Office Market Recovery Favors Atrium Ljungberg AB According to BAC Company Report

25 Jan 2012 • by Natalie Aster

LONDON - Atrium Ljungberg puts all its efforts into construction of new office properties enjoying high demand in the last couple of years. The company aims to use the market trend to the full while it has sufficient financial strength.

The Swedish property market rebounded strongly in end 2009 and entire 2010, and the transaction volume amounted to about SEK 110 billion (a 100% increase over 2009). Interest towards investing in real estate grew among many investors, resulting in rising prices for both office and retail properties. The higher transaction activity was conditioned by better access to bank financing, stronger rental market and greater unity between buyers and sellers around the prevailing price levels. The most active buyer categories during the year were institutional investors, private real estate companies and property funds.

Interest in investing in commercial properties increased markedly in 2010. Sales of retail properties during the year amounted to about SEK 13 billion, compared with only 3 billion in 2009. Sales of office properties increased significantly during 2010 and totaled over SEK 30 billion, compared with 15 billion in 2009.

The increased interest in property investment has led to increasing property prices in Sweden in 2010. The rising prices are the result of both declining yield and higher rents, especially in downtown locations. Currently, the yield levels in the Stockholm CBD are just under 5% for top retail and office properties, a cut of 25-50 basis points compared to 2009. The price difference between the modern buildings in good locations and poorer properties in secondary locations, however, is relatively large. Market rates rose slightly in 2010 but are still low comparing to historical perspective.

Demand for office space has increased over the years, mainly due to their increased reliance on economic recovery. The average rent for primary office space under the finished quarter of 2010 was SEK 4300/m² per year. The increased demand for office space has contributed to a falling vacancy rate in the Stockholm CBD, which in the last quarter of 2010 was 6.4%.

Consumption has recovered – a trend that is clearest in the big cities. Continued strong growth will see strong retail hubs in subsidiary markets experiencing positive development and increased rental levels. The property market has picked up once again, resulting in more normal transaction volumes and slightly lower yield requirements, with the biggest fall, to date, seen in central locations in Stockholm.

Atrium Ljungberg has currently 7 projects ongoing: NOD science center in Kista, Mobilia mall in Malmö, City Hall in Stockholm, Port73 mall in Haninge, Intrum Justitia office, HK 60 office building, Akzo Nobel worlplace office building. Three of the projects cover office facilities construction.

Company’s financials are strong enough to expand properties. While 2008 was a crisis year, 2010 can be marked as a total recovery. With flat revenues over the last four years Atrium Ljungberg was able to restore its net incomes to profit level in 2009 and raise them by 390% in 2010. Annual results for FY 2010 show revenue of SEK 1936.4 M and net income of SEK 915.5 M.

Quarterly results are also even; however, they reveal significant fluctuations in net incomes. Q3 2011 numbers indicate revenue of SEK 484.6 M and net income of SEK 172.6 M.

Formed in 2006 as a merger between LjungbergGruppen and Atrium Buildings, headquartered in Nacka (Sweden), Atrium Ljungberg AB is one of the biggest investment property companies in Sweden. As of June 30 2011 the company was valued at SEK 20.6 billion. It has 50 fully owned properties and 7 more under construction; one of those is to start operating in April 2012. Atrium’s main interests are office buildings and malls, sometimes mixed with educational and science facilities. Company’s predecessor LjungbergGruppen was listed at Nasdaq OMX Stockholm exchange in 1994, and now the company trades under the ticker LJGRB.

Acquire more information on the company’s properties, ongoing projects, risk factors and business possibilities, peer description and analysis from the report "Atrium Ljungberg AB Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis" recently published by Market Publishers Ltd.

Report Details:

Title: Atrium Ljungberg AB Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis
Date: Jan, 2012
Pages: 93

More company reports featuring SWOT and financial information, industry and competitors analysis can be found in Company Reports Catalog.



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