Gathering forces to strengthen the business
Sweden is Bonava’s second-largest market. We have an attractive breadth in our offering of housing units to rent or own, in or near large cities. At the same time, a firmer grasp of our projects is required in ¬order to ensure profitable and sustainable growth.
Market potential and drivers
Increasing population and relocation to the major cities, together with historically low interest rates and greater disposable income, previously drove the housing market in Sweden. Higher costs of living and rising interest rates in 2023 led to a cautious market and a robust slowdown as regards both production starts and sales of housing units. A large proportion of Swedish households have variable- rate mortgages, meaning that the interest rate hikes have impacted their consumption capacity and reduced their purchasing power.
The number of construction starts in Sweden decreased dramatically during the year, which impacts both Bonava and other players in the industry. Market conditions have not been this challenging since the early 1990s. At the same time, there is a significant deficit of approximately 175,000 housing units, corresponding to approximately 190 times Bonava’s average production volume in the country over the last five years. In Sweden, the housing shortage is expected to increase further in the coming years due to there being few production starts of new housing units, and Bonava is active in the regions that have – and are expected in future to have – a deficit.
Strategic focus going forward – stabilise operations
The Sweden business unit is in the initial strategic phase: stabilise operations. To ensure good profitability and manage shifts in business volume, the business unit will need to create a more flexible organisation and increase clarity around responsibilities and control in its projects. The utilisation of “turnkey” suppliers will increase in order to reduce the fixed cost base. The business unit will focus on regions and types of projects that have historically proven profitable, such as single-family and multi-family homes outside Stockholm.
