Robust market conditions for Bonava
The conditions for residential developers in our markets are favourable. There is a housing shortage, purchasing power is strong and the COVID-19 pandemic has put a premium on housing. At the same time, each project is local, there are many players, competition is fierce and market developments are rapid. The players who make the right choices therefore have tremendous opportunities to benefit from this robust market.
Our markets are attractive
Significant stimulus measures have led to a strong recovery in the global economy, and COVID-19 vaccination programmes have given companies and households a more positive view of the future. At the same time, there is a deficit of housing units. Population growth and urbanisation in combination with low levels of housing construction over several years has led to a shortage of housing units in destination regions. The result is robust demand and rising prices for housing units in many regions. Government initiatives to promote an increased offering of housing units in certain regions also create favourable market conditions for residential developers.
Our markets are local
Bonava operates in six countries and 19 regions. These markets differ – not only among countries, but among regions as well. Some markets are very fragmented and will likely be consolidated over time. Other markets are dominated by a handful of players.
Laws, regulations and requirements for housing units and housing construction vary based on country, region, and even municipality. This means that products and processes need to be standardised at a suitable level, and competence adapted to the needs of the local market in order to be effective.
In our various markets, moreover, the working methods of our subcontractors, our expected payment methods for land and our customers’ payment methods all vary.
The changing market dynamic
Residential development is characterised by long turnaround times. After the initial investment in land, it will sometimes take years before customers can move into their homes. This requires a long-term perspective, while players have to deal with a constantly changing market.
The positions of consumers and residential developers in the market is undergoing change. The shift in consumer preferences means that the home and sustainability are of increasing significance, but it is primarily investors and financiers who are driving the need for more sustainable homes.
Players in residential development such as Bonava are experiencing increased competition. These players’ costs are increasing – both for construction in general and for land in particular – which is creating both winners and losers. Over the long term, the market will be consolidated. At the same time, new commercial models, new business ideas and various forms of partnership are being created that address the changes in customer preferences.