Ferd Real Estate – 2016 summarised
- Historically high return of NOK 770 million (35%) in 2016
- Very strong sales in residential development projects
- Purchase of 90.1 % of a ca. 26,000m2 mixed-use commercial property in Forus/Stavanger
- Approximately NOK 110 million invested in a residential development project in Sweden
Ferd Real Estate is an active real estate investor, involved both in real estate development and management, with a particular focus on the market segments of residential development and commercial property.
At the end of 2016, the equity value of the portfolio was NOK 2.95 billion. The portfolio generated a return on equity for 2016 of 35%.
With a high number of transactions, 2016 was a busy transaction year in the commercial property market, even though the transaction volume was lower than in 2015. It continues to be large regional differences in the commercial property market, where areas with many oil-related companies still experience higher office vacancy rates and stronger downward pressure on rental prices than other areas such as Oslo’s central business district. Towards the end of the year, rental prices flattened out in the office market in general, while there was an upward trend for office rental prices in central Oslo, partially due to the supply being limited by an increasing rate of office buildings being converted to residential use and a low level of new office construction.
With regard to the residential market, remaining low interest rates contributed to the level of demand for residential properties remaining high and this, combined with the limited supply of new and existing properties, led to strong price growth. Growth in residential real estate prices in Oslo was further strengthened in 2016 when more investors bought properties in new developments than in 2014 and 2015. In the beginning of 2017, the authorities introduced new measures to try to limit this trend. Residential real estate price growth was flat in regions with many oil-related businesses throughout 2016.
Ferd Real Estate has eight employees and is organised into the areas of development/projects, investment/finance, markets/rental and property management.
Residential real estate development portfolio
- Tiedemannsbyen, Ensjø:
The Tiedemannsbyen project has a development potential of approximately 1,600 residential units, and will be developed over a period of around 15 years. The first 660 units are being developed by Tiedemannsbyen DA, while Tiedemannsfabrikken AS will develop the next 350 units.
Tiedemannsbyen DA is owned 50/50 by Ferd Real Estate and Skanska Bolig, while Tiedemannsfabrikken AS is owned 50/50 by Ferd Real Estate and Selvaag Bolig. The remaining areas are 100% owned by Ferd Real Estate.
The 210-unit Petersborgkvartalet development, the first sales phase for which was launched in the spring of 2013, has now sold out, with the final units set to be handed over to buyers in 2017.
The 258-unit Utsiktskvartalet development, the first sales phase for which was launched in the autumn of 2015, has now nearly sold out, and construction has started. The units will be handed over to buyers in 2018/2019.
Nearly all 158 units in the first area (area F) of the Tiedemannsfabrikken development have now been sold, with the first sales phase for this area having been launched in the spring of 2016. Construction has started and the old Tiedemanns tobacco factory has now been demolished. The units will be handed over to buyers in 2018/2019.
Sales for the 222 units that form the second area (area E) of the Tiedemannsfabrikken development will be launched in the first half of 2017.
A total of 383 residential units were sold in Tiedemannsbyen in 2016 as compared to 115 in 2015.
Ferd Real Estate is developing a residential area in collaboration with Mestergruppen in Bråtejordet, adjacent to Strømmen station. The project will comprise approximately 400 townhouses/detached houses/apartments. The first sales phase was launched in the autumn of 2014 and construction work on the first 40 units started in the summer of 2015, with these 40 units set to be handed over to buyers in the first half of 2017.
In total 57 residential units were sold in Bråtejordet in 2016. This brings total sales to 93 by the start of 2017.
Commercial property portfolio
In 2016 Ferd Real Estate purchased 90.1% of a ca. 26,000m2 mixed-use commercial property, approximately 5,000m2 of which is office space and the remainder warehousing/workshop space. The property is located on Stokkamyrveien in Forus, next to the Kvadrat shopping centre. Virtually all of the property is rented out to Weatherford Norge AS on a long-term rental contract.
Ferd Real Estate has several ongoing office development projects:
Østensjøveien 16 is an office building of approximately 14,000m2 in Helsfyr/Bryn in Oslo, where the project development has been finalised and where the project is now being marketed to potential tenants.
The construction of an office building of approximately 20,000m2 in Asker to be called “Asker Tek” is underway and is progressing as planned. Indra Navia will be the largest tenant and will move into the premises once they are complete in the fourth quarter of 2017.
Ferd Real Estate has three sites intended for warehousing and logistics purposes at Gardermoen, Vestby and Mastemyr close to Oslo. In addition, Ferd Real Estate is a part owner of Frogn Næringspark AS, which has a 95,000m2 site intended for warehousing at Måna, immediately adjacent to the entrance to the Oslofjord tunnel. These sites represent total development potential of around 180,000m2.
With the exception of the remaining areas in the office building in Asker, which is under construction, and the office building at 16 Østensjøveien in Bryn/Helsfyr, virtually all available space was fully let at the start of 2017. Ferd Real Estate’s commercial rental portfolio amounted to approximately 125,000m2 at the end of 2016.
Financial Investment portfolio
Ferd Real Estate continually evaluates financial investment opportunities both in Norway and internationally where the underlying asset is real estate. We made financial investments totalling approximately NOK 110 million in a residential development project outside Stockholm in Sweden in 2016.
The Norwegian mainland economy is expected to grow moderately in 2017, with a small decrease in the overall unemployment rate, although with regional differences.
In the Greater Oslo Region, we think that the stable low unemployment rate, the prospect of interest rates remaining low and office rental prices rising will result in the continued high level of activity in both the residential and office markets. Although the residential real estate market achieved record growth in 2016, which has continued into the start of 2017, we think this rate of growth will slow as the year progresses among other reasons due to the new financing rules that have been introduced and the greater supply of residential units in the market. Any surprise increase in interest rates could potentially impact growth in a more negative direction.
The residential real estate market in regions with a high proportion of oil-related businesses is expected to improve in line with the unemployment rate having stabilised. The office rental market in these regions is, however, expected to continue to make weak progress as a consequence of overcapacity and the low number of new tenants for office space.