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
July – September 2022
Net sales for the third quarter 2022 in Project Development amounted to SEK 2,234 million (2,741). The decrease is related to Housing Development. Operating profit amounted to SEK 265 million (326).
January – September 2022
Net sales for the period January-September 2022 increased by five percent to SEK 6,675 million (6,380). The increase is attributable to Property Development. Operating profit improved to SEK 818 million (791) and the operating margin was 12.3 percent (12.4).
Capital employed in Project Development at the end of the period amounted to SEK 14,173 million (13,685). The increase primarily refers to higher investments in project and development property.
Capital employed
| MSEK | 30 Sep 2022 | 30 Sep 2021 | Dec 31 2021 | |
| Mkr | 30 sep 2022 | 30 sep 2021 | 31 dec 2021 | |
| Operations property | Driftsfastigheter | 55 | 65 | 52 |
| Investment property | Förvaltningsfastigheter | 36 | 48 | 36 |
| Project and development property | Projekt- och exploateringsfastigheter | 11,545 | 9,513 | 10,628 |
| of which housing development rights | varav bostadsbyggrätter | 6,669 | 5,251 | 6,629 |
| of which commercial development rights | varav kommersiella byggrätter | 710 | 586 | 613 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 1,971 | 1,660 | 1,549 |
| of which ongoing rental projects | varav pågående hyresrättsprojekt | 1,246 | 628 | 727 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 447 | 533 | 483 |
| of which completed property | varav färdigställda fastigheter | 129 | 307 | 123 |
| of which other | varav övrigt | 373 | 548 | 504 |
| Participation in joint ventures | Andelar i joint ventures | 2,581 | 2,401 | 2,371 |
| Loans to joint ventures | Utlåning till joint ventures | 1,285 | 1,197 | 1,177 |
| Working capital and other | Rörelsekapital och övrigt | -1,329 | 461 | -741 |
| Total | Summa | 14,173 | 13,685 | 13,523 |
| of which Property Development | varav Fastighetsutveckling | 4,415 | 4,261 | 4,265 |
| of which Housing Development | varav Bostadsutveckling | 9,758 | 9,424 | 9,258 |
Key ratios
| Jul-Sep 2022 | Jul-Sep 2021 | Jan-Sep 2022 | Jan-Sep 2021 | Oct-Sep 2021/2022 | Jan-Dec 2021 | ||
| Jul-sep 2022 | Jul-sep 2021 | Jan-sep 2022 | Jan-sep 2021 | Okt-sep 2021/2022 | Jan-dec 2021 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 2,234 | 2,741 | 6,675 | 6,380 | 9,792 | 9,497 |
| of which Property Development | varav Fastighetsutveckling | 304 | 33 | 483 | 96 | 908 | 521 |
| of which Housing Development | varav Bostadsutveckling | 1,930 | 2,708 | 6,192 | 6,284 | 8,884 | 8,976 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 265 | 326 | 818 | 791 | 1,264 | 1,237 |
| of which Property Development | varav Fastighetsutveckling | 91 | 70 | 168 | 109 | 290 | 231 |
| of which Housing Development | varav Bostadsutveckling | 174 | 256 | 650 | 682 | 974 | 1,006 |
| Operating margin, % | Rörelsemarginal, % | 11.9 | 11.9 | 12.3 | 12.4 | 12.9 | 13.0 |
| of which Property Development | varav Fastighetsutveckling | 29.9 | 212.1 | 34.8 | 113.5 | 31.9 | 44.3 |
| of which Housing Development | varav Bostadsutveckling | 9.0 | 9.5 | 10.5 | 10.9 | 11.0 | 11.2 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 14,173 | 13,685 | 14,173 | 13,685 | 14,173 | 13,523 |
| Orders received, MSEK | Orderingång, Mkr | 1,541 | 1,893 | 5,566 | 6,896 | 8,651 | 9,981 |
| Order backlog, MSEK | Orderstock, Mkr | 6,505 | 6,045 | 6,505 | 6,045 | 6,505 | 6,555 |
| Operating cash flow, MSEK | Operativt kassaflöde, Mkr | 55 | -202 | 397 | -479 | 1,125 | 249 |
| Number of employees 1) | Antal anställda 1) | 250 | 243 | 250 | 243 | 250 | 242 |
1) Calculated on rolling 12 months
Housing Development
July – September 2022
Net sales for the third quarter 2022 amounted to SEK 1,930 million (2,708). Net sales have decreased in all countries. Operating profit amounted to SEK 174 million (256) and the operating margin was 9.0 percent (9.5).
The number of start-ups of our own developed homes during the third quarter were lower and amounted to 428 units (678), of which 56 (75) have been converted from rentals. The production starts are well spread geographically. The number of sold homes was 257 (747), of which approximately half were in Finland. During the third quarter the market has become more wary and fewer homes were sold, particularly in Sweden. In the third quarter production started on 42 (–) homes in rental apartment projects in Sweden.
January – September 2022
Net sales amounted to SEK 6,192 million (6,284). Net sales increased in Sweden but contracted in Norway and Finland. More ongoing housing projects along with a high level of homes sold during the periods has had a positive effect on net sales in Sweden. Operating profit amounted to SEK 650 million (682) and the operating margin was 10.5 percent (10.9). In the latest rolling 12 month period the operating margin amounted to 11.0 percent compared to 11.2 percent for the entire year of 2021.
The number of start-ups of our own developed homes amounted to 1,680 units (2,125), of which 203 (337) have been converted from rentals. The number of sold homes was 1,502 (2,201). At the beginning of the year sales were relatively good in all three countries but during the second and third quarters the market has become more wary and fewer homes were sold, particularly in Sweden. The number of own developed homes in production at the end of the period was 5,046 (4,487). The level of sold homes in production was 72 percent (77). The number of repurchased homes per September 30, 2022 was 103 (170) and most of them were in Finland. Production started on 342 homes (388) in rental apartment projects on our own balance sheet during the period. No homes in rental apartment projects have been sold and settled during the period (91). The number of homes in rental apartment projects in production was 1,061 (723) at the end of the period. Of these 932 are under contract to be sold upon completion.
The underlying need for housing is still considered good but higher construction costs and hikes in interest rates make it difficult to assess future developments. The dwindling rate of homes being sold is having a negative impact on the conditions for production-starts.
Capital employed has increased slightly at the end of the period and amounted to SEK 9,758 million (9,424).
Joint venture established for housing properties in Finland
Peab has established a joint venture with Slättö to develop and manage newly produced green housing developments in Finland. The partners share an ambition to develop the portfolio focusing on big cities in Finland. The initial acquisition consists of two housing projects in Vantaa and Turku with 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 when they will be divested to the joint venture.
Net sales
Development rights for housing
| Number, approx. | Sep 30 2022 | Sep 30 2021 | Dec 31 2021 | |
| Antal, cirka | 30 sep 2022 | 30 sep 2021 | 31 dec 2021 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 21,400 | 19,600 | 19,500 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,500 | 4,800 | 4,600 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 9,000 | 9,800 | 10,500 |
| Total | Totalt | 34,900 | 34,200 | 34,600 |
Own housing development construction
| Jul-Sep 2022 | Jul-Sep 2021 | Jan-Sep 2022 | Jan-Sep 2021 | Oct-Sep 2021/2022 | Jan-Dec 2021 | ||
| Jul-sep 2022 | Jul-sep 2021 | Jan-sep 2022 | Jan-sep 2021 | Okt-sep 2021/2022 | 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 | 428 1) | 678 1) | 1,680 2) | 2,125 2) | 2,575 | 3,020 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 257 | 747 | 1,502 | 2,201 | 2,348 | 3,047 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 5,046 | 4,487 | 5,046 | 4,487 | 5,046 | 4,702 |
| Portion of sold homes under production, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 72% | 77% | 72% | 77% | 72% | 76% |
| Number of repurchased homes on our balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 103 | 170 | 103 | 170 | 103 | 144 |
| Rentals | Hyresrätter | ||||||
| Number of production-started homes during the period | Antal under perioden produktionsstartade bostäder | 42 | – | 342 | 388 | 630 | 676 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | – | – | – | 91 | – | 91 |
| Number converted to tenant-owner associations during the period | Antal under perioden konverterade till bostadsrätter | 56 | 75 | 203 | 337 | 292 | 426 |
| Total number of homes in production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 1,061 | 723 | 1,061 3) | 723 3) | 1,061 | 922 |
1) Includes 56 (75) homes that have been converted from rentals
2) Includes 203 (337) homes that have been converted from rentals
3) Of which 932 (528), respectively 88 percent (73), are under contract to be sold upon completion
Time of completion of our own ongoing housing development projects 1)
1) Refers to Swedish tenant-owner associations and single homes, Norwegian condominiums and share housing and Finnish residential limited companies
Grandkvartalet Larvik
Larvik, Norway
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.
July – September 2022
During the third quarter 2022 net sales were SEK 304 million (33) and operating profit was SEK 91 million (70). Capital gains from property divestitures amounted to SEK 61 million (41). Profit contributions from partially owned companies amounted to SEK 38 million during the quarter compared to SEK 30 million in the same quarter last year.
January – September 2022
During the period January-September 2022 net sales were SEK 483 million (96) and operating profit was SEK 168 million (109). Capital gains from property divestitures amounted to SEK 83 million (67). The period included divestment of a logistic facility in Södertälje to Annehem Fastigheter and a sports arena was sold to Balder. Profit contributions from partially owned companies amounted to SEK 109 million compared to SEK 61 million in the same period last year.
Capital employed in Property Development was SEK 4,415 million (4,261) at the end of the third quarter 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 September 30, 2022. The property in Trollhättan is under contract to be sold to an external party during the fourth quarter 2022. During the period Peab made the decision to invest SEK 101 million in a new office in Jönköping. The project is expected to be completed during the fourth quarter 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, % | ||
| Warehouse building | Trollhättan | Lagerfastighet | Trollhättan | 3,900 | 100 | 47 | 51 | Q4-2022 | 92 |
| Office building | Malmö | Kontor | Malmö | 7,100 | 43 | 187 | 313 | Q1-2023 | 60 |
| Office building | Jönköping | Kontor | Jönköping | 3,200 | 100 | 10 | 101 | Q4-2023 | 10 |
| Office building | Gothenburg | Kontor | Göteborg | 13,100 | 0 | 185 | 533 | Q3-2024 | 35 |
| Other ongoing projects | Övriga pågående projekt | 18 | |||||||
| Total | Summa | 447 |
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 September 30, 2022 1): SEK 7,866 million (7,343)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 656 million (474)
Major ongoing projects: Varvsstaden, Malmö, renovation of Gjuteriet 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
Location: Lund
Recognized value on properties September 30, 2022: SEK 1,952 million (1,979)
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 September 30, 2022: SEK 1,397 million (1,369)
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 September 30, 2022 1): SEK 2,494 million (2,028)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 50 million (12)
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 September 30, 2022 1): SEK 6,142 million (5,358)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 432 million (375)
Major ongoing projects: LP Parken, Gothenburg 11,200 m2 rentable area , Tallbohov, Järfälla 10,500 m2 rentable area, Tamarinden, Örebro 11,000 m2 rentable area and other apartment building projects in Helsingborg, Lund and Umeå
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.