Good afternoon, ladies and gentlemen, and welcome to Kojamo's first-ever Investors' Day. My name is Maija Hongas, and I'm Manager of Investor Relations here at Kojamo, and I'm very happy to host you today, even though, unfortunately, we have to be on a virtual format instead of a live one. The purpose of today is to give you more color on how Kojamo implements its strategy. If we take a look on today's agenda, we have three main themes that we are discussing today. The first speaker will be our CEO, Jani Nieminen, who will be giving the opening words. After that, we will discuss our digital roadmap, which is a roadmap defining how we use digitalization in implementing our strategy. This will be presented by our Chief Digital Officer, Katri Harra-Salonen. Today, we have also launched our sustainability program.
Sustainability has always been very important for Kojamo and in the company's DNA. Now the program gives a framework and targets how we are going to implement this going forward. This program will be presented by Hannamari Koivula, our Sustainability Manager. The last presentation will be about our project development, which is a very important part of our growth strategy. This presentation will be given by Ville Raitio, Chief Investment Officer. After each of the main presentations, we have 10 minutes for questions and answers. We will be first taking questions from the conference call line and after that from the chat. If there are more questions than we have time, do not worry. We have reserved time for a general Q&A at the end of the event, where we can take those as well. Enjoy the day. Let's get started.
Please, Jani, let's start.
Good afternoon, everybody, and welcome to Kojamo's Investor Day. We have been proceeding well in line with our strategy. Today, as Maija mentioned, our purpose is to increase understanding on Kojamo as an investment. There are no changes in our strategy or our KPIs. Our topics will provide color on our activities as we will continue creating better urban living. I will talk about megatrends and our strategic focal topics and points. We have identified five megatrends supporting our business. A current theme at the moment is whether there will be an impact on megatrends because of COVID-19 or not. To start with, it's good to keep in mind that Finland is a country with a population of 5.5 million people. Actually, it means 2.7 million households on average, two persons per household.
Of that, more than 1.2 million households with only one person and two person households, the number is roughly 900,000 people in those households. Yes, we do have here in Finland an aging population and an increasing number of smaller households. That will continue creating actually demand for new homes as the number of one person households seems still to be increasing. Of course, urbanization creates a lot of demand, and it seems that still Finland is lagging behind the rest of Europe concerning urbanization rate. Even throughout this year, urbanization has been proceeding, even of course with a bit of slower pace at the moment. To my understanding, all the new jobs and services in the future will be created in the biggest cities, and especially here in the Helsinki region. People probably will be moving towards Helsinki more rapidly next year already.
All the estimates still are valid, providing the information that more than 10% of the total population will be moving towards the biggest cities here in Finland during the next 20 years. Actually, to provide a description of the amount of people moving towards the Helsinki region, the same number of people living in Tampere today will be moving towards Helsinki during the next 20 years. The number of people living in Lahti today will be moving towards Helsinki during the next 10 years. That actually creates a lot of demand for new homes. New technologies and digitalization, a big topic today, I guess, during this year and the impact of COVID-19 has been that digitalization seems to be going with a more rapid speed than it used to. We are moving towards online services. We are using online meetings. We are meeting our friends with digitalized ways.
Actually, I think a lot of things will happen faster than we anticipated before. Individuality and sense of community, of course, has been a bit different here. I guess most of the same features still will remain the same. On the other hand, of course, things like remote working, working from homes are issues we have to consider. To my understanding, what we have to think about is what kind of common areas we will build and what kind of services should our buildings include for our customers. It still seems that they prefer the same kinds of apartments, same kind of micro-locations, but the facilities in the properties will be changing in the future. Environment and sustainability development, sustainability has been an important topic already, and the importance seems to be increasing on an annual basis.
In the big picture, I don't see that COVID-19 will have an impact towards our operations or the megatrends supporting our business. Strategy is always a big question. For Kojamo, what it actually means is that we have to know the right things to do right and efficiently. The strategy is in place. Just to keep in mind the most important KPIs in our strategy, we aim to increase the total turnover annually between 4% and 5%. We are investing on an annual basis between EUR 200 million and EUR 400 million. We keep our FFO against total turnover about 36%. That actually means that we are growing, and we are growing in order to be even more profitable. We are keeping our LTV above 50% and loan value above 50% and equity ratio above 40%. Actually, the LTV below 50.
That is how we handle the risk position. Of course, we never ever forget the customer, and the strategic KPI there is the net promoter score of 40. The strategic focal points are related to each other, and they create a wholeness together. They are supporting the total strategy of profitable growth. Delivering the best customer experience is really important. For us there, an important factor is how to create easy and effortless living and provide added value for our customers. Strong growth. For us, it is important that we are able to grow using multiple sources. We are making new development projects. Typically, half of the projects are based on our own land bank. Half of the projects we buy from construction companies.
We have the capability to convert buildings, which are now used for different purposes, into apartments like the Metropolia case. Of course, we are able to move fast and make acquisitions when we find portfolios suitable to our parameters. An important part of strong growth is our capability to use optimized financing from multiple sources. Operational excellence is the heart of doing right things right and efficiently. That creates scalability for our operations and competitiveness. We are creating operating models using technology. We do have all the most value-adding processes as in-house operations. We are using our own people when we are renting, doing the property management, supervising the construction sites, and things like that when we are meeting the customers. That is why there is a focal point of most competent personnel and a dynamic place to work.
We want to ensure our future through competence development and employee experience. Responsibility and sustainable development is an important aspect. Sustainability and responsibility has always been a part of our company DNA and our daily operations. We already achieved many great things in our daily operations. Today, we are launching our sustainability program. The sixth area is renewal through digital solutions, where we are adding value for our customers and improving our business. As I said, these things are all linked together and provide us the capability to move forward with our strategy. Today, we will be focusing on providing more deeper color on these three topics. Ville providing color on strong growth and development processes, then Katri providing the digital roadmap, and then Hannamari providing the color on the sustainability program.
With these words, I still want to welcome you all to our Investor Day. I am looking forward to have a good day with a lot of value-adding questions. Thank you.
Thank you, Jani. We can move forward and start our first theme presentation of the day. I welcome you to the stage, Katri.
Good afternoon, ladies and gentlemen. It's a real pleasure to be here today to talk you through the digital roadmap and our thoughts and plans around digitalization here at Kojamo. I wanted to start with a little bit of hindsight with what we have already been doing. We have a great platform for digital already today. It's a strong foundation for us going forward. I just wanted to highlight some milestones from the past five years, with 2015, where we launched the very first web shop, industry-leading first mover in that field. In 2018, we came out with an artificial intelligence-powered temperature measurement and operation. In 2019, we launched the service for our current residents called My Lumo. And this year, 2020, we have launched a new concept for the web shop launched five years ago.
Of course, there has been happening a lot of other advancements also, but I wanted to bring out this and give that as a foundation for what we will talk about today. This leaves us in a very good position indeed. If you look at the numbers, we can see that our current service called Lumo.fi already attracts approximately 200,000 visitors every month. When we look at the platform for our residents called My Lumo, we can take out a key performance indicator for us called DAU, daily active users. And that has been around 1,300 lately. Those figures give us a little bit of background of where we start 2020 and where we started to when we started to think about what the roadmap should look like going forward. Let's have a little bit of a look at the roadmap then.
The key point here is, of course, that digital is not only about the future. It is very much present in our everyday operations today. What we are doing 2020 as we speak and during the coming year that we have planned, 2021, it will be very much focusing on the actions here in the slide. We have the digital services, and we will for sure scale them up. We are going to focus on the service business. We have been doing a lot of activity in that area already 2019, and we have a great foundation to build on this year and going forward. We will increase the use of artificial intelligence when it comes to our processes, and it will change some ways of working in the organization. We are going to focus on the experience elements that Jani mentioned in his presentation.
Around our core product, we are going to build services and other elements that we will provide value with for our clients. Of course, we also need to remember that there are some competencies that we are adding to the organization as we speak. If we want to look at what the areas really are for the roadmap and what we have chosen to focus on in this field, there are five areas. Three of our areas are value creation areas. We have a big area in the customer experience and in servitization. This is the interface towards our customers. Here we are already strong, but we are adding on the experience element, and we are really focusing on the customer experience in the digital.
We are proud about that figure that you can see on the slide, the NPS, the net promoter score for our joint digital services. It has been around 70 and even above this year. Of course, we will track that very closely in the future and even better understand what elements, what functionalities provide value for our clients online. The second area, the value creation element, is around scalability. It is about also at the same time about employee experience. We are looking to different kinds of productivity solutions across our operations at Kojamo. One example comes later on, but I can already mention here that there are a lot of mobile services, for example, that will help our field personnel in their daily tasks. The third area is a really exciting one. It is about our core product and the digitalization of homes and properties.
In these areas, we already had one example earlier on, 2018, with the AI-powered temperature control. Here we are working very, very actively at the moment. Also, a new category of possible products around the intelligent home is a very intriguing one. There we are analyzing, looking into, and learning about our customer behaviors. This is an area we are going to pilot on this year and the coming year. To power really these three value creation areas, we need to do activities in two enablers, if you like. First, I will mention the data and artificial intelligence that we already talked about. This is an area where we really have stated ourselves a goal to be best among our peers in database leadership. Data is not just about information.
It's very important that we as an organization are also capable of utilizing the data that we have. Of course, in the foundation, in the backend, we have a lot of work ahead. We are going to move most of our systems into an in-cloud architecture. Also, we are learning and experimenting a lot around the virtual techniques. That will be kind of the foundation that we all need in order to be able to provide the value that we're planning to do in the future. What is the philosophy behind and what are really the key kind of takeaways? We believe a lot in the digital user experience. We really want to be able to make our customers happy with a very easy experience online. We want to bring in relevancy into the digital services that we provide.
Of course, we measure every day, each hour, what is going on and understand more and more about the customer behavior in our services. Here you can also see that we put another KPI on the slide. This is about the employee experience. Through the new services that we are bringing to our employees, be it in the office or out in the field, we really want to lift the employee experience and make the life and the day, the working day, a lot easier and better data-powered for all of our employees. There is a measurement that we have done also in the past. We are targeting at 3.7 in employee experience. On the other side, the utilization of the data is really important for all of our thinking.
We get a lot of data at Kojamo, and we are utilizing it already today in very many areas. In the middle of this picture, you can see even a heart, which we have there to explain and state about the importance of linking technology and people. It is a philosophy that we think is very important for companies today to be able to really reap the benefits of digitalization and build an organization that is very competitive in the future. Let me come to the really exciting part of the presentation today. We wanted to give you some highlights and examples of the cases that we are currently working on or that we have planned to work on. There is an example around how we work with My Lumo at the moment.
We're going to tell a little bit about Lumo One, our tower in Kalasatama, something very exciting called mVasu, which is a mobility solution for our sales organization. Of course, also a small example of how AI will really power our organization and already now teaches us a lot about what is really going on with our customers. I hope that through these four examples, you will get a good picture of the variety of actions and the depth of actions and also, of course, the impact on the business that we are working on on the digital side. Let's get started with the examples. My Lumo, already today, it is in the pocket, if you like. It's a very mobile service, and it has been designed mobile first. It already is in the pocket of approximately 75% of our customers, of our current residents.
I mentioned the figure, 1,300 of them are there every day. We have digitalized our processes through this service to a great extent already. There is a lot a customer can already do through this service. It is a self-service tool. At the same time, it is one of the, or actually the most liked communication tool by our customers today. Right now, what we are looking at, we are looking at bringing our new services on top of this platform for our customers to consume. It has a variety of functions and is very central in our digital strategy in the future. Of course, here also, when our customers move from one platform, if you like, or digital service to another, we need to work on a very coherent user experience. We can call it a seamless way of working or way of using these services.
There are a couple of screenshots that you can see on the slide, and those are from a change that we're making in one of the parts of My Lumo. We want to really welcome our customers when they have chosen to take a Lumo home, when they are planning what they are going to do in there. We are going to give them a warm welcome and make it very easy to tailor their experience also with the coming services. Especially when they are moving, we have a package of services to help them out. About Kalasatama and Lumo One Tower, which I think that we are all very excited about. It is an example of a product that we will enhance with services.
We have learned from the studies and from the customers that the service elements will be very important in order to get the full experience of living in the Kalasatama Harbor in a unique tower. What we are going to focus on here is very much, was very much already pointed out in Jani's introduction, with especially the common spaces that are going to be quite unique in this building with the terrace, with the common areas, and of course also with the lobby area downstairs. We are putting a great deal of effort in designing those areas so that they will be providing a great experience and also some monetization elements for Kojamo. On top of the common spaces, of course, then come partner services.
We're looking into different areas where our customers in this specific building will be getting value from us helping them to find good services. Last but not least, this is of course a target where we will enhance and bring to our customers some of the intelligent home elements. This is a piloting area at the moment for us. Quite exciting indeed, and we still have a little bit of time ahead of us, but going live then in 2022 with the building. The third example is about the mobility services, if you like, or the services that we are bringing to our staff who is working in the field, but also in the office. This example that we took out right now is very, very fresh, and it is something that we're working on at the moment.
It will help our salespeople and sales personnel out in the field to give the customer the best possible customer experience. They will have all the data and all the information that we have in our CRM available to them in their mobile, and they will be able to keep the customer very happy in that moment when they physically meet the customer. It is a design that we have made ourselves, and this is a great strength also of the team that we have at hand here. We are quite fast, and we have our own system development for that part of our system architecture. Very proud about that one. If we go forward, we also wanted to bring out another, maybe a newer example of how we can utilize artificial intelligence today.
We have been building a great data infrastructure with our EDV and with the availability of the data from different sources of the company. This example that I have here on the slide is about understanding the customer and about understanding the customer sentiments. We have a lot of information in a structured manner that we have asked our customers, and it is a great strength to us. On top of that, we get a lot of kind of free data, free text, free comments from our customers. This specific tool called Aivo is helping us in order to interpret that data, that kind of mass of data that is very unstructured, to see where there are patterns, where there are maybe new needs, or where there are some challenges for us in the customer experience.
It gives the voice to the people, and it makes us understand the uniqueness in the answers that we get. It has been very exciting to look at kind of the results from this one. We have just started, and we see that there is a lot of opportunity when we bring it also to the other sources where we get this kind of data from the customers. We have done other pilots as well. Here on the slide, we are mentioning the churn modeling, which is also quite interesting. Of course, it is really important for us to understand where, why, and who would be kind of at risk to churn amongst our residents. When we understand it better, when we understand the reasons behind it better, we are also going to be better at working with those reasons before somebody decides to leave us.
Here, artificial intelligence has brought us a lot of new knowledge about who it is and why, what are the reasons. With that tool, we can go into the nuances of an individual or a group making decisions. Very important for us as well. These are the kind of prepared cases or examples of different parts of our operations of how we work with the digital and with the digital roadmap. What to expect really going forward with 2021? We will continue, like I said, working on all these five key areas. What that really means is that we see, as Jani stated, there is an increased activity online and on the digital. We will see the customers more and more active increasingly online.
What we want to do is, of course, we want them to stay with our digital services also when they become customers and take My Lumo into use, etc. Throughout the customer journey that our customers have with Lumo, we want to be there, support, help, and be very, very easy to approach. The service offering that we mentioned earlier is something that will be in our focus 2021. This year, we have really carved out a kind of a package of services that we wanted to monetize. Last year, we launched a lot of interesting new services. This year, we are going to continue the work with the carved out package and, of course, scale that up, but also innovate new possible services.
There is a figure after the six months of turning kind of the servicing model into a monetized model that we have every one per 10 customers is actually buying some service from us currently. That is a very encouraging number for us, and we are going to continue scaling it up. The productivity goals that we have, digital is going to be very important in reaching those and mentioning these field solutions, and of course, then also in the office, how can we make the office life and the remote work a lot easier still. The core product, the product line will benefit from the new digital services, the experience elements, and of course, also in the future, we hope to launch some of the intelligent home services in a couple of years. Data investments, we will turn them into competitive advantage more and more.
Of course, there is a big element of better foresight. Of course, also the speed and decision, speed of the decision making, and of course, also the quality of the decision making across Kojamo. The innovativity factor, that is of course something that we will keep alive and focus on also in the future. Listening a lot at what our customers say, like you heard through the Aivo example, and then of course also utilizing both design and data capabilities in the future. In this field, we have added on some people also to the organization and hope to be maybe talking about that later on. I think that this is what I wanted to talk to you about. At this stage, very, very welcome for any questions around the digital.
Thank you very much, Katri, for your presentations.
Now we're ready for the questions. Please operator, we are ready for the conference call line questions.
Thank you. If you wish to ask an audio question, you may do so by pressing zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Once again, it's zero one on your telephone keypad if you wish to ask an audio question. There will be a brief pause whilst you wait for questions to be registered. Our first question comes from Anssi Kiviniemi from SEB. Please go ahead.
Yeah, hi guys. It's Anssi from SEB. Thanks for taking my questions. I have two of them. I will take them one by one if that's okay. Firstly, on My Lumo and the add-on services that you provide through the platform, how much of the sales do they currently account for?
Do you have any ambitions for the service part in the future, some kind of figures in terms of top line perhaps in some years ahead, or how should we look at the scalability of the service offering and the potential of the service offering? That's the first one. Thanks.
I think that the best way to look at it at the moment is that if you look at the kind of the product portfolio that we launched last year, 2019, it had a different kind of a setup for the products and services there. This year, like mentioned, we have carved out some services where we have started out to monetize those. We can mention some examples about the moving services and, for example, the key courier, everything that is important to you when you start to move to your new home at Lumo.
We are in the process, of course, of looking into what specific targets we will set, but at the moment, we have not yet got any figures to announce around that. The fact that we have at the moment every 10th customer, new customer, taking one or the other of the services gives a little bit of confidence for us that we can scale this business up.
Okay, thanks. The second question is on the competitive edges. Perhaps digital capabilities, data, and data utilization that perhaps your local competitors in Finland do not have. How would you describe the competitive edges that you have?
I think that first of all, of course, throughout the digital services that we have today and the fact that most of our customers visit them quite regularly, we are going to bring that number up as well in the coming years.
The data that we get about the customer behavior and the way we can understand our customers also throughout, of course, when they are looking for the potential home is quite in good shape. Through the digital services, the data that we have is deeper than what our customers have. Of course, it is also for us to really kind of keep on building our capabilities and utilizing that data and bringing it into all relevant areas. We are currently using kind of a daily and real-time data to steer, for example, the online services, the web shop, if you like. On the other side, we have a lot of really important functions that already today are AI-powered.
If you look at, for example, some pricing decisions, I think that we are very able to do good decisions in that field because of the technological background and the AI that we use. Indeed, in very important areas of the business, we have been so far able to bring in kind of focused technological solutions, and we will increase that in the future. Data, it's very important to get the data not just into the company, but also data flows throughout the company and then, of course, the utilization. I would say that our operations already today are very data-keen and very eager to get more and analyze more. I think that we're in a good spot from that perspective.
Okay, thanks. That's very helpful. That's all from me for now. Thanks.
Okay, next question, please.
There appears to be no further questions at this point, so I will hand back to the speakers.
Okay, thank you very much. We have had some questions from the chat. First of being very interesting with your data collection and services connected to that. What kind of future services are you thinking about offering going forward?
When we looked at our kind of portfolio of services that we have launched last year, of course, we were looking for the most relevant ones for the customer to really kind of for the value creation for the customers. We also started from a point in the customer journey that is quite significant to us when we get the new customers into Lumo. We are going to look into services that are important and interesting for our current residents especially.
That's quite an exciting field of exploring what could be something that we have not yet offered. Of course, there is plenty of, how to say, inspiration also on the market of what the clients value.
Okay, next one. In digital services to tenants, how are you positioned versus competition in Finland and peers outside Finland? This we a bit touched already.
Yes, of course, I mean, we see that we have been quite a first mover in this field. Of course, it is always difficult to kind of compare with the services that are for the residents in the other companies. From what we know, I think that, for example, the fact that our customers in and through My Lumo can pay the rents today without friction, I think that that is quite a unique functionality in these services.
Of course, not just the functionalities, but the fact that our customers, when we have asked them, they really value the communication opportunity that this service provides. We see that we are quite in the front line. It is our intention to keep it that way.
How much of your churn is unwanted or high-risk tenants? Do you believe you can lower churn through, for example, AI?
We would not be doing this churn analysis and utilizing AI if we did not believe that we can get a better understanding about this question through that technology. We have been piloting this year, and I think that we will continue. This is an area which goes fast forward all the time, and we need to stay on track and ahead of the track.
We think that we can work with that to lower it, yes.
Can you please provide some more concrete examples of the new services you want to monetize? How much do you expect services to generate in revenues in two years?
This question came earlier also, and I could kind of go repeat that one. Definitely, like if you're looking at the services for the current residents, I think that we will find, especially when we look at the kind of the new pilots and the innovation areas going into the intelligent home, we hope to really find a good value creation element in there. At the same time, we have some very interesting discussions with some partners also within the fields where we have been active before, but not monetized those services.
That is an area that we are looking at and turning kind of the business model with those services around. There are several alternatives. Of course, in this innovation pipeline, you need to be able to make the decisions about the right ones for our customers. They help a lot. We are going to have quite some activities together also with the customers during 2021 to really understand what their needs are, how they see the services that we are developing, and whether or not we can provide value through those.
What are the most liked and used services?
At the moment, when we look at the services, kind of this moving portfolio has seen quite some traction. Also, interestingly, a service that we launched for our customers for them to be able to compare the electricity providers.
That has been very, very liked and used during these first six months of operation. It seems that the customers really value kind of the information that they get and that they can work with their electricity options.
Maybe we take the final question. Have you seen a better rate retention of your tenants after the deployment of your digital strategy?
That is a very difficult question. I mean, at this time, we are and we have been kind of fulfilling the digital strategy for quite some years already. Of course, now we are in the middle of kind of working across with the roadmap that we have. I think that for the results, we will have to wait a little bit and then go through those.
Thank you very much, Katri.
Thank you.
Next is time for our next presentation, which will be our sustainability program. I welcome onto stage Hannamari Koivula.
Good afternoon, ladies and gentlemen. It's my pleasure to be here today to present you our today published sustainability program. The agenda I have for today is that I will first go through the link between our strategy and our sustainability. Then I will go through a little bit of our history with sustainability, the long-term foundation that we have, many years doing the sustainability work. Then going forward to today to present you the sustainability program with its focus areas and objectives and the foundation of the sustainability program. Lastly, I will talk you through to what are the plans to go forward from here.
First of all, about our strategy, as Jani mentioned in the beginning, sustainability is one of our strategic focal points for the current period 2020 to 2023. It means that responsibility and sustainable development is part of our DNA, is part of our everyday work, is part of everyone's work at Kojamo. Now we are even strengthening this link between our strategy and sustainability further with our sustainability program. Sustainability is not something that we have already done that we have just implemented today. It is something that we have already been working for several years. We have a very strong long-term foundation of our sustainability. Already since 2002, we have been part of the voluntary energy efficiency agreements in Finland, which is an agreement between the state and between the real estate sector. Now we are today ongoing our third agreement period lasting until 2025.
We have a target to reduce our energy consumption 7.5% before 2025 with already very good results and achieved 73% of the target already. Energy efficiency is something that we have been working on already for a very long time, and it has been in the core of our business. Also, since 2002, our head office has been certified according to the WWF Green Office certification. Moving on for today, since 2019, all our offices have been certified according to the Green Office certification. We have very strong growth and new developments, which are an important part of our sustainability as well. Sustainability has been integrated into our new development projects already since 2016 when we established the nearly zero energy building principles for all our new developments.
At this moment, 80% of all our completed construction projects are already done according to these principles. When we look at the ongoing development projects we have at the moment, 90% of the projects are according to the nearly zero energy buildings. We pay a lot of focus for sustainability also and it goes in line with our growth. Taking a look at the social side of sustainability, since 2017, we have been awarded as Finland's most inspiring place to work. This recognition we already have had for the third consecutive years. We have very good results of personal satisfaction. We pay a lot of attention to employee well-being, for example. The satisfaction index has been on a high level, 75%. This is something we measure also on an annual basis. Since 2019, our portfolio has been carbon neutral in terms of electricity.
When we look at the whole energy renewable selection, the renewable part of the energy consumption of the whole portfolio, we already are at 28% at the moment. The artificial intelligence solution that is controlling the indoor temperature of our portfolio covers already 80% of the portfolio. Definitely, sustainability is something that we have been working for a very long time already. Now, when we go forward for today, we have this year 2020 done our first corporate responsibility materiality analysis. With this analysis, we have combined the long-term work and the foundation we have for sustainability with our stakeholder input. We did a questionnaire and deep interviews with our key stakeholders, including investors, analysts, our own employees, our customers.
With the views of our key stakeholders, we incorporated the sustainability focus areas and objectives that concluded our sustainability program where we are launching today. Now finally presenting you the program. This is the framework for our sustainability from today onwards. We have our strategy, responsible and sustainable development at the very core, at the very top of our sustainability work. The main focus of our sustainability program is to create better urban housing. Our mission is at the core of our sustainability. We have four cornerstones. We have four focus areas, cornerstones of our sustainability program: sustainable cities, the best customer experience, a responsible corporate citizen, and most competent personal and dynamic workplace. Within these focus areas, we have identified and created targets for longer term and for the years to come and also more detailed KPIs.
Today I will go through some of the most important objectives of all of these focus areas. We will publish the more detailed KPIs as part of our annual reporting. Also as the foundation, the cornerstones of our sustainability program, we have at the bottom of the visualization, ensuring long-term profitability and business growth, sustainable and responsible operations, and transparent communication and reporting. These are the factors that enable our sustainability program to progress. Before presenting you in more detail the content of each of the sustainability focus areas, I'm going to present you the key sustainable commitments that we are committing to with our sustainability program. With our program, we are committed to United Nations Sustainable Development Goals and the Net Zero Carbon Buildings 2030 commitment.
With our program, we commit to those eight of the United Nations Sustainable Development Goals that have the greatest impact on our business. Those goals are good health and well-being, gender equality, clean energy, decent work and economic growth, innovation, infrastructure, sustainable cities, responsible consumption, and climate action. These are the key United Nations Sustainable Development Goals that our sustainability program will support. We have identified those focus areas of our sustainability that are relevant for each of these United Nations goals. Also, very importantly, we have established ourselves an ambitious goal. We will be owning only assets that are net zero carbon in operation by 2030. Why we chose this commitment and this ambitious goal for 2030 is that when we look at the whole carbon footprint of our portfolio, up to 70% is from the energy usage of our properties.
We wanted to concentrate on the issue where we have the most impact on to decrease the carbon footprint. With this commitment, the Net Zero Carbon Buildings 2030, we are committing to the World Green Building Council commitment as well. On the basis of our sustainability program and linked to our strategy, the sustainability program is supporting the execution of our strategy. Ensuring long-term profitability and business growth is on the foundation of our sustainability and is in line with our strategic targets for this current strategic period. Sustainable responsible operations, how we manage our own operations, and also how we manage sustainability in our supply chain. We have just launched our supplier code of conduct, and that is incorporated into all our new partnership agreements. Also, transparent communication and reporting on sustainability plays a highly important role in our sustainability program.
We engage in very transparent multi-channel communication on our sustainability. We have selected the frameworks that we are reporting on. We are reporting on the GRESB Global Real Estate Sustainability Benchmark, the GRI standards, and EPRA frameworks. I will get back to these a little bit later in my presentation. Now, moving forward, going through the different focus areas of our sustainability program, sustainable cities. With this focus area, we are committed to decreasing the carbon footprint of our portfolio and to increasing energy efficiency of our portfolio. Those are the two main priorities in these sustainable cities. We are committed to only owning assets that are net zero carbon in operation by 2030. We continue to be committed to improving energy efficiency by 7.5% by 2025. This is the voluntary energy efficiency agreement that we have been part of already since 2002.
We continue to implement the actions as part of this agreement. Very importantly, we invest in the growth centers. Sustainability has, as said, a very strong link with our growth. We invest in locations with good accessibility and services with good transportation links. That is also one of our key sustainability factors. We have also divided these long-term targets into annual targets and into smaller parts. We are reducing energy consumption by 3% annually and measuring that in our energy intensity. On the development project level, we are targeting to have energy efficiency level 80 or below in our new construction projects starting from next year. When we look at the major renovation project, we have a target to improve energy efficiency in 30% of our major renovation projects. We also have a water consumption target, reduction of 5% by 2030.
Circular economy, important sustainability aspect for us as well. There we have a target to improve our portfolio waste recycling rate up to 55% and related to new development and major renovation to improve it to 70% by the end of 2023. Moving on to best customer experience, another focus area of our sustainability program. We work to promote better and more sustainable urban housing. The Lumo brand provides and delivers residents the best customer experience in housing. That is also in the core of our sustainability program. We have two main targets, our main objectives, satisfied residents and increasing our net promoter score. Here we continue our program that is ongoing, the customer's viewpoint program. We have a target, more concrete targets for this program. Ninety percent of our households is a target that is using Lumo application by the end of 2023.
At least 80% of Lumo homes, we have a target to have waste sorting solutions supporting waste fractions by 2025. This is in line with the target that we have to increase the waste recycling rate to 55% by the end of 2025. Also, we have a target to increase the high energy efficiency rates in our home appliances and also to expand the coverage of shared cars and shared bikes that our residents are using. Expand the geographical coverage of the service. In this best customer experience focus area, we focus on those sustainability factors that are the most relevant for our Lumo residents and the neighborhood environments of our Lumo buildings. Employees is a highly important part of our sustainability. The most competent personnel and dynamic place to work is the third focus area of our sustainability program.
We want to be and we are known for dynamic and productive corporate culture and sustainability, as said, is already now part of our DNA. We ensure competitiveness through competence development, provide employee experience that attracts the best talent. We have divided this focus area into three main areas: good management, investing in employee well-being, and promoting equality and non-discrimination. Here we have several concrete targets. We have zero accident targets related to accidents at work. We have a zero tolerance policy for harassment and inappropriate conduct. We want to be the most attractive and highly valued employer in our industry. That is one goal we have in this focus area. Importantly, we promote the equality and well-being amongst our personnel throughout the employment relationship starting from the recruitment.
We have a very development-driven approach to management, and we encourage our personnel to emphasize renewal and learning in their own competence areas. These are issues that we continue to work on with our employees, and they are also a very important part of our sustainability program. A responsible corporate citizen. We operate in a sustainable and transparent manner while developing our shareholder value in accordance with our strategy. That is the key of this focus area. We have a code of conduct, and we have just recently updated our code of conduct with more specific sustainability factors. We have a new supplier code of conduct that will be incorporated in all new partnership agreements starting from next year. We have a zero tolerance policy for grey economy and also zero tolerance policy for data protection violations.
We are reporting taxes very transparently, and these are the factors as well included in this focus area. Also, our Lumo sponsorship program and grant program are an important part of this focus area. We annually support top Finnish athletes and individuals and team sports for young people. The core of this focus area is anti-grey economy work, privacy and data protection, corporate governance, paying taxes transparently, and compliance. These are kind of the foundation, the base of the sustainability program. Here, I'm putting together the sustainability frameworks and recognitions that are supporting our sustainability work. The key commitments that we have for sustainability is advancing net zero. We are targeting a 2030 zero emission energy usage. We are also committed to United Nations Sustainable Development Goals. We are ongoing with our—we are continuing and ongoing with our voluntary energy efficiency agreement.
All our offices are Green Office certified. We have a recognition also for being a responsible employer and also being a responsible summer job provider. These are the commitments, our key sustainability commitments that we have. Regarding our sustainability recognitions, we are very happy with our first GRESB result. We have done our first Global Real Estate Sustainability Benchmark reporting this year. We got three stars, 70 out of 100 points, and a Green Star recognition, which we are very happy about and a very good result for a first-year reporter. Also, our annual report 2019, we did in accordance with the EPRA sustainability best practice reporting principles for the first time. We got Silver Award from that and also Most Improved Award. Very happy about that. These are the frameworks and recognitions that we hope to continue.
We are also reporting and applying the GRI standards with our annual reporting. That brings the framework for our sustainability annual reports. Our sustainability memberships that we have that are supporting our sustainability work in Finland is that we are a member of the Finnish Business and Society. We are a member of the Climate Leadership Coalition. We are Helsinki's Ilmastokumppani, which is Helsinki Climate Partner. These are the key frameworks and recognitions for our sustainability work from going toward from today onwards. Finally, putting it all together, where we are the way forward from today is that from now on we are dividing our sustainability according to this our sustainability program. We have four focus areas: sustainable cities, the best customer experience, responsible corporate citizen, and most competent personal and dynamic workplace. We have objectives for all these and then more detailed KPIs.
The work that we are, the sustainability work that we are doing is from now on based on this, our program. The foundation, ensuring long-term profitability, business growth, sustainable responsible operations, and transparent communications and reporting and continuation in that, are a very important part in enabling the rest of the sustainability work to go on. We create better urban housing. That is our mission. That will be also in the core of our sustainability work. Thank you very much.
Thank you very much, Hannamari, for the presentation. Let's get the Q&A started. Please, operator, we are ready for questions.
Yes, thank you. Just as a quick reminder, it is zero one on your telephone keypad if you wish to ask an audio question. Our first question comes from Anssi Kiviniemi from SEB. Please go ahead.
Hi guys, it is Anssi again from SEB.
Yeah, a couple of questions from my side. First of all, you target to achieve the zero carbon level in energy by 2030. Kind of what should we read on that in terms of investments? Does it mean that your renovation and modernization spending will increase in the coming years? In concrete terms, does it also mean that you will be focusing more on thermal energy and those kind of solutions for keeping the apartments heated up? That is the first question. Thank you very much.
A very good question. The roadmap that we have for the zero carbon 2030 is consisting of improving energy efficiency and own renewable energy production as well as buying renewable energy. We have already now been part of the voluntary energy efficiency agreement. We have already now been implementing the energy efficiency actions. We continue to do that.
Within this framework, we are also a big part of this framework is our new developments, which are built very energy efficient on a good energy efficiency level. That is one important part. Also, the renovations that we have done. Actually, we have already been implementing the energy efficiency as part of our renovations. These we are continuing on the same investment principles as we have already done.
Okay, we should not expect any increases in renovation and modernization spendings, right?
Right, yes.
Okay, and the thermal energy part, where do you get the energy for heating? Could you touch a little bit on that part? Is there a change in view how you drive the business?
No, there is no change. These are the kind of decisions that we make on property-based level and on investment-based.
We are continuing with our long-term maintenance goal and maintenance plans that we have for the coming years. If there is, we will always evaluate in case of every property the possibilities for own energy production. We will make the decisions based on the same investment decisions that we have done before as well.
Okay, that's all from me. Thanks.
Okay, thank you.
The next question, if we have any.
Our next question comes from Svante from Nordea. Please go ahead.
Yeah, hi, Svante Krokfors from Nordea. Hi. I have one question, and that's regarding what's your customers' or tenants' focus on sustainability, energy efficiency, and so on when choosing apartment? Do you think that you could eventually price differentiate based on apartments' sustainability features?
That might be.
At this moment, we have done, as part of our materiality analysis this year, we conducted a large survey including also our customers. We got almost 3,000 answers of our Lumo residents regarding sustainability and what factors they find important. The views were that the waste recycling, for example, the energy efficiency, the carbon footprint-related issues, and issues related to safety, comfortability of the housing, those were all very important. They are now incorporated into our sustainability program. On the basis of that questionnaire, that was the tenants, it was obvious that they find it increasingly important, the sustainability issues. We will continue to focus on questionnaires like this on an annual or bi-annual ba sis.
Okay, thanks. That's helpful all from me for now. Thanks.
Thanks. The next question, please.
Thank you. That appears to be the last question in queue.
I'll hand back to you for any other ones.
Okay, then we have some questions from the chat. The first being, what do you think about wooden buildings from the ESG perspective? Do they have lower carbon footprint?
That's a very good question. Yes, they have a bit, they might have a bit lower carbon footprints. We have just now, very recently, we are actually on, we have our first wooden developments ongoing at the moment as well. We are waiting the results for the carbon footprint production. There are many research that refer to the fact that wooden buildings have a lower carbon footprint. That's also one thing that we are analyzing in the next, in the future.
Can you elaborate a little bit about the definition of the nearly zero energy emission buildings?
Is the whole construction process defined as zero emission or just the finished building? Are you compensating the emission that are generated during the construction phase?
The nearly zero energy building, the definition is that the building is using renewable energy. Totally, the energy that the building is using comes from totally renewable sources. That is the definition. The definition does not include the construction phase, not the materials. It is concentrated on the energy usage. What is included in the definition is the energy efficiency and then the production of how the energy is produced in the building.
Can tenants choose freely their electricity provider or do they have to buy electricity for sustainability-generated sources?
They can use the source freely. At the moment, the electricity that we have for the property common areas, that is from renewable sources. That is 100% renewable electricity that we have.
Could you elaborate on your possibilities to utilize the apartment or property-specific water or energy consumption data to nudge or incentivize the tenants to save natural resources in line with your goals?
That's a good question. Yes, that's something that we might be looking at in the years to come. I think that the very important part of this is that we increase the communication with the tenants about this, how to save energy and how to save water. I think the communication is an important part of this achievement and also incorporating tenants into paying attention to their water usage and their energy usage. Also, what we do as our normal maintenance planning and maintenance work, we are always changing or paying attention to the water equipment that we have in the buildings to make them as water efficient as possible.
These are maybe the main ways to concentrate at the moment on the water consumption.
How do you audit your suppliers and the suppliers of your suppliers?
As said in the presentation, we have just very recently now launched our supplier code of conduct. How we plan to incorporate this into action is that we are incorporating the supplier code of conduct into all of our agreements with our suppliers. Also, we take sustainability as part of our cooperation in the corporate meetings and all cooperation that we have with the supplier. We do internal auditing as well with our own resources for our suppliers. Sustainability and responsibility factors are part of that as well.
Yeah. Then we talk about what are our main means to receiving or reaching the net zero emissions.
Could you review the main actions when transiting our current assets into net zero?
Regarding our current assets, I think the main way of moving towards zero is, first of all, the major renovations and all renovations that we do and how to implement energy efficiency in that sense. Also, the consideration of buying district heating products that are from renewable sources.
Okay, thank you very much.
Thank you.
It is time for our final but not the least presentation. Ville Raitio, welcome to the stage.
Good afternoon, everyone. If this was a rock concert, this would be a very special slot. That is why, because we are moving into the sunset slot of the day. Those listening in on the presentation in Helsinki can testify to that. Let us spend the next 20 minutes or so looking at our investment strategy.
I want to do a couple of things. First, try to understand how we are generating growth. As you know, we are aiming for EUR 200 million to EUR 400 million of annual growth. I'll open up a little bit the avenues, the ways that we generate that. Secondly, we have a special collection of projects, the Metropolia schools that we acquired a couple of years ago. Let's spend a brief moment on those projects and see where we are with them. Finally, what I will do is run through a specific investment case really from start to finish. How do we go about identifying investment opportunities? What is the exact process that we then go through? Finally, what does it look like now that the investment is completed? The starting point really is, again, investing that EUR 200 million to EUR 400 million on an annual basis.
What is it that we're looking for? First of all, the question is about the cities. Which cities do we invest in? As you know, our focus is on the seven largest cities in Finland. More specifically, with the growth investments, we are targeting the top three, if you like. The metropolitan region, the Helsinki region, as well as Turku and Tampere. These regions all benefit from strong population growth. Tampere and the Helsinki region, they're all forecasted to grow at double-digit numbers for the coming decade. Turku, almost the same at 8.5%. Strong, robust population growth and urbanization, which sets a really good starting point for our investment strategy. Secondly, we want to understand what kind of neighborhoods we're investing in. We're building homes for people. What are good locations for homes?
We want to see good transport connections, both road connections, but also public transport. We want to see parks and other recreation facilities. We want to see shops and services where people live, where they shop. As we've heard today already quite a bit about sustainability, those features are really important for us as well. In terms of implementing that strategy, we have three main alternatives. Direct acquisitions, our in-house project development and land bank, and then finally project acquisitions directly from construction companies. We remain open for direct acquisition opportunities. We have a track record of implementing large transactions. We are all the time looking at different opportunities that feed our strategy and are ready to move when the opportunities present themselves. In terms of the in-house development, and as you can see, the two final boxes, they really represent ways of growing through development projects.
The in-house development is really focused on our land bank. We own approximately 180,000 sq m of land. Roughly half of that is already zoned. That gives us a good path to grow. The other half is still something that we are working on through the zoning process. The land bank itself, together with the Metropolia properties, provide us some growth opportunities for approximately 3,000 new homes. Quite substantial avenue for growth. Finally, the project acquisitions, buying projects directly off construction companies. The main difference here is that as we work on our own developments, that is where we take a very active role in the design of the buildings as well. Whereas with the project acquisitions, typically the design responsibility and the planning responsibility lies with the construction company.
Of course, we review the plans in our due diligence, like I'll show you in a minute. Typically, they come as sort of readily planned. This is something that you will probably recognize from our quarterly reviews in terms of our development pipeline. Two important points that I want to make here. First, as it comes to the actual map, you will see quite a number of dots, and you will see that the dots are linked and closely related to either the metro connection or the railroad, which is shown in the darker blue color. Again, coming back to that point in terms of the micro location and where we want to see the assets located with the good transport connections. Also, you'll notice that this is not the complete map of Finland, but right now this is where our development focus is.
All of the projects that we're right now working on are in the Helsinki region. The second point to make here is about the numbers in the table. You'll notice that we have around 500 apartment completions for 2020. Perhaps right now, as we're already in December, it is more important to look into 2021 and 2022. We have around 1,400 and 1,600 apartments on an annual basis due for completion in those two years, setting us on a very good path in terms of delivering that growth target of EUR 200 million to EUR 400 million of annual investments. 2023 is something where we do not have such high numbers yet, but that is really if you think about the construction period, typically 16 to 18 months. Everything that we've been working on so far has naturally flown into the 2021 or 2022 buckets.
Increasingly, the opportunities that we're working on right now will gradually start to be apparent in the 2022 and 2023 numbers. Let's zoom in to Helsinki. Like I promised, let's take a quick look at what's happening with the Metropolia properties. This is a portfolio of six schools used by the Metropolia school. They centralized their operations on one campus and therefore did not need the schools any longer. Therefore, the city of Helsinki sold these properties. We were very fortunate to be able to acquire them a few years back and since then have been working on the zoning for those properties. Of course, they've been in a public use, and now we're working on zoning them, of course, predominantly into residential use. The photos show that they are quite unique, quite special buildings.
We are aiming to develop up to 1,000 apartments, 1,000 homes into these locations. The little table there on the top right-hand corner shows you our best estimate as we stand here today in terms of when we are through the zoning process. The first two assets, A and B, we're really moving towards the final stages of the approval now in December. The remaining four assets, we hope to complete the zoning of those for the most part during the first half of next year and then for the final asset, second half of next year. I've also shown a simple graph in terms of how the zoning process works. The little blue eggs in the bottom of the screen, if you like, that shows the interaction. There is always, it's a public process.
The public has an opportunity to voice their opinions, voice their concerns of these processes. Therefore, with this element, it's always difficult to assume and give a precise timing as to when exactly the plans are going to be complete because of the potential to opinion or the potential to appeal on the final zoning. I think the graph there should give a very good understanding of what we're aiming towards. At the same time, as we're already quite far with the zoning process on most of these assets, we've started to look at the detailed planning and looking at the projects and their completion. If all goes well, we should see the first projects started already towards the end of next year in terms of the construction start. Let's go back to our development map. Here now you can see that I've highlighted case Kirkkojärventie.
Why this specific asset? As I'll show you in a minute, it's been included in one of our reverse tender offers and processes, and it's also something that's recently completed. It's now gone through the whole cycle, so it's quite interesting to look at it right now. Secondly, of course, I mean, you must love the name. Kirkkojärventie is so easy to pronounce, so this is for all our foreign audience. Sorry, bear with me. I'll just refer to it as the asset. If you look at the process, it's really four steps. By the way, this is the picture of the asset. This is how it looks like in Espoo about 200 days a year. So beautiful. We start with the reverse tendering process. I'll talk about that in a little while.
I'll also show you how we've approached the actual investment underwriting, what are the things that we're looking at, what are the things that we're paying attention to, the actual construction, and quite importantly, what are the risks there on us as the investor versus then the construction company who is actually delivering the process. Finally, as the building is now just complete, a little quick look at the lease up on how we have performed there. In terms of the reverse tendering process, about 18 months ago, a bit more even, spring of last year, we approached construction companies that we knew are active in the Finnish market and asked them to propose us development portfolios in the tune of EUR 100 million each with the following shopping list, if you like.
We wanted the assets to be located in those top three regions, Helsinki, Turku, or Tampere. We also follow our own design principles in terms of our own development. We wanted those to be as closely matched as possible with those projects that would be offered to us equally. We were also looking at the net zero energy building standard. We wanted to reach that level of energy efficiency as one of our key sustainability goals. Finally, we were looking at an average apartment size of 45 sq m. We went through the offers, and the process really culminated in August of last year with us signing two cooperation agreements with SRV and with Skanska, covering a bit more than 900 homes altogether. The asset that we are going to talk about now is included in the agreement that we signed with Skanska.
That was nearly 400 homes in Espoo. Getting a little bit closer with the actual underwriting, there is quite a bit of material here, but this is something that we look at as we evaluate the investment. I'll make a few points there. We want to understand the area profile, how we score the location, how we score the public connection, the transports. We look at the amenities. We look at the sustainability features. From the map, like you can see, there are both recreational opportunities very close by, schools, shopping opportunities, and a train connection to the city of Helsinki in less than half an hour. It ticks a lot of boxes in our interest. The bottom shows the Lumo services, and I'm sorry to say, cats are not included in the rent, but you're of course welcome to bring your own pets.
A little bit closer look at what is it that we then mean by those different dots and how do we look at the amenities, for example. These heat maps really are looking at all of the data that we have on the area and really showing it in a graphical way and scoring it in terms of how we look at it on these three key aspects of amenities, transport connection, and then nature and recreational areas. Let's then look at the actual development process. With this specific asset, the developer was developing the whole block, so they got a little bit of a head start in terms of the development of the asset. The construction started in October 2019, and it's now finished at the end of October, and the clients moved in beginning of November.
In terms of the roles and responsibilities, and this is a key point in a sense that if you consider the pipeline that we're working on and to understand a bit more closely the risks that are involved with that. Very simply, the design responsibility, the timetable responsibility, the budget responsibility, that's all with the developer. Our main responsibility comes with the project oversight. We have our own staff who are looking after the project, so we understand what's going on in a very detailed way. Of course, we are funding the project as per the completion rate of the building. That's our main responsibility. Most of the financial responsibility, therefore, in terms of the actual project, in terms of the construction risk, that is with the construction company. What's our competence in this? We have the internal project management team.
Our development team is 20 people strong. For each of our projects, we have both the project manager who's looking at the project, the overall timeline, and then, of course, following up on the completion rate. We also have a technical oversight. This goes a lot more into detail in terms of the technical implementation and really, at the end of the day, making 100% sure that we get what we are paying for. Let's then move into the fourth and the final phase of the building as it comes to the development, and that is the lease up. We start leasing the buildings six months ahead of completion. We benefit quite a lot from our web store in terms of the lease up efforts, but we also use our direct sales team.
You can see here how the occupancy has evolved, how the sales have evolved. We were pretty much at sold-out position already in October. When the building was then taken over by us in the beginning of November, we were at 100% occupancy rate, so all of the apartments sold. Quite a good result. You can also see that roughly half of the apartments were sold through our web store. This is quite typical if you look at our new construction. Also, perhaps interesting to think that, okay, this is, of course, a project that's been quite successful in terms of the lease up. We are typically underwriting the new investments to a 97% occupancy, and that's something that we look at completing within the first three months of the acquisition or the completion.
That is something that we have been also consistently able to achieve throughout this year. Finally, in terms of the customer profile, just a few observations there. I will start with the donut on the left side. If you look at where the people are coming from, where they are moving from, most of them are actually not moving from that far at all. More than half are coming from somewhere else in Espoo. That is quite typical because what you tend to see is that once people get accustomed to a certain area, they tend to move within the area rather than moving outside of the area. Of course, if there are big changes in the personal situation in terms of work, etc., then it is a different story. By and large, this is quite typical.
I guess the one area where this differs from a number of other properties is that if we look at the longer-term trend specifically for Espoo, we see that from the start of 2018, more than 20% of people have come from outside of the Uusimaa region, so from the rest of Finland. Like you see here, it's less than 10%. Interesting consideration. Maybe there's something to do with the COVID situation right now, so people don't necessarily move that much from one location to another. That could be a possible explanation. In terms of the household side, like you can see, a little bit more than half, one-person households and then a third of two-person households, with the remaining being in the larger households.
If you look at, again, contrast this specific investment to the broader market, I think we've overemphasized the one-person households a little bit here. The market number is probably closer to 45%. Equally with the two-person household, not a big change there or not a big difference there, whereas, of course, in the market, then the larger households are a bit or see a little bit higher numbers where we've emphasized the smaller households in this specific example. Hopefully this has given you a good overview of how we go about implementing the investment strategy through those three pillars in terms of the acquisitions, our own in-house development, and then finally buying projects directly from the construction companies.
Also a little bit of an update on where we are with the Metropolia properties, and then finally with the walkthrough of our development process from identifying the investment to completing and then finally lease up and including it into our portfolio. Thank you.
Thank you very much, Ville. Before we start the Q&A, I would like to remind you that we have the first 10 minutes with Ville here, and after that, we will have all our speakers on the stage, so you can still have questions with them if you would like to. Let's start the Q&A with Ville. Please, operator, we're ready.
Thank you. Just as a reminder, if you wish to ask a question, it's zero one on your telephone keypad. Our first question comes from Svante Krokfors from Nordea. Please go ahead.
Yeah, hi, Svante Krokfors from Nordea. Thank you, Ville, for the presentation. Very good to look at how you look at your growth path as you haven't been acquiring anything. I guess that is mainly because of the price level in the market currently. Could you elaborate a bit why you say that Helsinki, Turku, and Tampere are the focus areas, but you currently build zero apartments in Turku and Tampere?
Yeah, absolutely. I think we are within that strategy and within that scope. We are quite opportunity-driven. This is really the function of where we've seen the best investment opportunities and why we have been so focused on the Helsinki region for the time being.
Okay, that's clear. Perhaps on the different ways that you can grow, obviously when you buy a portfolio, you get the yield that you pay. Could you elaborate a bit on what you expect in development gains when you compare in-house development versus project acquisitions or reverse tendering and also conversion of, for example, the Metropolia to apartments?
Sure. I'll start with the two different types in terms of our own in-house development versus then the project acquisitions directly from construction companies. I don't think that there is, just by the different format, necessarily a fundamental difference in terms of the profitability of those projects. I think it's quite location-driven and therefore also revenue-driven in terms of where you would see potentially the most profitable investment. It's not necessarily whether we do it in-house or we buy it from a construction company that's driving the difference. As we look at our development cost, we take into account all of our own costs in terms of managing the process. That's a cost that's put on top of the construction cost. We also, of course, take into account the time value of money that's involved with the construction period. Those are taken into account.
Once you take that into consideration, we're typically shooting for at least a 4% yield with those investments. That's, just to give you a very rough idea, kind of the yardstick. In terms of the development opportunities as it comes to the conversion, that's probably not far off if you take the numbers that I just talked about as a base for the Metropolia opportunities. Like I was explaining, we're still a little bit off in terms of finalizing the zoning. That's a question mark, and that's why I wouldn't want to sort of state any specific numbers at this point. Also, like I said, they are unique properties, but at the same time, they are old-school buildings. In terms of the efficiency, you would have, for example, really, really wide corridors that you wouldn't necessarily have if you were building the apartment building from scratch.
I mentioned that because that has a bit of an impact on the efficiency. While we have very, very unique assets, very, very unique locations, and hopefully are therefore in a position to drive the rents as well, of course, the construction itself needs to be taken into account.
Okay, that's very helpful. Thank you. Final question regarding the fact that you haven't acquired anything in a while. Is it mainly owing to that you haven't found the right locations or that the prices are just too high on the ones that you find suitable?
We've turned an awful lot of stones, and like you said, we've not really completed too many direct acquisitions this year. Pretty much the same applies for 2019 as well. The way I look at it is that we remain diligent in our process, and right now, at this present time, we've seen more value in the development opportunities compared to the direct acquisitions. Like I said, we remain open for business on that front as well.
Will you remain open also for divesting apartments if there is an opportunity for that?
That's probably a smaller focus going forward. As you know, we've sold quite a lot of apartments in the previous years. Last year, we sold roughly 500 apartments, and there were certain non-strategic locations that we divested at that point in time. That really completed our divestment program for the present time.
Okay, thank you. That's all from me. Thanks a lot.
Thank you.
Next question, please.
Our next question comes from Oliver Carruthers from Goldman Sachs. Please go ahead.
Hi there. Thank you very much for the presentation, Ville. I just wondered if you could comment a little bit about the new supply environment, particularly in Helsinki, where your land bank is. On top of that, any comments regarding further projects that you're looking to acquire and how you really see the scale of your land bank on a two, three-year view? Do you intend to continue to grow it as you have been doing, or will it be more of a case of it kind of coming off as you complete projects? Thank you.
Sure. If we look at just to provide a few numbers on what's going on with the new construction, I think a few points to make. If you look at the estimate for the country in total and all of new housing, I think the number's around 28,000. If you then take off the regulated part of the market and if you focus purely on the non-regulated part, on the flats, that's where we are active in, so be it for owner occupancy or be it for an investor like ourselves, I think the latest projection is 16,000 units for this year, going down to 11,000 for next year.
There is quite a decline in terms of the production volumes, and I think that will also be beneficial for us in terms of our acquisition opportunities as there will be less competition and less development coming online. That is one thing. In terms of our focus, we remain focused on those three areas, so we continue to evaluate opportunities in the Helsinki region as well as Turku and Tampere. Finally, I think you asked about the land bank, so that is also quite opportunity-driven. I think we have, like I mentioned, we now, through the land bank, have a path to add around 3,000 homes to our portfolio. I think that is a very good level. I would love to see some of that unzoned land then go through the zoning process and eventually turn into cash flow positive from our viewpoint.
Probably not any aggressive additions to the land bank at present time.
Thank you.
Next question, please.
Our next question comes from Anssi from SEB. Please go ahead.
Yeah, hi guys. It's Anssi from SEB. A couple of follow-ups. First of all, the fact that you haven't done any larger portfolio acquisitions. Do you think that you need to lower your thresholds in terms of asset location, etc., and also in terms of pricing to get the deals done, or are you unwilling to do this?
I think our main benefit is really to make the most out of the fact that we're able to grow through acquisitions, through the land bank, and through the development projects. I think we've been able to generate quite robust growth through those three strategies, even if the acquisition part has been weaker for this year. I would be a little bit reluctant to start compromising on the investment criteria.
Okay, thanks. That's clear. On the Metropolia project, I know it's early stage, but you have highlighted that you aim to have 20% development gain in your own production and own units that you build. Is this a fair assumption for the Metropolia, or how should we read the situation currently?
I think that's a good basis to start. I'd love to aim a little bit higher than that, but starting with the same base as for the rest of the portfolio, I think it's a good place to start.
Great, thanks. The last question is on project management team and the organization capabilities and perhaps scalability. Can you increase the development volumes, meaning units under construction, with this team, or do you need to hire more staff or do something else in order to facilitate the, let's say, faster growth if there are more opportunities in the future?
Right now, we're not looking to expand the team any further. I think short-term, if there are changes in the portfolio so that we need more simply manpower to manage the process, we, of course, always have the flexibility in terms of outsourcing some of it, which is an important option for us. Long-term, I think we are right now at the level where we need to be, and that's already accounting for the growth that we are aiming at.
Okay, thanks. The last question, it's on the units under construction, and we are close to record level, so at a record level currently what you are doing. Is this a new norm, or is this a peak, or should we expect higher numbers going forward? What's your view? How do you aim to drive the own development business?
I think, as you know from the numbers, we've been ramping up the development activity really from last year and have seen quite an increase. Of course, the nature of the beast is that those production that also finishes and sort of gets removed and becomes part of the portfolio as it should. With the targeted growth, I think we will continue to see a high number of homes under construction. This is probably something that we'll get used to.
Thank you very much, and that's all from me. Thanks.
Thank you.
Thank you. We take a short break, and we will invite all our presenters to the stage and continue the Q&A then. Thank you for your presentations today. We will now continue the Q&A session, and we will continue to take questions from the conference call line. Please, operator.
Thank you. Just as a reminder, if you wish to ask an audio question, you may do so by pressing zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from Anssi from SEB. Please go ahead.
Yeah, hi guys. It's Anssi from SEB. One question on the short-term trends that you are seeing. You have been a little bit more positive on new rental contracts when we have kind of entered, let's say, a recovery phase from the first COVID peak, but now we are seeing more infections in Finland on that side. Has this impacted the new rental contracts, and kind of what's the outlook in the short-term like for like?
Yes, Jani, please.
Yeah, thank you, Anssi, for your question. I think it's quite early to predict the impact on renting with the latest COVID-19 news. What we learned from the first wave of COVID-19 was that the impact was temporary. As we've been providing information, already in July, we received a high number of new tenant agreements, actually a record high number of tenant agreements. As soon as things got better, people started moving. My estimate is that if things would get worse, there might be a short-term impact towards moving. Of course, if there would be a lockup, that would have an impact. On the other hand, globally, people are waiting for vaccinations to start. If something would happen, it would be a short-term impact. Probably not major impacts towards like-for-like growth in the mid to long term.
Okay, thanks. That's all from me.
The next question, please.
Thank you. Our next question comes from Svante from Nordea. Please go ahead.
Yes, hi from Nordea. I hope you can hear me.
Yes, we can.
Yes, good. I have a question to Jani regarding the transaction activity in the market, which slowed down in the spring. Have you seen any more activity on that side? You also mentioned two deals that you or two portfolios that you looked at, but that you walked away from. Could you comment a bit on the market activity currently?
Yeah, thank you for the question. As we've been providing color, we attended a bidding contest during the springtime, ended up walking away. Just a month ago, there was another one going on, which we participated in and decided to walk away. That deal has not been closed yet, so we actually do not know the final buyer or the pricing. There have been indications that there is a lot of interest towards our markets from international players, and some of those acquisitions could come available, but nothing significant going at the moment as it seems. As Ville was providing information, he and his organization have been turning a lot of stones in order to find good possibilities. We will keep on working every day.
Okay, thank you.
Thank you. Next question, please.
Thank you. Just as a reminder, if you wish to ask an audio question, it is zero one on your telephone keypad. Okay, there appears to be no further audio questions, so I will hand back to the speakers.
Thank you very much. We have some questions in the chat. Actually, they are related to Ville's presentation, so let's continue with those. Could you comment on demand-supply balance for your new apartments coming to the market in 2021 and 2022?
Yeah, that kind of relates back to what we were talking about already in the previous Q&A in terms of the production volumes and the growth prospects of the city. That seems to be balanced and also taking into account that there's at least right now an expectation of some type of a slowdown, actually even quite dramatic in terms of the number of apartments started. I think that all bodes well for the completion of our apartments and the lease-up. Even if it has been an exceptional year, we have progressed quite well in terms of our letting targets, just like I was showing with this one specific example as the illustration. I think we're looking at 2021 and the lease-up in a very positive way.
Any comments on smaller markets outside Helsinki, for example, Lahti, Jyväskylä, or Kuopio? Do you plan to exit, keep the current footprint, or grow in those markets?
Yeah, we do not have any, like I was mentioning, in terms of the divestments. I think we are happy with where our portfolio is right now at the present moment. The markets that you were mentioning, some of the smaller cities, if you look at our occupancies there, it is quite clear that we have room for improvement. You can also see the impact that we have seen also over time in some of the smaller cities that even small increases in supply can be a little bit of a short-term shock to the market. I think we see a little bit of that going on as well as some of the more COVID-19-related impacts of universities closing down, students not having to show up then for the classes. That is also important for the smaller university cities.
There's a little bit of one-off impact and a little bit of short-term increase in supply in that regard.
On the slide on the customer origin, it seems not to be supporting urbanization. Most are local or regional, few moved in from the rest of Finland. Are these short-term or COVID deviation, or is it another effect in the data?
That's a good question and something I was also sort of contrasting and maybe just to repeat that difference. If you recall the numbers, we saw, I think, 9% of people from outside of the Uusimaa, so the closest region. Very little in that sense, people moving in from the rest of Finland. There is a difference in terms of if you also look at it vis-à-vis what's been the historic rate. We were closer to actually 20%. I think time will tell if that's a one-off for this specific asset, because again, it's just one building, or if there was more of a COVID impact in terms of less movement from the rest of Finland.
Do you see wooden buildings as an investment? Are they viable investments for Kojamo, and do you have any strategy to invest or not to invest in those?
We don't have a strategy to not invest. Like Hannamari was mentioning, we have one project under construction right now that started in September. We're quite keen on understanding and learning more. I think there are positives primarily with the carbon footprint. There's still a number of things that we need to understand better, especially in terms of the cost of managing those buildings long-term. Like I said, we're also evaluating those opportunities.
If the economics are the same for in-house developments or buying from a developer, does it not make much more sense to do the latter where you have less direct development risk, for example, on cost overruns?
Important to understand what the risk difference is, because like I mentioned, when we buy the projects of the construction company, we really buy it with the design, with the plan, and most of the construction risk then lies with the construction company. If we look at what happens within our own development, we hire the designers, we hire the architects, so we control the process. We go out and tender the actual construction works with the construction companies, and those are fixed-price contracts. The risk profile is no different compared to if we were to buy it from a construction company start to finish. It's just that we have more of a say and more of an impact in the design phase of the project.
Maybe you have touched on this, but did you have to give any initial rent discounts when leasing up the Espoo project? What is the running rental income on the project compared with your underwriting?
We're pretty much hitting our numbers. The rent, if you look at that, that's just slightly in excess of EUR 20 per sq m. Overall, I think we're very happy with sort of meeting our underwriting numbers, both in terms of the rent levels, but then also in terms of the occupancy curve that I was showing in the presentation. That's very, very positive, I would say. There was a second part to the question as well, or?
What is the running rental income on the project compared with your underwriting?
Sorry, can you repeat the start? Maybe I was.
Oh, yeah. Maybe you have touched with this, but did you have to give any initial rent discounts?
Yeah, exactly. Yeah, no wonder I forgot that. Always hard to think about money moving away from us. No, we have these campaigns. Right now with the Black Week, there was a campaign, but that is for specific apartments and specific assets. Here, we did not use any incentives. We are actually working on the second phase right now, and the sales are progressing quite well in that one as well.
How have you analyzed the market for Lumo One Tower? How large is the market for this kind of high-end and high-priced apartments, and how do you see the demand?
The building will be completed in August 2022. Kathleen was showing some of the ideas in a sense of what sort of service concepts and innovations we are thinking about bringing in with Lumo One. In terms of the market opportunity and in terms of the volume, I do not have any specific numbers to share at this point in time, but there has been quite a bit of initial interest. We have already started to, if you like, build the book and really try to get those already interested in the asset or the building to be in our client list. That initial process has been quite promising.
What is the amount of investment still required to the Metropolia assets?
That depends quite a bit in terms of where we get with the final zoning. Again, one of the open questions partly is the amount of new construction, and that is, of course, driving a lot in terms of the investment volume. A little bit too early to say.
Okay. It seems that we do not have any more questions at this point, so I warmly thank you all and our presenters today for participating and giving us nice and very, very insightful presentations. Thank you all for participating. These presentations are currently available at our website, and the recording of the webcast will be there afterwards as well. Thank you once again, and have a good evening.