Real Estate
Ferd Real Estate is a leading urban developer which has taken a strategic position in the market by investing in prime located property for total of approximately NOK 8 billion in 2020. Key to Ferd Real Estate’s new strategy are major urban development projects, residential projects in the Greater Oslo Region, and the construction of office buildings at transport interchanges, preferably within inner circle of Oslo city. Through active and sustainable urban development, real estate management and the implementation of environmentally friendly projects, we create value that is more than just a financial return.
Return
At the end of 2020, the value of the business area’s portfolio of real estate holdings was NOK 14.3 billion and the equity value of the portfolio was NOK 5.4 billion. The portfolio generated a return on equity for 2020 of 15.7%.
The market
2020 proved to be another busy year for transactions in the commercial real estate market, with a large number of transactions amounting to a volume that exceeded most people’s expectations when the uncertainty caused by Covid-19 first spread.
The most important driver in the market was the significant decrease in interest rates and the extensive rescue packages provided by the state, both of which have led the market to believe that the impact of Covid-19 on the economy will be short-lived.
There have been, and continue to be, major differences in how the various segments of the real estate market have been affected by Covid-19. While office, logistics building and residential real estate prices grew strongly in 2020, hotels, retail premises and street-level business properties such as restaurants etc. fell due to the lockdown.
2020 was a year of strong growth in residential real estate prices in Norway, which climbed 8.7%. Residential real estate prices grew more strongly in Oslo than in Norway as a whole and were up 12% in 2020. There continued to be a high level of demand and a large number of transactions in 2020, and Oslo stood out with higher demand and more transactions than the rest of Norway. A significant contributory factor to the growth in the residential market was the fact that Norway’s key policy rate was cut by a total of 150 basis points in 2020. This, in combination with the low level of supply, contributed to the strong growth.
Organisation
The higher level of investment and the shift in strategy to carry out residential development projects has increased the business area’s needs in terms of staff and expertise. Ferd Eiendom are hiering more real etstat expertise e in the time ahead.
To support this organisational growth, a management team with clear areas of responsibility has been set up to ensure we are well prepared to create system value and manage the exciting projects we have in the portfolio.
Ferd Real Estate has 11 employees who cover the key specialist areas of commercial and urban development, residential, investment/finance and marketing/communication.
Sustainability
Ferd Real Estate seeks to make a difference and to contribute to the development of the real estate industry of the future. We do this by assessing the environmental impact of our projects, attending to HSE and regulatory compliance, and adopting new technologies and innovative solutions. Ferd Real Estate takes active steps in social sustainability and uses community involvement to achieve strong results in these areas.
As well as financial targets, all our projects have environmental strategies and clear environmental targets.
In 2020 the average energy consumption of the commercial properties in Ferd Real Estate’s portfolio was 127 kWh/m2. This is 12% lower than in 2019, primarily because of less use being made of these properties during the Covid-19 pandemic. For comparison, Enova’s latest official statistics for commercial properties indicate that the average energy consumption for offices is 171 kWh/m2.
Residential real estate development portfolio
Marienlyst, Oslo
On 26 February 2020, Ferd entered into an agreement to acquire the NRK plot on Marienlyst. Ferd will create a new vibrant residential area on Marienlyst that will bring together the history of the Norwegian Broadcasting Corporation (NRK), the knowledge-based activities around the University of Oslo’s Blindern campus and Oslo’s desire to become a greener, creative and inclusive city.
The development has been called ‘Lyst’ after Marienlyst. The word ‘Lyst’ has various meanings in Norwegian and reflects, for example, the site’s sunny location and the value of natural light as an important parameter for quality of life.
Central to the project is the Broadcasting House (Kringkastingshuset), which will become an assembly point for innovative and entrepreneurial activities as well as a meeting place for the district and city. It will be the neighbourhood’s meeting place and an identity marker for the area. The Broadcasting House can become a new venue, a home for new experiences and creativity. The historic building will be opened to the public and will be able to host activities both during the day and the evening. It will house innovative and knowledge-based business activities, a hotel, conference facilities and rich cultural and catering offerings.
The agreement gives NRK a minimum price of NOK 3.75 billion when the sale completes, but the final price will depend on the zoning adopted for the area. Ferd will settle its purchase and take possession of the site in a manner that gives NRK sufficient time to find a new and modern headquarters, and NRK is now in the process of finding a new site for its activities.
Ensjø, Oslo
Tiedemannsbyen comprises a total of around 1,400 residential units.
Approximately 1,000 new residential units were built in the 2010-2020 period by Tiedemannsbyen DA, a 50/50 partnership between Ferd and Skanska Eiendomsutvikling, and Tiedemannsfabrikken AS, a 50/50 partnership between Ferd and Selvaag Bolig.
A total of 164 residential units in Tiedemannsbyen were sold in 2020 as compared with 107 in 2019.
The sales process for the first residential development project to be completed by Ferd alone in recent times is expected to start in the first quarter of 2021. This development, ‘Humlehagen’, is the final part of Tiedemannsbyen and consists of 142 residential units, nine of which are townhouses.
Bråtejordet, Strømmen
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. The first 123 units were handed over to buyers in 2017 and 2018.
The first sales phase for the next area to be developed (B7), which comprises 186 apartments and townhouses, was launched at the end of 2019.
A total of 35 residential units were sold in Bråtejordet in 2020 as compared to 9 in 2019.
Central Ski
Ferd Real Estate is involved in two large residential development projects in the centre of Ski, representing total potential of around 500 units in addition to retail/commercial premises and parking spaces.
Planning of the central development and zoning planning are now underway for the areas known as Skolekvartalet and Trekantkvartalet. Skolekvartalet is owned 50/50 by Ferd Real estate and Ski Sentrum AS, while Trekantkvartalet is 100% owned by Ferd Real Estate. The planning processes for both projects are expected to be completed in 2021.
Høyda, Moss
In the summer of 2018 Ferd Real Estate bought Rabekkgata 4 and 6 in the Høyda area of Moss, close to Melløs Stadium. The site is 55,000 m2, and Ferd Real Estate intends to develop it primarily as a residential area, with public-facing premises on Rabekkgata. A parallel project involving four firms of architects was completed in the autumn of 2018, and in 2019 the formal process of developing the zoning plan was started. Approximately 800-900 residential units are expected to be built on the land for a range of different target groups. The project will make a big contribution to transforming Høyda from what has been an industrial and trading area into a vibrant and attractive district of Moss.
Vestre Billingstad, Asker
Ferd Real Estate collaborated with several real estate owners on the zoning planning process for the western part of an area known as Billingstadsletta in Asker municipality where residential housing developments totalling up to 1,650 units are envisaged. Approval of the zoning plan for Vestre Billingstad was granted by Asker municipality at the end of January 2018.
Ferd Real Estate owns the property at Bergerveien 12, which is currently leased by ABB. The lease contract with ABB is due to expire in a few years’ time, and Ferd Real Estate is planning a residential development project for 420 units following expiry of the lease.
Høvik, Bærum
In 2019 Ferd Real Estate entered into agreements to later purchase several properties near Høvik station in Bærum municipality. The area around Høvik station is well-suited for an attractive urban development once the new E18 eventually passes through a tunnel past Høvik as planned.
Commercial property portfolio
DEVELOPMENT PROJECTS
Ferd Real Estate has several ongoing office projects and made a number of acquisitions in this area in 2020.
Hieronymus Heyerdals gate 1 is a characterful building that is the closest neighbour to Oslo City Hall, and it offers fantastic views over Oslo fjord, the Aker Brygge area, and Akershus Fortress. The building has some vacant space in the top three floors, which will be renovated to a state-of-the-art standard. The street-level floor will also be revitalised, with a retail and service offering set up to support both the activities of tenants and to attract people to the building.
Trekanttomten, in Oslo’s Vika neighbourhood, was acquired by Ferd Real Estate in partnership with Vedal in December 2020. The site, a former construction compound for the newly built National Museum of Art, Architecture and Design, is centrally located in Norway’s most attractive office area. The site currently has approval for a development with a total net floor area of 24,000 m2, that could include residential development, offices, and public sector use.
Vitaminveien 1B, in Oslo’s Storo neighbourhood, was acquired by Ferd Real Estate in spring 2020. The former filling station is in a central location in an attractive area for offices. A parallel project involving four firms of architects was completed in the autumn of 2020, and the formal process of developing the zoning plan was started. The development is expected to be a state-of-the-art office building with a total surface area of approximately 18,000 m2.
WAREHOUSING/LOGISTICS
Ferd Real Estate, Veidekke and Fabritius are engaged in a collaboration to develop the sites owned by Ferd Real Estate and Veidekke in the Gardermoen Industrial Park, acting through the company FFV Gardermoen AS. Each of the parties owns 1/3 of FFV Gardermoen. The sites in question total approximately 1,000,000 m2 and represent a very significant development potential intended principally for warehousing, logistics and combination facilities. In addition, some areas may be used to retail items characterised by large space requirements.
Frogn Næringspark AS, which Ferd Real Estate part-owns together with NHP Eiendom and Stiftsstaden, owns sites totalling approximately 110,000 m2 with development potential of around 40,000 m2. The first rental contract was signed in 2020 (with Norva24) and construction was started in some parts of the site.
RENTAL
Ferd Real Estate’s commercial rental portfolio amounted to approximately 200,000 m2 at the end of 2020 and generated approximately NOK 200 million in 2020. The biggest contributions to this were the newly constructed properties Asker Tek in Asker, Brynsveien 14 in Bryn and Stokkamyr Eiendom in Forus.
Financial investment portfolio
Ferd Real Estate continually evaluates financial investment opportunities both in Norway and internationally where the underlying asset is some form of real estate.
Future outlook
In 2021 much of the economic growth in the real economy will be affected by the enduring effects of Covid-19 and the associated pervasive infection control measures. There is therefore significant uncertainty associated with growth forecasts, but we believe that Norway’s mainland economy will continue to catch up following the steep fall in 2020.
In the Greater Oslo Region, we believe that the relatively stable unemployment rate and the expectation that office rental prices will remain stable will result in a continued high level of activity in the office market. Street-level premises will be more affected by Covid-19 and in this market national support schemes and infection control measures will determine the industry’s growth trajectory.
Following the growth in residential real estate prices in Norway in 2020, we think that we will continue to see prices move in a positive direction in 2021 because of interest rates remaining at a low level. However, we think that Oslo, where the construction of new homes is expected to fall short of the level needed to match demand, may see higher residential real estate price increases than the rest of the country. This particularly applies to central areas of Oslo.
Any unexpected increase in the infection rate in combination with a delay in administering vaccinations and/or a significant increase in interest rates could potentially impact growth in a more negative direction.