Business area Project Development

Business area Project Development, which comprises Housing Development and Property Development, creates sustainable and vibrant urban environments with both residential and commercial 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 projects or in collaboration with other partners in joint ventures.

Housing Development develops all kinds of housing such as apartment buildings in tenancy ownership, ownership and rental form as well as single homes. Operations in Property Development revolve around the acquisition, development, maintenance and management as well as the divestiture of commercial property.

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 bolster business and profit generation.

Net sales and profit

October – December 2020

Net sales for the fourth quarter 2020 in business area Project Development decreased to SEK 1,804 million (2,684). The decrease is primarily due to lower net sales in Housing Development. Operating profit was SEK 1,195 million (278), of which the effect of distributing Annehem Fastigheter was SEK 896 million.

January – December 2020

Net sales for the year 2020 in business area Project Development decreased to SEK 7,500 million (9,125). The decrease is primarily due to lower net sales in Housing Development. Operating profit was SEK 1,669 million (1,015), of which the effect of distributing Annehem Fastigheter was SEK 896 million. Last year included an income contribution of SEK 170 million from the divestiture of property in the partially owned company Acturum.

Capital employed in Project Development has decreased and amounted to SEK 12,189 million (16,679) at the end of the year. Capital employed contracted in Housing Development as a consequence of more homes being sold than production started. Annehem Fastigheter was included by SEK 1,927 million in Property Development at the end of last year.

Brf Brygghusen

Huddinge

Capital employed

MSEK Dec 31
2020
Dec 31
2019
Mkr 31 dec
2020
31 dec
2019
Operations property Driftsfastigheter 161 1,226
Investment property Förvaltningsfastigheter 112 500
Project and development property
Projekt- och exploateringsfastigheter
9,060 11,850
of which housing development rights varav bostadsbyggrätter 4,819 5,674
of which commercial development rights varav kommersiella byggrätter 585 556
of which unsold part of ongoing housing projects varav osåld del av pågående bostadsprojekt 1,730 3,520
of which ongoing rental projects in Sweden
varav pågående hyresrättsprojekt i Sverige
1,100 846
of which ongoing commercial projects
varav pågående kommersiella projekt
226 445
of which completed property varav färdigställda fastigheter 311 391
of which other varav övrigt 289 418
Participation in joint ventures Andelar i joint ventures 1,873 2,019
Loans to joint ventures Utlåning till joint ventures 1,213 1,106
Working capital and other Rörelsekapital och övrigt -230 -22
Total Summa 12,189 16,679

Key ratios

Oct-Dec
2020
Oct-Dec
2019
Jan-Dec
2020
Jan-Dec
2019
Okt-dec
2020
Okt-dec
2019
Jan-dec
2020
Jan-dec
2019
Net sales, MSEK Nettoomsättning, Mkr 1,804 2,684 7,500 9,125
of which Property Development varav Fastighetsutveckling 71 179 375 786
of which Housing Development varav Bostadsutveckling 1,733 2,505 7,125 8,339
Operating profit, MSEK Rörelseresultat, Mkr 1,195 278 1,669 1,015
of which Property Development varav Fastighetsutveckling 961 28 982 300
of which Housing Development varav Bostadsutveckling 234 250 687 715
Operating margin, % Rörelsemarginal, % 66.2 10.4 22.3 11.1
of which Property Development varav Fastighetsutveckling 1,353.5 15.6 261.9 38.2
of which Housing Development varav Bostadsutveckling 13.5 10.0 9.6 8.6
Capital employed at the end of the period, MSEK
Sysselsatt kapital vid periodens utgång, Mkr
12,189 16,679 12,189 16,679
Orders received, MSEK Orderingång, Mkr 2,211 1,480 6,940 6,164
Order backlog, MSEK Orderstock, Mkr 5,151 5,027 5,151 5,027
Number of employees at the end of the period
Antal anställda vid periodens utgång
248 343 248 343

Housing Development

October – December 2020

Net sales decreased by 31 percent and amounted to SEK 1,733 million (2,505). The reduction is due to lower net sales in Sweden because of fewer ongoing housing projects compared to last year. Operating profit decreased to SEK 234 million (250) but the operating margin was 13.5 percent (10.0). Operating profit included positive effects from the sales of tenancy projects.

The number of start-ups of our own developed homes during the fourth quarter amounted to 679 units (538) with a good geographic spread. The number of sold homes was 664 (755). During the quarter sales were good in all three countries.

January – December 2020

Net sales decreased to SEK 7,125 million (8,339) and the reduction is mainly related to Sweden. Operating profit amounted to SEK 687 million (715) and the operating margin improved to 9.6 percent (8.6).

The number of start-​ups of our own developed homes amounted to 2,291 units (2,067), most of which were in Sweden. The start-ups have been spread geographically in Sweden, Norway and Finland. The number of sold homes was 2,682 (2,709). Sales of homes were high during the beginning of the year but slowed down when the corona pandemic broke out in the spring. During the summer and in the beginning of autumn demand for our housing has grown and all together sales have been good during the year in all three countries. The number of own developed homes in production at the end of the year was 4,014 (4,616). The level of sold homes in production was 73 percent (69). The number of repurchased homes per December 31, 2020 was 222 (253) of which two thirds were in Sweden, a few were in Norway and the rest in Finland. Peab develops and builds housing all over Sweden and in large parts of Norway and Finland. Our housing is primarily in the medium price segment and we see that there continues to be a considerable need for new production of housing in this range.

Capital employed has decreased at the end of the year compared to the corresponding point in time in 2019. The reduction is largely due to less capital tied up in unsold homes. In recent years we have completed more homes than production started which is why the amount has contracted. At the same time we have had a good rate of sales, which has reduced the amount of capital tied up in unsold homes. Capital employed also includes apartments for rent projects in Sweden that can be converted to tenant-​owned homes or be sold on the investment market.

In October 2020 Peab signed contracts for the sales of three tenancy projects and an assisted living facility, all in all 280 apartments, which will be on Peab’s balance sheet under construction and turned over during 2022-2024. The sales value is SEK 775 million. One apartment building project in Malmö and one in Partille are sold to Annehem Fastigheter, one apartment building project in Örebro is sold to a local actor and an assisted living facility is sold to SPP Fastigheter (publ). The projects will be recognized in profit/loss when they are turned over.

In December 2020 Peab signed contracts to sell four tenancy projects with a total of 312 apartments for a total value of SEK 824 million. The four projects consist of 84 apartments in Botkyrka, 79 apartments in Västerås, 108 apartments in Eskilstuna and 41 apartments in Trollhättan. The project Flottiljen in Botkyrka is sold to Niam, the project Poseidon in Västerås and Fristaden in Eskilstuna are sold to Podium Fastigheter AB and the project Traversen in Trollhättan is sold to Fortinova Fastigheter AB. All the tenancy projects will be on Peab’s own balance sheet under construction and will be recognized in profit/loss when turned over in 2023.

Development rights for housing

Number, approx. Dec 31
2020
Dec 31
2019
Antal, cirka 31 dec
2020
31 dec
2019
Development rights on our own balance sheet Byggrätter i egen balansräkning 18,900 20,300
Development rights via joint ventures Byggrätter via joint ventures 4,400 4,600
Development rights via options etc. Byggrätter via optioner m.m. 9,700 9,500
Total Totalt 33,000 34,400

Time of completion of our own developed ongoing housing 1)

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

Net sales

per geographic market, rolling 12 months

Own housing development construction

Oct-Dec
2020
Oct-Dec
2019
Jan-Dec
2020
Jan-Dec
2019
Okt-dec
2020
Okt-dec
2019
Jan-dec
2020
Jan-dec
2019
Number of housing starts during the period
Antal under perioden produktionsstartade bostäder
679 538 2,291 2,067
Number of sold homes during the period
Antal under perioden sålda bostäder
664 755 2,682 2,709
Total number of homes under construction, at the end of the period
Totalt antal bostäder i produktion, vid periodens slut
4,014 4,616 4,014 4,616
Share of sold homes under construction, at the end of the period
Andel sålda bostäder i produktion, vid periodens slut
73% 69% 73% 69%
Number of repurchased homes in the balance sheet, at the end of the period
Antal återköpta bostäder i egen balansräkning, vid periodens slut
222 253 222 253

Property development

Net sales and operating profit from operations are derived from acquisitions, development, maintaining 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.

October – December 2020

During the fourth quarter 2020 net sales were SEK 71 million (179) and operating profit was SEK 961 million (28), of which the effect of distributing Annehem Fastigheter was SEK 896 million.

January – December 2020

During the year 2020 net sales in Property Development were SEK 375 million (786) and operating profit was SEK 982 million (300), of which the effect of distributing Annehem Fastigheter was SEK 896 million. Some operations connected to air travel and tourism have been negatively affected by the corona pandemic which has lowered operating profit by SEK -64 million, of which SEK -44 million is related to Ängelholm Airport. The amount includes a SEK -20 million write-down of goodwill. Ängelholm Airport was divested during the year. During the year Property Development divested its 50 percent ownership in Nya Bara Utvecklings AB to Brinova with a positive effect on profit of SEK 30 million. Last year included an income contribution of SEK 170 million from the sales of property in the partially owned company Acturum.

At the end of the year capital employed in Property Development had contracted compared to the same period 2019 due to the transfer of fully developed properties to Annehem Fastigheter. At the same time last year Annehem Fastigheter was included by SEK 1,927 million.

Capital employed in Property Development includes as of 2020 primarily commercial development rights, ongoing property projects, shares in partially owned companies as well as loans to partially owned companies.

During the second quarter 2020 property containing offices and parking space in Solna was divested to Annehem Fastigheter and in the fourth quarter another property was divested in Oslo. Peab has signed a contract with Annehem Fastigheter to divest two more property projects located in Solna and Helsingborg respectively during 2021. The table below presents the larger ongoing property projects per December 31, 2020.

Ongoing property projects

Type of project Location 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 Helsingborg Kontor Helsingborg 2,900 88 92 106 Q2-2021 87
Office building Solna Kontor Solna 4,300 89 111 194 Q3-2021 57
Tennis hall Sundsvall Tennishall Sundsvall 14,700 100 78 212 Q2-2022 37
Total Summa 281
of which operations property varav driftsfastigheter 92
of which project and development property varav projekt- och exploateringsfastigheter 189

Significant joint ventures

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 of properties December 31, 2020: SEK 1,356 million (1,279)
Major ongoing projects: No major ongoing projects

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