Stockholm's housing construction boom

Published January 2017 in collaboration between Invest Stockholm and The Local. 

No matter where you’re from or what you do, if you find yourself in Stockholm, the city’s housing situation is always a hot topic of conversation. And as more people move to Stockholm to take advantage of the wide-range of opportunities there, the city is working feverishly to expand the housing supply to keep up with growing demand.

Indeed, Stockholm is certainly putting its money where its mouth is, with €95 billion in infrastructure investments planned for the region by 2025, and new home construction accounting for almost half of the figure, according to data from Invest Stockholm.

In 2016 alone, more than €36 billion worth of new construction projects got off the ground in the Stockholm Region.

And anyone visiting Stockholm these days won’t have to look far to see signs the city is in the midst of a massive building boom.

Construction cranes dot ever wider swaths of the Stockholm skyline, adding new buildings are popping up like mushrooms both in the city and the surrounding suburbs.

“The plan is to build 140,000 homes in the city of Stockholm alone by 2030 – that’s equal to what the entire country of Denmark will build over the next ten years,” says Erik Krüger, Business Development Manager for Invest Stockholm.

And as more and more foreigners choose to make their home in the Swedish capital, it’s perhaps fitting there’s an international twist to Stockholm’s current construction craze. Namely, an increase in the number of foreign companies bidding on – and winning – construction projects as the primary contractor. 

One foreign construction company that’s on the edge of entering the Swedish market is Unihouse, a branch of Unibep S.A. from Poland, which specializes in modular housing.

“We see Sweden as a market where there is demand for affordable housing; regular people who want regular housing,” says Unihouse’s Michał Urbankowski.

“Modular housing is one alternative for meeting the construction need and of course Stockholm is on our agenda.”

According to Urbankowski, Unihouse has already delivered 1,500 apartments in neighbouring Norway, and is currently in the running for various public tenders in Sweden, including Stockholm region.

“The greatest demand is in Stockholm, but there is a lot elsewhere too,” Urbankowski says, adding that Unihouse has already built one home in the outer-ring Stockholm suburb of Södertälje.

“In Stockholm, we’d like to be in the suburbs where there is a real need for prefabricated standardized rental housing.”

While Stockholm may be at the heart of Sweden’s current housing construction boom, the need for new homes extends to other parts of the country as well.

Overall, Sweden needs to build more than 700,000 new housing units in the next decade – and at prices that keep the homes affordable. 

This reality presents a difficult challenge for the country’s municipality-owned housing companies, which together account for about 20 percent of the country’s housing stock – and roughly half the rental sector overall.

“More and more of our member companies say they are having problems getting tenders when trying to produce new dwellings,” says Jonas Högset of the Swedish Association of Public Housing Companies (SABO), a membership organisation representing the country’s public housing companies.

Put simply, there just aren’t enough construction companies in Sweden to place bids on all the projects planned by SABO’s member companies.

“The percentage of our member companies that only get one to no bids is way too high,” adds Högset. “If our member companies only get one bidder, we can’t ensure competition with the procurement.”

Högset believes foreign construction companies can help Stockholm – and Sweden – address the challenge of building enough housing to keep pace with demand. 

“We made a strategic decision last year go to other European countries and tell them about this situation and the market, and explain that there are business opportunities here,” Högset explains. 

In addition to courting foreign construction companies like Unihouse, SABO has also looked for ways to make it easier for foreign firms to do business as primary contractors in Sweden by, among other things, promoting the increased use of English in the tender process and looking at how to better evaluate skills that have been certified abroad.

“Language may be one of the biggest barriers, but so is know-how about how the Swedish market works,” says Högset, who hopes SABO’s efforts will ultimately make it easier for more foreign companies to start building in Sweden.

Another SABO initiative is Kombohus, a framework for building multi-dwelling buildings that allows municipality-owned housing companies can build at lower prices – and one that Unibep from Poland is hoping to participate in.

“We want to focus on the market for rental housing, and the most cost effective approach is standardized modular projects of four to five stories which matches the rental housing segment perfectly” says Urbankowski. “Prefabrication enables us to be more accurate and maintain a high standard when it comes to sustainability and energy efficiency. It also allows us to build faster and so we can more easily expand construction capacity in Sweden and fulfil the current need at an affordable price.”

And, as SABO’s Högset points out, his organisation’s members and foreign construction companies entering the Swedish market aren’t the only ones who benefit from building more homes faster and at lower costs.

“Ensuring that we have enough dwellings in the area is a key factor for success for Stockholm,” he explains. “That will help ensure that Stockholm remains the economic motor of Sweden.”
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