SRV’s business operations focus on property development and construction in Finland, Russia and Estonia. The company seeks long-term profitable growth in business premises and housing construction in Finland’s developing urban centres, close to good transport links, particularly rail traffic routes. Additionally, SRV implements profitable shopping centre projects in Moscow and St. Petersburg, Russia.
SRV’s business operations is based on three different project types. In the first type, contracting projects, the project is chosen carefully, and the primary focus is on high value added projects. In development projects, on the other hand, the development phase is executed together with the partners, and SRV sells the project to investors before the start of the construction phase. SRV bears the construction risks in such projects, which are recognised as revenue according to the percentage of completion. These higher added value projects are clearly more profitable than competitive contracting, and SRV’s strategy focuses on increasing the share of such projects. The third type, developer-contracting, means projects that are designed and executed by SRV, and which have not been sold at the beginning of the construction phase. In these projects, SRV bears the risks for selling and construction, and the projects are recognised as revenue once the site is completed and sold.
Share of Group revenue: 91%
Share of Group personnel: 69%
Share of order backlog: 95%
Operations in Finland are divided into housing construction and business premises construction. Housing production focuses on growth centres, where structural growth in demand creates a strong foundation for the expansion of residential construction. SRV is known for its area development projects in growing urban centres.
In housing production in 2015, SRV launched the construction of 802 (330) developer-contracted housing units within the scope of the RS system; the construction will be completed in late 2016 or 2017.
Sales also developed favourably with a total of 646 developer-contracted housing units sold, compared to 288 in the previous year. At the end of December, there were a total of 1,849 (1,625) housing units under construction, three quarters of them had been sold. The majority of these are located in the Helsinki metropolitan area. There were 885 (330) developer-contracted housing units for sale to consumers and about half of these units were unsold. The number of completed housing units for sale dropped by nearly half from the previous year, to 107 units (183).
The most significant housing project, and Finland’s largest urban construction project, is the REDI complex in the Kalasatama district of Helsinki. There will be a total of 8 towers, the highest topping out at 132 metres: six residential towers with a total of 1,200 housing units, and an office tower and a hotel tower. The pre-marketing of the apartments in the first residential tower, called Majakka, started at the beginning of 2016, and in February about 200 of the 283 apartment units had been reserved. The area will also have a shopping centre, a parking facility and a health and wellbeing centre. The earthworks started in April 2015, and the construction of Majakka is planned to commence in 2016. The entire REDI complex is expected to be completed by 2023.
There are major housing complexes under construction and in the planning phases also along the West Metro line at the Espoo Niittykumpu and Kivenlahti metro centres, and in Perkkaa.
SRV’s business premises projects are mainly carried out either as own-development or project management projects, which SRV’s own experts and the company’s construction partner network implement efficiently, applying the SRV Approach. Business premises construction encompasses hospitals, offices and commercial premises, hotels and special facilities, logistics centres, underground tunnels and caverns, and infrastructure projects.
The order backlog for business premises construction improved in 2015, but overall, the market situation for new contracts was challenging. New contractor agreements worth EUR 894 million were signed. The most significant project was the REDI’s shopping centre and parking facility, which accounted for EUR 390 million.
Work at the SRV-implemented West Metro Koivusaari metro station project will continue through the first half of 2016. The project was awarded Site of the Year 2015 by Rakennuslehti magazine. The jury commended the well-led production management of the contractually, and structurally-demanding project, as well as the time-saving innovative technical solutions.
A health and wellbeing centre will be built as an own-development project next to the REDI complex. The centre was sold in August 2015 to a special fund managed by German Deka Immobilien, and the centre will be completed in the second half of 2017; it will have about 18,000 square metres of leasable space.
Other significant own-development projects include the metro centre in Niittykumpu, Espoo, being implemented as a joint project by SRV and SATO, with SRV responsible for the planning, construction and leasing of the 5,400-square-metre shopping centre. About 90 per cent of the space has already been leased. The project will include approximately 400 housing units and it will be completed in the first half of 2017.
Share of Group revenue: 9%
Share of Group personnel: 22%
Share of order backlog: 5%
International operations are divided into Russian and Estonian operations, of which Russia constitutes the biggest part. In Russia, SRV focuses on profitable operations in the shopping centre market in St. Petersburg and Moscow. SRV’s strengths in Russia are the retail trade competence, the best shopping centre concepts and a transparent approach.
In 2015, SRV’s projects in Russia advanced as planned. SRV is responsible for the planning, construction, development and leasing of the Okhta Mall and Daily shopping centres in St. Petersburg and Moscow.
The largest project, with an investment budget of about EUR 210 million, is the Okhta Mall in St. Petersburg. Opening in August 2016, the shopping centre will have two underground parking floors and four aboveground floors. The total space is about 144,000 square metres, 78,000 square metres of which is leasable to businesses. The leasing of the space in the shopping centre is under way, and in January 2016, final leasing agreements have been signed for about 30 per cent of the premises, the leasing rate was 33 per cent. The leasing revenue target level is over EUR 30 million. The Okhta Mall is part of the bigger Okhta City project, in which a 400,000-square-metre complex of apartments, office and business premises, hotel, restaurant and entertainment services will be built on an 8.5-hectare plot.
The Daily shopping centre being constructed in Moscow will have 26,000 square metres of leasable space and will open in autumn 2016. The project’s investment budget is about EUR 61 million. The leasing revenue target level is about EUR 10 million.
The Pearl Plaza shopping centre in St. Petersburg opened in 2013. The number of visitors increased to 7.5 million in 2015, which is over one million more than in 2014. Sales also increased, by 25 per cent.