
Own housing development construction
| Apr-Jun 2024 | Apr-Jun 2023 | Jan-Jun 2024 | Jan-Jun 2023 | Jul-Jun 2023/2024 | Jan-Dec 2023 | ||
| Apr-jun 2024 | Apr-jun 2023 | Jan-jun 2024 | Jan-jun 2023 | Jul-jun 2023/2024 | Jan-dec 2023 | ||
| 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 | – | – | 137 | 81 1) | 177 | 121 2) |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 136 | 87 | 302 | 188 | 656 | 542 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 1,504 | 3,392 | 1,504 | 3,392 | 1,504 | 2,392 |
| Portion of sold homes under production, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 61% | 67% | 61% | 67% | 61% | 68% |
| Number of repurchased homes on our balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 266 | 266 | 266 | 266 | 266 | 252 |
| Rentals | Hyresrätter | ||||||
| Number of production-started homes during the period | Antal under perioden produktionsstartade bostäder | – | 185 | – | 402 | 204 | 606 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | – | 119 | 139 | 263 | 268 | 392 |
| Number converted to tenant-owner associations during the period | Antal under perioden konverterade till bostadsrätter | – | – | – | 45 | 40 | 85 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 862 | 1,273 | 862 3) | 1,273 3) | 862 | 1,302 |
| Number of homes completed, at the end of the period | Antal färdigställda bostäder, vid periodens slut | 306 | – | 306 | – | 306 | – |
1) Includes 45 homes that have been converted from rentals
2) Includes 85 homes that have been converted from rentals
3) Of which 116 (603), respectively 13 percent (47), 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
Groundbreaking ceremony, Brf Havtornet
Tjörn
Property development
Net sales and operating profit from operations are derived from acquisitions, development, running and managing wholly owned property, shares in the result from partly owned companies as well as capital gains/losses from the divestiture of completed property and shares in partly owned companies.
April – June 2024
During the second quarter 2024 net sales were SEK 21 million (65) and operating profit was SEK 21 million (29). Capital gains from property divestitures amounted to SEK 17 million (7) in total. Among other things, an office building in Jönköping was divested in the quarter. Profit contributions from partly owned companies amounted to SEK 15 million compared to SEK 33 million in the same quarter last year.
January – June 2024
During the first half-year 2024 net sales were SEK 44 million (74) and operating profit was SEK 282 million (23). Capital gains from property divestitures amounted to SEK 275 million (8) in total, of which the divestiture of the shares in Tornet Bostadsproduktion contributed by SEK 220 million. Profit contributions from partly owned companies amounted to SEK 34 million compared to SEK 43 million in the same period last year.
At the end of the second quarter 2024 the capital employed in Property Development was SEK 4,703 million (4,952). A large part of the capital employed is shares in partly owned companies and loans to partly owned companies.
In December 2023 Peab signed a contract to divest its 33.3 percent ownership in Tornet Bostadsproduktion to the two other owners, Folksam and Fastighets AB Balder. Peab has been a part owner in Tornet Bostadsproduktion since 2009. The company owns and manages around 2,200 rental apartments and has some 650 rental apartments in production in a number of cities in Sweden. The deal was closed in January 2024, entailing capital gains of SEK 220 million.
The table below presents current property projects per June 30, 2024. The logistics property in Södertälje has been divested to an external party and is expected to be handed over during the fourth quarter 2024.
Current property projects
| Type of project | Location | Rentable area in m2 | Degree rented, % | Recognized value, MSEK | Adopted investment, MSEK | Completion time point | Completion level, % | |||
| Typ av projekt | Ort | Uthyrningsbar yta, m2 | Uthyrningsgrad, % | Bokfört värde, Mkr | Beslutad investering, Mkr | Tidpunkt färdigställande | Färdigställande-grad, % | |||
| Office building | Gothenburg | Kontor | Göteborg | 12,900 | 23 | 489 | 568 | Q3-2024 | Q3-2024 | 86 |
| Logistic facility | Södertälje | Logistikfastighet | Södertälje | 23,900 | − | 253 | 379 | Q4-2024 | Q4-2024 | 67 |
| Others | Övrigt | 19 | ||||||||
| Total | Summa | 761 |
Significant joint ventures
Peab’s significant joint venture companies Fastighets AB Centur, Fastighets AB ML4, Point Hyllie Holding AB and Skiab Invest 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 June 30, 2024 1): SEK 8,148 million (7,957)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 555 million (626)
Major ongoing projects: No major ongoing projects
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 June 30, 2024: SEK 1,868 million (1,918)
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
Geography: Hyllie, Malmö
Recognized value on properties June 30, 2024: SEK 1,361 million (1,396)
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 June 30, 2024 1): SEK 2,184 million (2,304)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 52 million (69)
Major ongoing projects: No major ongoing projects
1) Valued at market price in joint venture companies. The point in time when market valuations take place can differ between the companies. Market prices on properties that affect the recognized values in the joint venture companies are not included in Peab’s accounts.