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All investor and press releases in August have been about Pasila. By far the most significant piece of news was the long-term lease agreement signed by YIT and Telia Finland on the Tripla Workery East offices under construction in the Pasila city centre in Helsinki, Finland. The contract is the largest single lease agreement ever by YIT. The agreement covers approximately 21,000 square metres in the easternmost quarter of Tripla above the new Pasila station. With the agreement, the occupancy rate of the Tripla Workery East offices will be approximately 80 per cent. The agreement includes the sale of Telia Finland’s current head office buildings in Vallila, Helsinki, to YIT.
It is not only about a lease agreement and real estate sales: because of the high occupancy rate of the offices and the quality of the lease agreement, YIT is now better positioned to sell the offices further to real estate investors. YIT’s pro forma operating profit estimate for 2018 includes sales of real estate leased with high occupancy rates likely to materialise in the last quarter of the year. Furthermore, Telia Finland’s current head office in Vallila, next to Pasila, offers approximately 50,000 square metres of development opportunities in a prime location. YIT and Telia Finland are also negotiating on the possibility of establishing a joint venture for developing the real estate. In this case, Telia Finland would operate as a partial investor in the project.
By mid-August, over 80% of the Mall of Tripla space had been leased. The latest tenants are the brand stores of Reserved, Cropp, House, Mohito and Sinsay. These brands are owned by LPP Group that has decided to begin its foray into the Nordic countries with Finland and Mall of Tripla. Mall of Tripla is scheduled for completion at the end of 2019. With the completion, YIT will be able to recognise the share of its ownership (38.75%) of net sales and result of the turnkey project and book the real estate to fair value. The total value of the project is appro-ximately EUR 600 million.
General questions continue to be about apartment sales in Finland. The past few years have seen record-high numbers of apartments, but measured in square metres, the volumes have been lower. Decreasing average sizes of apartments measured in square metres have been a general trend, but now the ave-rage size of YIT’s housing stock has begun to grow slightly. The indicators of the Finnish economy are good: strong consumer confidence, growing economy, declining unemployment rate and continuing low interest rates. A change is that the availability of financing for consumers has during the beginning of the year become tighter. Housing demand continues to be on a good level, both for consumers and investors, even though it has stabilised on a normal level after a strong period. Sales of apartments in good locations corresponding to demand is good. During spring, demand has been particularly good also in the CEE countries, especially in Prague and Bratislava. In Russia, sales have picked up in the beginning of the year in the Moscow region following the given discounts, but in general, demand continues to be stable and the price level continues to be unchanged and on a low level.
To honour the centenary of Finnish independence, YIT challenged experts representing different fields to develop new ideas and solutions for the yards of the future.The project resulted in a concept of more functional, comfortable and versatile yards. YIT utilises the created solutions in its new projects. As thanks for the work carried out, YIT promised to rebuild the Sähköttäjänpuisto Park, next to Konepaja area in Pasila, Helsinki, using its “More life in yards” concept. The rebuilt park will be opened for public at the end of August.
At the end of June, YIT gave numerical guidance including an estimate of the completions of residential projects under construction. According to the IFRS accounting principles, revenue from residential projects for consumers is recognised upon completion. Consequently, there may be significant fluctuation in the Group’s results between the quarters depending on project completion dates. In Finland, the average price of apartments is approximately EUR 200,000 and in the CEE countries, approximately EUR 120,000. In Russia, the average price is approximately EUR 45,000. In the CEE countries and Russia, time of completion is defined by commissioning by the authorities. The date of the commissioning may differ from the technical completion of the building, and the Group is not completely able to influence the reported time of completion.
Apartments under construction, June 30, 2018: 14,938 units (3/2018: 14,097)
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