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
October – December 2022
Net sales for the fourth quarter 2022 in Project Development decreased and amounted to SEK 1,986 million (3,117). The decrease is related to both Housing Development and Property Development. Operating profit amounted to SEK 309 million (446).
January – December 2022
Net sales for 2022 in Project Development decreased and amounted to SEK 8,661 million (9,497). The decrease is attributable to Housing Development. Operating profit amounted to SEK 1,127 million (1,237) and the operating margin was 13.0 percent (13.0).
Capital employed in Project Development at the end of the year amounted to SEK 15,632 million (13,523). The increase is primarily due to higher investments in project and development property.
Capital employed
| MSEK | Dec 31 2022 | Dec 31 2021 | |
| Mkr | 31 dec 2022 | 31 dec 2021 | |
| Operations property | Driftsfastigheter | 83 | 52 |
| Investment property | Förvaltningsfastigheter | 36 | 36 |
| Project and development property | Projekt- och exploateringsfastigheter | 12,943 | 10,628 |
| of which housing development rights | varav bostadsbyggrätter | 7,246 | 6,629 |
| of which commercial development rights | varav kommersiella byggrätter | 739 | 613 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 2,493 | 1,549 |
| of which ongoing rental projects | varav pågående hyresrättsprojekt | 1,422 | 727 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 462 | 483 |
| of which completed property | varav färdigställda fastigheter | 173 | 123 |
| of which other | varav övrigt | 408 | 504 |
| Participation in joint ventures | Andelar i joint ventures | 2,573 | 2,371 |
| Loans to joint ventures | Utlåning till joint ventures | 1,494 | 1,177 |
| Working capital and other | Rörelsekapital och övrigt | -1,497 | -741 |
| Total | Summa | 15,632 | 13,523 |
| of which Property Development | varav Fastighetsutveckling | 4,585 | 4,265 |
| of which Housing Development | varav Bostadsutveckling | 11,047 | 9,258 |
Key ratios
| Oct-Dec 2022 | Oct-Dec 2021 | Jan-Dec 2022 | Jan-Dec 2021 | ||
| Okt-dec 2022 | Okt-dec 2021 | Jan-dec 2022 | Jan-dec 2021 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 1,986 | 3,117 | 8,661 | 9,497 |
| of which Property Development | varav Fastighetsutveckling | 11 | 425 | 494 | 521 |
| of which Housing Development | varav Bostadsutveckling | 1,975 | 2,692 | 8,167 | 8,976 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 309 | 446 | 1,127 | 1,237 |
| of which Property Development | varav Fastighetsutveckling | 19 | 122 | 187 | 231 |
| of which Housing Development | varav Bostadsutveckling | 290 | 324 | 940 | 1,006 |
| Operating margin, % | Rörelsemarginal, % | 15.6 | 14.3 | 13.0 | 13.0 |
| of which Property Development | varav Fastighetsutveckling | 172.7 | 28.7 | 37.9 | 44.3 |
| of which Housing Development | varav Bostadsutveckling | 14.7 | 12.0 | 11.5 | 11.2 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 15,632 | 13,523 | 15,632 | 13,523 |
| Orders received, MSEK | Orderingång, Mkr | 453 | 3,085 | 6,019 | 9,981 |
| Order backlog, MSEK | Orderstock, Mkr | 5,447 | 6,555 | 5,447 | 6,555 |
| Operating cash flow, MSEK | Operativt kassaflöde, Mkr | -1,087 | 728 | -690 | 249 |
| Number of employees 1) | Antal anställda 1) | 255 | 242 | 255 | 242 |
1) Calculated on rolling 12 months
Housing Development
October – December 2022
Net sales for the fourth quarter 2022 amounted to SEK 1,975 million (2,692). Net sales have decreased in all countries. Operating profit amounted to SEK 290 million (324). The operating margin improved to 14.7 percent (12.0), which primarily stems from capital gains from property sales.
Demand for housing has declined in all countries as a result of higher interest rates and the uncertain economy, which has contributed to lower sales levels and fewer production starts. The number of start-ups of our own developed homes amounted to 130 units (895). The number of sold homes was 141 (846). In the fourth quarter production started on 184 (288) homes in rental apartment projects in Sweden and 66 (–) were sold.
January – December 2022
Net sales amounted to SEK 8,167 million (8,976). Net sales decreased in all countries. Operating profit amounted to SEK 940 million (1,006) and the operating margin was 11.5 percent (11.2).
The number of start-ups of our own developed homes during the year amounted to 1,810 units (3,020), of which 203 (426) have been converted from rentals. The number of sold homes was 1,643 (3,047). At the beginning of the year sales were relatively good in all three countries but in the second half of the year demand for housing has diminished. The number of own developed homes in production at the end of the year was 4,539 (4,702). The portion of sold homes in production was 69 percent (76). The number of repurchased homes per December 31, 2022 was 105 (144) and most of them are in Finland. Production started on 526 homes (676) in rental apartment projects on our own balance sheet during the year. The number of homes in rental apartment projects that have been sold and settled during the year amounted to 66 (91). The number of homes in rental apartment projects in production was 1,179 (922) at the end of the year. Of these 866 are under contract to be sold upon completion.
There is still a substantial underlying need for homes but rising interest rates and the uncertain economy reduce demand on the housing market for all kinds of homes. A slow rate of home sales has a negative effect on the conditions for production starts going forward.
Capital employed has increased at the end of the year and amounted to SEK 11,047 million (9,258). The increase is mainly explained by acquisitions of development rights, several ongoing apartments for rent projects and the unsold part of ongoing tenant-owner apartment projects.
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. | Dec 31 2022 | Dec 31 2021 | |
| Antal, cirka | 31 dec 2022 | 31 dec 2021 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 21,800 | 19,500 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,700 | 4,600 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 8,900 | 10,500 |
| Total | Totalt | 35,400 | 34,600 |
Own housing development construction
| Oct-Dec 2022 | Oct-Dec 2021 | Jan-Dec 2022 | Jan-Dec 2021 | ||
| Okt-dec 2022 | Okt-dec 2021 | Jan-dec 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 | 130 | 895 1) | 1,810 2) | 3,020 2) |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 141 | 846 | 1,643 | 3,047 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 4,539 | 4,702 | 4,539 | 4,702 |
| Portion of sold homes under production, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 69% | 76% | 69% | 76% |
| Number of repurchased homes on our balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 105 | 144 | 105 | 144 |
| Rentals | Hyresrätter | ||||
| Number of production-started homes during the period | Antal under perioden produktionsstartade bostäder | 184 | 288 | 526 | 676 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 66 | – | 66 | 91 |
| Number converted to tenant-owner associations during the period | Antal under perioden konverterade till bostadsrätter | – | 89 | 203 | 426 |
| Total number of homes in production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 1,179 | 922 | 1,179 3) | 922 3) |
1) Includes 89 homes that have been converted from rentals
2) Includes 203 (426) homes that have been converted from rentals
3) Of which 866 (638), respectively 73 percent (69), 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
Brf Bergslussen
Linköping
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.
October – December 2022
Net sales were SEK 11 million (425) and operating profit was SEK 19 million (122). During the quarter there have been no major real estate transactions. The previous year included the divestiture of an office building in Solna to Annehem Fastigheter. Capital gains from property divestitures amounted to SEK 2 million (151). Profit contributions from partially owned companies amounted to SEK 25 million (31).
January – December 2022
During 2022 net sales were SEK 494 million (521) and operating profit was SEK 187 million (231). Capital gains from property divestitures amounted to SEK 85 million (218). The year included divestment of a logistic facility in Södertälje to Annehem Fastigheter and a sports arena in Sundsvall was sold to Balder. The previous year included the divestiture of office buildings in Helsingborg and Solna to Annehem Fastigheter. Profit contributions from partially owned companies increased and amounted to SEK 134 million compare to SEK 92 million last year.
Capital employed was SEK 4,585 million (4,265) at the end of 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 December 31, 2022. During the year Peab made the decision to invest SEK 101 million in a new office building 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, % | ||
| Office building | Malmö | Kontor | Malmö | 7,400 | 55 | 223 | 331 | Q1-2023 | 67 |
| Office building | Jönköping | Kontor | Jönköping | 3,200 | 100 | 27 | 101 | Q4-2023 | 26 |
| Office building | Gothenburg | Kontor | Göteborg | 13,100 | 0 | 239 | 535 | Q3-2024 | 45 |
| Total | Summa | 489 |
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 December 31, 2022 1): SEK 7,872 million (7,497)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 653 million (573)
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 December 31, 2022: SEK 1,940 million (1,991)
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 December 31, 2022: SEK 1,403 million (1,385)
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 December 31, 2022 1): SEK 2,526 million (2,093)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 56 million (16)
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 December 31, 2022 1): SEK 5,748 million (5,649)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 350 million (417)
Major ongoing projects: LP Parken, Gothenburg 11,200 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.