Return

At the end of 2022, the value of Ferd’s portfolio of real estate holdings was NOK 12.2 billion and the equity value of the portfolio was NOK 4.1 billion. Through our attention to detail, innovation and major commitment to sustainability, we are committed to creating value that is more than just a financial return. We respect history, understand the present and develop for the future.

The market

High inflation and rising interest rates had an increasing effect on the direct market for commercial real estate over the course of 2022, which resulted in a low level of transactions in the second half of the year. Rising interest rates and higher credit spreads caused an increase in the yield requirement for all segments of the commercial real estate market, and the estimated yield for prime office space at year-end was in the range of 3.75% to 4.0%. A historically strong rental market with higher rental prices and low vacancy rates went some way to balancing the effect of higher interest rates.

Areas of uncertainty in the macroeconomic outlook such as recession, energy prices, inflation, interest rates and geopolitical developments have all affected the commercial real estate market. There is continuing good demand for office premises in Oslo, particularly in the central business district, reflecting stable employment levels and low vacancy rates.

Ferd Real Estate is well-positioned with a range of attractive office premises that will benefit from growth in rental prices. We are not currently carrying out any office development projects, and are not planning to commit to any new projects before 2025 at the earliest.

2022 was a year of large fluctuations in real estate prices. For 2022 as a whole prices in Oslo increased by 1.8%, but this reflects a significant fall in prices in the second half of the year in response to increases in interest rates. In the peripheral areas of Follo, Asker, Bærum and Romerike prices fell by between 1.1% and 1.7% in 2022.

For Norway as a whole, 2022 saw a weak increase of 1.5%, with transactions taking on average 47 days.

New residential developments saw a very strong performance in terms of sales, prices and new sales campaign starts in the first half of 2022, but the number of new sales campaigns fell by almost half in the second half of the year. Prices of new residential properties in Oslo increased by only 1.5% in the second half of 2022, which is approximately in line with the prices of new residential properties for Norway as a whole. The increase was largely due to price adjustments for developments where the sales campaign had already started. New projects had little effect on prices. The stock of completed residential units was little changed in the second half of 2022, and very few new units have come onto the market. The units that were sold were to a large extent in developments that were launched some time ago. The low supply of new residential units in greater Oslo may trigger a significant price increase when the market recovers. This is likely to start in Oslo and spread over time to projects in the peripheral areas. However, interest costs are expected to stay high for some time to come, and this will tend to restrict the scope for price increases.

The downturn in the residential market had an impact on the pace of sales seen for Ferd Real Estate’s residential development projects that are currently on sale and under construction. Most of the residential projects in the Ferd Real Estate portfolio are under construction. Abnormally high increases in construction costs are putting pressure on profit margins for these projects. However, the development projects are located in robust markets and are not due to be ready for sale for some time.

Organisation

Ferd Real Estate has 19 employees who cover the key specialist areas of commercial and urban development, residential, investment/finance and accounting. The real estate team was strengthened by six new appointments in 2022. Ferd Real Estate expects to recruit more new members to the team in the time ahead.

Sustainability

Our ambition is for our work on sustainability to create added value for society, our customers and for the Ferd group. The key to success is to find the right balance between environmental, social and financial sustainability. Work on sustainability must be an integrated part of the entire value chain, and will influence Ferd Real Estate’s decisions on the choice of real estate for investment and how the company develops, constructs and manages its real estate investments. Our real estate investments will be developed, operated and managed with a view to creating added value for both users and society at the local level, while at the same time taking into account the key global challenges and solutions for sustainability.

Ferd Real Estate has focused on the renovation project at Hieronymus Heyerdahls gate 1 and the associated BREEAM In Use certification, with the ambition of achieving a Very Good rating for the finished renovated building. Work has started on a feasibility study and profitability assessment of solar panels on the roof of Blåswixvegen 5 in Lillehammer. Work is underway to optimise the technical plant at Brynsveien 14 in Oslo with a focus on improving both energy efficiency and the indoor climate for users. Construction work on the residential project at Humlehagen in Ensjø is using low-carbon concrete which leaves a significantly lower CO2 footprint than a normal benchmark project. It is hoped that this development will be certified as BREEAM Residential Very Good.

Work started in 2022 on a new Sustainability Strategy for Ferd Real Estate. Ferd Real Estate is committed to working systematically on social, environmental and financial sustainability throughout the entire value chain.

Residential real estate development portfolio

The units in the Tiedemannsfabrikken development have all been sold and were transferred to the purchasers in summer 2022.

Humlehagen (133 apartments and 9 townhouses), which is the last part of the Tiedemannsbyen project, had sold 103 the 142 units at the end of 2022.

Full planning permission for the Kleven Gård project was approved in March 2022, the architect has been appointed and the pre-project has been launched. The sales campaign for the project is planned to start in 2023.

Work started on the demolition of the existing brewery at Bergerveien in the second half of 2022.

At the Bråtejordet development, which is being carried out in partnership with Mestergruppen Real Estate (Ferd Real Estate 80% and Mestergruppen Real Estate 20%), 158 of the total 185 units in the project have been completed and transferred to the purchasers.

Commercial property portfolio

Extensive work on renovating and extending Hieronymus Heyerdahls gate 1 continued throughout 2022, and the rental process has been started.

The planning process for Trekanttomten (3KT) and Vitaminveien is well underway, and a start-up meeting has been held with the Agency for Planning and Building Services. Planning process programs have been submitted for both 3KT and Vitaminveien, and Ferd Real Estate has also signed a contract with FutureBuilt 2.0 for Vitaminveien.

Ferd Real Estate entered into an agreement with Flott Gjort for temporary use of the 3KT site starting in summer 2022. 3KT was opened to the public in June 2022 with catering facilities and various cultural activities. Over 16,000 people visited 3KT in the summer of 2022.

Rental

Ferd Real Estate signed three new lease contracts for Brynsveien 14. In addition, a lease contract was signed with OneMed Services at Gardermoen.

The weighted average unexpired lease term (Wault) for the portfolio is approximately 5.1 years.

Marienlyst

A parallel assignment was carried out for Broadcasting House (Kringkastingshuset) in spring 2022, and the decision was taken to proceed with the proposal from KIMA arkitektur AS. Work is underway on the zoning process and on the concept sketch project. A strategy for sustainable urban development has been produced for the project, and will form the foundation for ongoing work. KIMA has been selected as the new architect for the urban district concept at Marienlyst. A new website for the project has been created together with a communications strategy.

Future outlook

Ferd Real Estate has a portfolio of urban development projects and residential projects in the Greater Oslo region as well as commercial real estate in Oslo within Ring 3 that is located close to transport interchanges, and is well positioned to create value in 2023 and the years ahead. At the same time Ferd has significant investment capacity, and will place great importance on working proactively with new investment opportunities with a focus on opportunities where we can make good use of Ferd’s relative advantage. We primarily intend to concentrate on office premises and residential developments in central growth areas in the Oslo region which have good access to public transport. The opportunity to diversify risk at the group level makes it possible for us to be more development-oriented than other real estate companies. This gives Ferd Real Estate a competitive advantage as an urban developer.