Chief Executive’s review
The development of the property markets was mixed in 2015. Increased activity by foreign funds led to higher demand for properties for sale. The number of players on the market increased, and properties changed hands at a higher rate than in the previous year. At the same time, however, the prolonged recession has weighed down on rental demand in the business premises market, reduced market rents, and increased the average vacancy rates of properties in both the office premises market and the retail property market.
In spite of these difficulties, the key indicators for Sponda’s rental operations show positive development in 2015. In a challenging market situation, we were able to maintain stable occupancy rates for our office properties. In the office market, Sponda’s strategic areas in the Helsinki metropolitan area, particularly the central business district and Ruoholahti, remain desired locations. Another positive aspect was the increase in the occupancy rate of our shopping centres compared to 2014.
Sponda is focusing its property ownership
The stronger demand for properties for sale also supported Sponda’s strategy of increasingly focusing our property ownership on office and shopping centre properties in the Helsinki metropolitan area and Tampere. In late 2015, we sold our properties in Vuosaari harbour as well as our holding in the logistics property company Certeum established in the previous year. We also managed to reduce our property ownership in Russia in line with our strategy.
In February 2016, we announced the purchase of six prime properties in the centre of Helsinki. The acquisition covers the Forum shopping centre and adjacent office properties. The acquisition is perfectly in line with our strategy of focusing our property ownership on Helsinki’s central business district as well as of increasing the share of shopping centre and office properties in our portfolio.
Our aim was to start at least one new property development project in 2015. In spring Sponda started a shopping centre development project in central Tampere. The Ratina shopping centre will be the city’s largest shopping centre when completed. With an investment size of approximately EUR 240 million, the project comprises some 53,000 square metres of retail and service premises for more than 150 businesses. The shopping centre is scheduled to be completed in spring 2018. Another example of our bold approach is the Mothership of Work, or MOW, which is a new kind of coworking space that was opened in February 2016 on Pieni Roobertinkatu in Helsinki.
Among Sponda’s new property development projects, office buildings were completed in 2015 in Helsinki’s Ilmala and Lassila districts. We also made major renovation and maintenance investments, which will allow us to offer increasingly high-quality business premises solutions to our customers. We invested over EUR 37.8 million during the year in renovating and modernising our existing property portfolio.
Digitalisation is changing the operating environment
Megatrends such as digitalisation and urbanisation are changing the operating prospects of businesses at an increasingly rapid rate. This makes predicting the future even more difficult than before, but the year 2016, at least, looks cautiously positive from Sponda’s perspective. The Finnish economy is expected to slowly turn to growth, which will increase demand, particularly in the growth areas of Helsinki and Tampere.
A responsible way of working is at the heart of our strategy and business. It ensures the long-term viability of our operations. Sponda is committed to supporting the UN Global Compact principles regarding human rights, labour, the environment and anti-corruption.
The operating environment of our office and retail premises customers is constantly changing, and we will do our best to respond to these changes. In addition to a strong property portfolio, we have the capacity and experience to adapt business premises to suit our customers’ needs. For this, I wish to extend my warmest thanks to our personnel, whose strong professional expertise and willingness to think beyond the practices and conventions of our industry constitute our most important success factors.
I also want to take this opportunity to thank our customers for their good and productive partnerships with us, and our shareholders for the confidence they have shown in Sponda. I believe 2016 will be an even more favourable year for us all.
President and CEO