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 2023
Net sales in Project Development contracted in the quarter and amounted to SEK 856 million (2,234). The decrease is mostly attributable to Housing Development. Operating profit amounted to SEK 46 million (265) with an operating margin of 5.4 percent (11.9).
January – September 2023
Net sales in Project Development contracted during the period by 36 percent and were SEK 4,266 million (6,675). The decrease is attributable to both Housing Development and Property Development. Operating profit amounted to SEK 287 million (818) and operating margin amounted to 6.7 percent (12.3).
Capital employed in Project Development at the end of the period amounted to SEK 18,017 million (14,173). The increase primarily refers to higher investments in development rights, in rental apartment projects as well as an increase in capital tied up in unsold homes in our own housing developments.
Capital employed
| MSEK | Sep 30 2023 | Sep 30 2022 | Dec 31 2022 | |
| Mkr | 30 sep 2023 | 30 sep 2022 | 31 dec 2022 | |
| Operations property | Driftsfastigheter | 149 | 55 | 83 |
| Investment property | Förvaltningsfastigheter | 36 | 36 | 36 |
| Project and development property | Projekt- och exploateringsfastigheter | 15,068 | 11,545 | 12,943 |
| of which housing development rights | varav bostadsbyggrätter | 7,767 | 6,669 | 7,246 |
| of which commercial development rights | varav kommersiella byggrätter | 902 | 710 | 739 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 2,755 | 1,971 | 2,493 |
| of which ongoing rental projects | varav pågående hyresrättsprojekt | 1,752 | 1,246 | 1,422 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 393 | 447 | 462 |
| of which completed property | varav färdigställda fastigheter | 409 | 129 | 173 |
| of which other | varav övrigt | 1,090 | 373 | 408 |
| Participation in joint ventures | Andelar i joint ventures | 2,700 | 2,581 | 2,573 |
| Loans to joint ventures | Utlåning till joint ventures | 1,519 | 1,285 | 1,494 |
| Working capital and other | Rörelsekapital och övrigt | -1,455 | -1,329 | -1,497 |
| Total | Summa | 18,017 | 14,173 | 15,632 |
| of which Property Development | varav Fastighetsutveckling | 5,188 | 4,415 | 4,585 |
| of which Housing Development | varav Bostadsutveckling | 12,829 | 9,758 | 11,047 |
Key ratios
| Jul-Sep 2023 | Jul-Sep 2022 | Jan-Sep 2023 | Jan-Sep 2022 | Oct-Sep 2022/2023 | Jan-Dec 2022 | ||
| Jul-sep 2023 | Jul-sep 2022 | Jan-sep 2023 | Jan-sep 2022 | Okt-sep 2022/2023 | Jan-dec 2022 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 856 | 2,234 | 4,266 | 6,675 | 6,252 | 8,661 |
| of which Property Development | varav Fastighetsutveckling | 7 | 304 | 81 | 483 | 92 | 494 |
| of which Housing Development | varav Bostadsutveckling | 849 | 1,930 | 4,185 | 6,192 | 6,160 | 8,167 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 46 | 265 | 287 | 818 | 596 | 1,127 |
| of which Property Development | varav Fastighetsutveckling | 21 | 91 | 44 | 168 | 63 | 187 |
| of which Housing Development | varav Bostadsutveckling | 25 | 174 | 243 | 650 | 533 | 940 |
| Operating margin, % | Rörelsemarginal, % | 5.4 | 11.9 | 6.7 | 12.3 | 9.5 | 13.0 |
| of which Property Development | varav Fastighetsutveckling | 300.0 | 29.9 | 54.3 | 34.8 | 68.5 | 37.9 |
| of which Housing Development | varav Bostadsutveckling | 2.9 | 9.0 | 5.8 | 10.5 | 8.7 | 11.5 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 18,017 | 14,173 | 18,017 | 14,173 | 18,017 | 15,632 |
| Orders received, MSEK | Orderingång, Mkr | 84 | 1,541 | 287 | 5,566 | 740 | 6,019 |
| Order backlog, MSEK | Orderstock, Mkr | 2,362 | 6,505 | 2,362 | 6,505 | 2,362 | 5,447 |
| Operating cash flow, MSEK | Operativt kassaflöde, Mkr | -672 | 55 | -2,041 | 397 | -3,128 | -690 |
| Average number of employees | Medeltal antal anställda | 211 | 246 | 230 | 241 | 235 | 243 |
Housing Development
July – September 2023
The continued weak demand for homes contributed to fewer sold homes and production starts of our own housing developments during the third quarter 2023. Net sales contracted and amounted to SEK 849 million (1,930). Operating profit amounted to SEK 25 million (174) and the operating margin was 2.9 percent (9.0).
The market continues to be cautious regarding all kinds of housing as a result of rising interest rates, inflation and uncertain economies, which negatively affects the conditions for production starts. In total, the number of start-ups of our own developed homes amounted to 165 (470) during the third quarter. The production start-ups consisted of 40 (428) tenant-owner apartments/condominiums of which 40 (56) have been converted from rentals, and 125 (42) homes in rental apartments projects on our own balance sheet. The total number of sold homes were 153 (257), where all were tenant-owner apartments/condominiums. No homes in rental apartment projects were sold during the quarter and none were sold in the comparable quarter.
January – September 2023
The weak demand for homes in the entire Nordic region contributed to fewer sold homes and production starts of our own housing developments during the period. Net sales contracted and amounted to SEK 4,185 million (6,192) during the period. The decline stemmed from all our countries. Operating profit amounted to SEK 243 million (650) and the operating margin was 5.8 percent (10.5).
The market continues to be cautious regarding all kinds of housing as a result of rising interest rates, inflation and uncertain economies, which negatively affects the conditions for production starts. We noted a definite decline in Finland during the period. In total, the number of start-ups of our own developed homes amounted to 648 (2,022) during the period. Of the start-ups, 121 (1,680) were tenant-owner apartments/condominiums, where 36 (1,477) were new production and 85 (203) were conversions from previously started-up rental apartments, and 527 (342) were homes in rental apartment projects on our own balance sheet. The number of sold homes was 604 (1,502), of which 341 (1,502) were tenant-owner apartments/condominiums and 263 (–) were homes in rental apartments projects. Included in the homes sold in rental apartment 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 4,237 (6,107), of which 2,879 (5,046) were tenant-owner apartments/condominiums and 1,358 (1,061) were homes in rental apartment projects. The portion of sold tenant-owner apartments/condominiums in ongoing production amounted to 67 percent (72). The number of repurchased homes per September 30, 2023 was 301 (103) and they were mainly in Finland.
There is a substantial underlying need for homes throughout the Nordic region but higher interest rates and inflation make it harder to make calculations. We see continued interest in our own housing developments 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 compared to the same time in 2022 and amounted to SEK 12,829 million (9,758). The increase primarily refers to higher investments in development rights, construction of more rental apartment projects as well as an increase in capital tied up in unsold homes in our own housing developments.
Net sales
per geographic market, rolling 12 months
Development rights for housing
| Number, approx. | Sep 30 2023 | Sep 30 2022 | Dec 31 2022 | |
| Antal, cirka | 30 sep 2023 | 30 sep 2022 | 31 dec 2022 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 21,700 | 21,400 | 21,800 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,600 | 4,500 | 4,700 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 8,200 | 9,000 | 8,900 |
| Total | Totalt | 34,500 | 34,900 | 35,400 |
Own housing development construction
| Jul-Sep 2023 | Jul-Sep 2022 | Jan-Sep 2023 | Jan-Sep 2022 | Oct-Sep 2022/2023 | Jan-Dec 2022 | ||
| Jul-sep 2023 | Jul-sep 2022 | Jan-sep 2023 | Jan-sep 2022 | Okt-sep 2022/2023 | 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 | 40 1) | 428 1) | 121 2) | 1,680 2) | 251 | 1,810 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 153 | 257 | 341 | 1,502 | 482 | 1,643 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 2,879 | 5,046 | 2,879 | 5,046 | 2,879 | 4,539 |
| Portion of sold homes under production, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 67% | 72% | 67% | 72% | 67% | 69% |
| Number of repurchased homes on our balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 301 | 103 | 301 | 103 | 301 | 105 |
| Rentals | Hyresrätter | ||||||
| Number of production-started homes during the period | Antal under perioden produktionsstartade bostäder | 125 | 42 | 527 | 342 | 711 | 526 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | – | – | 263 | – | 329 | 66 |
| Number converted to tenant-owner associations during the period | Antal under perioden konverterade till bostadsrätter | 40 | 56 | 85 | 203 | 85 | 203 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 1,358 | 1,061 | 1,358 3) | 1,061 3) | 1,358 | 1,179 |
1) Includes 40 (56) homes that have been converted from rentals
2) Includes 85 (203) homes that have been converted from rentals
3) Of which 603 (932), respectively 44 percent (88), 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
Brf Varvsporten
Malmö
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 2023
During the third quarter net sales were SEK 7 million (304) and operating profit was SEK 21 million (91). There were no property divestitures during the quarter. During the third quarter of the previous year, capital gains from property divestitures amounted to SEK 61 million. Profit contributions from partly owned companies amounted to SEK 27 million during the quarter compared to SEK 38 million in the same quarter last year. The reduction is mainly due to higher interest costs in the partly owned companies.
January – September 2023
During the period January-September net sales were SEK 81 million (483) and operating profit was SEK 44 million (168). Capital gains from property divestitures amounted to SEK 8 million (83). The comparable period included, among others, divestment of a logistic facility in Södertälje to Annehem Fastigheter. Profit contributions from partly owned companies contracted and amounted to SEK 70 million compared to SEK 109 million in the same period last year. The reduction is mainly due to higher interest costs in the partly owned companies.
Capital employed in Property Development was SEK 5,188 million (4,415) at the end of the third quarter 2023. A large part of the capital employed is shares in partly owned companies and loans to partly owned companies.
The table below presents the ongoing property projects per September 30, 2023. We started production during the third quarter on a 23,900 m2 logistics facility in Södertälje. The property has been divested to an external party and will be turned over in the fourth quarter 2024. An office building in Malmö was completed during the second quarter 2023 with 7,400 m2 rentable space.
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 | 76 | 288 | 341 | Färdigställd | Completed | 84 |
| Office building | Jönköping | Kontor | Jönköping | 3,200 | 100 | 88 | 103 | Q4-2023 | Q4-2023 | 86 |
| Office building | Gothenburg | Kontor | Göteborg | 13,100 | 11 | 360 | 555 | Q3-2024 | Q3-2024 | 65 |
| Logistic facility | Södertälje | Logistikfastighet | Södertälje | 23,900 | 0 | 33 | 360 | Q4-2024 | Q4-2024 | 9 |
| Total | Summa | 769 |
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, 2023 1): SEK 7,991 million (7,866)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 613 million (656)
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 September 30, 2023: SEK 1,904 million (1,952)
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, 2023: SEK 1,388 million (1,397)
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, 2023 1): SEK 2,204 million (2,494)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 34 million (50)
Major ongoing projects: No major ongoing projects
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, 2023 1): SEK 6,248 million (6,142)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 421 million (432)
Major ongoing projects: 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 time point when the market valuations take place can differ between the companies. The market prices on properties that affect the recognized values in the joint venture companies are not included in Peab’s accounts.