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 2023
Net sales in Project Development contracted in the quarter and amounted to SEK 1,456 million (1,986). The decrease is attributable to Housing Development. Operating profit amounted to SEK 17 million (309) with an operating margin of 1.2 percent (15.6).
January – December 2023
Net sales in Project Development contracted during the year by 34 percent and were SEK 5,722 million (8,661). The reduction was due to the weak demand for housing throughout the Nordic region, which affected net sales in Housing Development. Operating profit amounted to SEK 304 million (1,127) and operating margin amounted to 5.3 percent (13.0).
Capital employed in Project Development at the end of the year amounted to SEK 18,093 million (15,632). The increase primarily refers to higher investments in development rights, in rental apartment projects and in unsold homes in our own housing developments.
Capital employed
| MSEK | Dec 31 2023 | Dec 31 2022 | |
| Mkr | 31 dec 2023 | 31 dec 2022 | |
| Operations property | Driftsfastigheter | 146 | 83 |
| Investment property | Förvaltningsfastigheter | 36 | 36 |
| Project and development property | Projekt- och exploateringsfastigheter | 14,603 | 12,943 |
| of which housing development rights | varav bostadsbyggrätter | 7,981 | 7,246 |
| of which commercial development rights | varav kommersiella byggrätter | 901 | 739 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 2,461 | 2,493 |
| of which ongoing rental projects | varav pågående hyresrättsprojekt | 1,712 | 1,422 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 489 | 462 |
| of which completed property | varav färdigställda fastigheter | 165 | 173 |
| of which other | varav övrigt | 894 | 408 |
| Participation in joint ventures | Andelar i joint ventures | 2,820 | 2,573 |
| Loans to joint ventures | Utlåning till joint ventures | 1,498 | 1,494 |
| Working capital and other | Rörelsekapital och övrigt | -1,010 | -1,497 |
| Total | Summa | 18,093 | 15,632 |
| of which Property Development | varav Fastighetsutveckling | 5,034 | 4,585 |
| of which Housing Development | varav Bostadsutveckling | 13,059 | 11,047 |
Key ratios
| Oct-Dec 2023 | Oct-Dec 2022 | Jan-Dec 2023 | Jan-Dec 2022 | ||
| Okt-dec 2023 | Okt-dec 2022 | Jan-dec 2023 | Jan-dec 2022 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 1,456 | 1,986 | 5,722 | 8,661 |
| of which Property Development | varav Fastighetsutveckling | 453 | 11 | 534 | 494 |
| of which Housing Development | varav Bostadsutveckling | 1,003 | 1,975 | 5,188 | 8,167 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 17 | 309 | 304 | 1,127 |
| of which Property Development | varav Fastighetsutveckling | 63 | 19 | 107 | 187 |
| of which Housing Development | varav Bostadsutveckling | -46 | 290 | 197 | 940 |
| Operating margin, % | Rörelsemarginal, % | 1.2 | 15.6 | 5.3 | 13.0 |
| of which Property Development | varav Fastighetsutveckling | 13.9 | 172.7 | 20.0 | 37.9 |
| of which Housing Development | varav Bostadsutveckling | -4.6 | 14.7 | 3.8 | 11.5 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 18,093 | 15,632 | 18,093 | 15,632 |
| Orders received, MSEK | Orderingång, Mkr | -151 | 453 | 136 | 6,019 |
| Order backlog, MSEK | Orderstock, Mkr | 1,620 | 5,447 | 1,620 | 5,447 |
| Operating cash flow, MSEK | Operativt kassaflöde, Mkr | -213 | -1,087 | -2,254 | -690 |
| Average number of employees | Medeltal antal anställda | 199 | 248 | 222 | 243 |
Housing Development
October – December 2023
The continued weak demand for homes contributed to fewer sold homes and production starts of our own housing developments during the fourth quarter. Net sales contracted and amounted to SEK 1,003 million (1,975). Divestment of rental apartment projects affected net sales positively. Operating profit amounted to SEK -46 million (290) and the operating margin was -4.6 percent (14.7). The lower level of activity in our own ongoing housing developments contributed to the lower operating profit. Capital gains from divestment of rental apartment projects had a marginal effect on operating profit for the quarter.
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 79 (314) during the fourth quarter. Homes in rental apartment projects on our own balance sheet made up 79 (184) of these start-ups. During the corresponding quarter last year 130 tenant-owner apartments/condominiums were production started. The total number of sold homes were 330 (207), of which 201 (141) were tenant-owner apartments/condominiums and 129 (66) were homes in rental apartments projects.
January – December 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 year. Net sales contracted and amounted to SEK 5,188 million (8,167) during the year. The decline stemmed from all our countries. Operating profit amounted to SEK 197 million (940) and the operating margin was 3.8 percent (11.5).
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 year. In total, the number of start-ups of our own developed homes amounted to 727 (2,336). Of the start-ups, 121 (1,810) were tenant-owner apartments/condominiums where 36 (1,607) were new production and 85 (203) were conversions from previously started-up rental apartments, and 606 (526) were homes in rental apartment projects on our own balance sheet. Total number of sold homes was 934 (1,709), of which 542 (1,643) were tenant-owner apartments/condominiums and 392 (66) were homes in rental apartments projects.
The total number of own developed homes in production at the end of the year was 3,694 (5,718), of which 2,392 (4,539) were tenant-owner apartments/condominiums and 1,302 (1,179) were homes in rental apartment projects. The portion of sold tenant-owner apartments/condominiums in ongoing production amounted to 68 percent (69). The number of repurchased homes per December 31, 2023 was 252 (105) 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 year compared to 2022 and amounted to SEK 13,059 million (11,047). The increase primarily refers to higher investments in development rights, construction of more rental apartment projects as well as an in unsold homes in our own housing developments.
In December Peab signed a contract to acquire Folksam’s shares in Sicklaön Invest AB that partly and wholly owns development rights in Kvarnholmen in Nacka. The acquisition was concluded in January 2024. Peab thereby increases its ownership from 50 to 100 percent. Peab has developed homes on Kvarnholmen since 2013. Sicklaön 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, 2023
Development rights for housing
| Number, approx. | Dec 31 2023 | Dec 31 2022 | |
| Antal, cirka | 31 dec 2023 | 31 dec 2022 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 22,000 | 21,800 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,700 | 4,700 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 7,400 | 8,900 |
| Total | Totalt | 34,100 | 35,400 |
Own housing development construction
| Oct-Dec 2023 | Oct-Dec 2022 | Jan-Dec 2023 | Jan-Dec 2022 | ||
| Okt-dec 2023 | Okt-dec 2022 | Jan-dec 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 | – | 130 | 121 1) | 1,810 1) |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 201 | 141 | 542 | 1,643 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 2,392 | 4,539 | 2,392 | 4,539 |
| Portion of sold homes under production, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 68% | 69% | 68% | 69% |
| Number of repurchased homes on our balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 252 | 105 | 252 | 105 |
| Rentals | Hyresrätter | ||||
| Number of production-started homes during the period | Antal under perioden produktionsstartade bostäder | 79 | 184 | 606 | 526 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 129 | 66 | 392 | 66 |
| Number converted to tenant-owner associations during the period | Antal under perioden konverterade till bostadsrätter | – | – | 85 | 203 |
| Total number of homes under production, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 1,302 | 1,179 | 1,302 2) | 1,179 2) |
1) Includes 85 (203) homes that have been converted from rentals
2) Of which 365 (866), respectively 28 percent (73), 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
Post Office Terminal
Stokke, 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.
October – December 2023
During the fourth quarter net sales were SEK 453 million (11) and operating profit was SEK 63 million (19). Net sales and operating profit were positively affected by the divestment of an office building in Malmö to Annehem Fastigheter. Capital gains from property divestitures totally amounted to SEK 87 million (2). Profit contributions from partly owned companies amounted to SEK 7 million during the quarter compared to SEK 25 million in the same quarter last year. The reduction is mainly due to higher interest costs in the partly owned companies.
January – December 2023
During the year net sales were SEK 534 million (494) and operating profit was SEK 107 million (187). Net sales and operating profit were positively affected by the divestment of an office building in Malmö to Annehem Fastigheter during the fourth quarter. Capital gains from property divestitures totally amounted to SEK 96 million (85). Profit contributions from partly owned companies contracted and amounted to SEK 77 million compared to SEK 134 million last year. The reduction is mainly due to higher interest costs in the partly owned companies.
Capital employed in Property Development was SEK 5,034 million (4,585) at the end of 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 December 31, 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.
In December Peab signed a contract to divest its 33.3 percent ownership in Tornet Bostadsproduktion to the 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.
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 | Jönköping | Kontor | Jönköping | 3,200 | 100 | 104 | 106 | Färdigställd | Completed | 98 |
| Office building | Gothenburg | Kontor | Göteborg | 13,100 | 11 | 410 | 557 | Q3-2024 | Q3-2024 | 74 |
| Logistic facility | Södertälje | Logistikfastighet | Södertälje | 23,900 | 0 | 77 | 372 | Q4-2024 | Q4-2024 | 21 |
| Total | Summa | 591 |
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, 2023 1): SEK 7,889 million (7,872)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 519 million (653)
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 December 31, 2023: SEK 1,890 million (1,940)
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, 2023: SEK 1,379 million (1,403)
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, 2023 1): SEK 2,149 million (2,526)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 40 million (56)
Major ongoing projects: No major ongoing projects
Tornet Bostadsproduktion AB
Develop, own and manage attractive and environmentally friendly rentals in larger cities in Sweden. In December Peab signed a contract to divest its 33.3 percent ownership in Tornet Bostadsproduktion to the other owners. The deal was closed in January 2024.
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, 2023 1): SEK 6,258 million (5,748)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 365 million (350)
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.