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Excellent. Hi, everyone, and welcome to YIT's analyst call preceding the silent period of our second quarter 2024 results. My name is Essi Nikitin. I am heading the investor relations at YIT. Together with me here is our CFO, Tuomas Mäkipeska. We will first hear a short intro from Tuomas, and then we will have time for questions. As a reminder, this call will be recorded, and the recording will be published on our website after the call. At this point, I will hand over to Tuomas. Please go ahead, Tuomas.
Thanks, Essi, and good morning on my behalf as well, everybody. We will be covering into introduction a couple of topics today. We will start with the market update regarding housing business and first of all, CEE countries, and then Finnish situation in the market. Then we will cover the market update regarding the other segments, business premises and infrastructure. After that, we will be moving on to the cash flow and financial position, and then finalizing the introduction by the transformation program update.
Starting with the market update regarding housing and moreover CEE countries. First of all, in our guidance and outlook for the rest of the year, we state that the housing market recovery in Central Eastern Europe is expected to continue. In Finland, the housing market is expected to continue to be weak in the second and third quarter of this year.
The housing sales has continued strong in the Central Eastern Europe, with the Baltics also picking up, anticipating continued strong performance for the year in these markets. As we commented in our Q1 earnings call, our apartment sales increased for the fifth consecutive quarters, in the Baltic and Central Eastern European countries in Q1.
During Q1, our number of startups over doubled, compared to the previous quarter to almost 500 units, and all of them were initiated in our operations in the Baltic and CEE countries. The number of startups in the Baltics and CEE countries is well balanced with the sales to maintain a healthy balance between demand and supply. Over 70% of our apartments will be completed in our Baltic and CEE operations this year. Thus, the good market conditions are key to the group's performance.
In April, we also announced the signing of agreements to establish three joint ventures with the Czech investment group, RSJ Investments in Lithuania, Latvia and Slovakia. The joint ventures will be implemented through a co-partnership model with YIT and RSJ Investments, each owning 50% of the joint venture. RSJ Investments is a longstanding and important partner we have worked with on similar partnership projects in the past.
We are very pleased to extend our collaboration to Latvia and Lithuania in addition to Slovakia and Czech Republic. These transactions are important part of YIT's efforts to develop increasingly capital efficient ways of conducting self-financed housing development business. The Finnish housing market has seen positive developments in terms of reservations, ongoing negotiations and completed transactions, although the overall market has still remained on low level.
The 25 basis points interest rate cut by ECB two weeks ago was certainly a positive sign for the industry and is expected to impact the consumer confidence positively. The market has received our five-year 2% interest rate cap and rent-to-buy campaigns very well, and both of the campaigns have led to dozens of deals so far.
Based on the experiences we have received through the campaigns during the spring and early summer, we see that there is clearly consumer demand in the market waiting for the uncertainties related to interest rates and overall economy to ease. We have a healthy inventory of apartments to sell to the market in Finland during 2024 and early 2025. Our total unsold portfolio of completed apartments in Finland was 1,000 units at the end of Q1.
There has been considerable demand among investors for these apartments in large quantities and even for the whole stock. So far, the offers have not been financially attractive enough, but it is good to see there is capacity and appetite at the market. We see the apartment stock as an asset for the following quarters as completions of consumer units will be at a historically low level for at least one and a half years ahead.
The portfolio continues to be well-balanced and located in attractive areas in major growth cities in Finland. With the population growth continuing in all the major cities this year, the lack of supply will eventually turn the market situation to be balanced. If the sales continue at the pace we have seen in the past few months, the stock of these 1,000 apartments will last somewhere between 12-16 months.
This presents a promising outlook for us. Moving on to the market update regarding other segments, starting with the business premises. In business premises, the underlying operational performance is expected to improve during this year, and the work continues to strengthen segment's profitability. In Q1, we saw an improvement in the underlying performance as a result of lower material costs and improved overall project management.
The negative margin deviations have decreased significantly from previous year's levels. Revenue improved, supported by a healthy order book of the segment as well. The plan forward for the segment is rather straightforward: releasing the capital employed, securing healthy order book, and improving operating profit. The real estate market on our operating countries continues on a normal level, and we see activity both in industrial and public sector to remain normal.
In infrastructure, the overall performance continued to improve during Q1 and ended up with solid quarter, with a decrease in capital employed, supported by the successful divestment of the equipment business and the release of capital from the operations in Sweden. We see this development very positive. Also, the Finnish infrastructure market is exceptionally strong at the moment, and there are several large tenders ongoing that might match our capabilities well, such as rail projects, where YIT has an excellent track record from, for example, the Raide-Jokeri project and the Tampere Tram.
On top of this, there are multiple large projects in tendering phase in the industrial sector as well. Moving on to the third topic in cash flow and financial position. We have had several successful transactions during the past months, improving our liquidity and safeguarding the company's financial position up until 2027.
As discussed earlier, in late Q1, YIT had executed a substantial financing arrangement, including equity and enhancements to existing loan terms, leading to an improvement in liquidity in excess of EUR 100 million. The newest transaction is the successful issuing of EUR 100 million green notes announced to the market last week.
The maturity of the new notes is three years, and the notes carry a margin of 7.5% per annum over three- month Euribor, and the issue price of the notes was 100%. The investor demand for the notes significantly exceeded the size of the offering, which clearly indicates the trust for YIT among investors. The notes were allocated to a balanced mix of domestic and international investors. This entity was an important transaction in proactively managing our upcoming debt redemptions and extending the average net debt maturity profile.
I'm very pleased about the issuance of the notes under a new Green Finance Framework as it further mobilizes our debt capital to support the company in efforts to reach our climate and sustainability targets. Our financing is secured for a healthy period of time, which gives us possibility to concentrate on our business. Also, as communicated earlier, in April, we redeemed the EUR 100 million bond with proceeds from previous asset disposals and capital release measures.
For the cash flow, we have guided for the year that the operating cash flow after investments is expected to be positive in 2024. The cash flow improved significantly in the first quarter of the year, and we were able to reach positive result in Q1, even though seasonally, the first quarter cash flow has been lower than the other quarters.
The efforts made to improve cash flow have continued also in the second quarter of the year. I would like to once again highlight that our underlying asset base is very strong. Key assets totaled to EUR 1.8 billion at the end of Q1. We have a land bank of over EUR 800 million to serve as a platform for future operations and profits. Some EUR 650 million of the portfolio are our own plots and i nventory assets under production decreased to under EUR 320 million in Q1 from over EUR 400 million at the year-end, reflecting the declining number of apartments under construction and the completed apartments and r eal estate inventory amounted to EUR 435 million.
Investments were worth EUR 281 million. There, the biggest single item is the ownership stake in Tripla mall, which is under strategic evaluation, as communicated many times.
Approximately EUR 510 million of our gross debt is related to IFRS 16 lease liabilities, including leased plots and long maturity housing company loans that are transferred to buyer when their apartments are sold. The adjusted net debt was consequently only EUR 260 million at the end of Q1. In big picture, we see that running our business profitably requires clearly less capital than before, and we aim to release capital significantly from our operations going forward.
Since the second half of the last year, we have achieved a positive trend downwards in our capital employed, despite the fact that the completed apartments in Housing Finland have tied up more capital, and this is the path we aim to continue on. Sale of these apartments from inventory will release capital, and low construction volumes will slow down the amount of additional capital tied to apartments in the upcoming quarters.
We will move on to the fourth topic and the transformation program, including the capital release. The program has continued to progress faster than originally expected. As we communicated in April this year, with the actions taken by the end of Q1, we will gain annualized run rate cost savings of EUR 30 million, which will be fully realized by the end of 2024.
Already in Q1, we reached 15% lower fixed costs than in the comparison period. In addition to the cost savings, we are expecting to achieve a significant amount of project-related and capital efficiency gains. Competitiveness is improved by increasing efficiency in procurement and project management and improving productivity. We already see tangible results related to the direct cost savings from the procurement and lower project margin deviations driven by improved project management and procurement.
With the changes implemented during the program, we will be able to clearly improve our competitiveness in the long term. As a part of the program, we are executing capital release measures. The latest action in the first quarter was the successful sale of our stake in joint venture Tieyhtiö Vaalimaa Oy to the company's other owner, Meridiam.
We established the joint venture back in 2015 to manage the E18 Hamina-Vaalimaa highway project, which was completed in 2018. In the project, YIT oversaw the construction of the road, and we continue that work as a project partner in road maintenance. The cooperation with Meridiam and the Finnish Transport Infrastructure Agency in the implementation of the project was excellent, and we are pleased to continue as a partner in road maintenance.
All in all, we will provide more details on the progress of the transformation program in accordance with the second quarter results announcement. To conclude the reintroduction part of this call, as has been discussed, supported by secured financing position and strong asset base, we have a firm focus on delivering full impact of the transformation and the capital release measures, taking the performance of the company to a new level.
We are in excellent position to utilize the operational diversification across different business segments and geographies and at the same time building acceleration capacity for the point in time when it is visible that the Finnish housing market is starting to turn around. That concludes the introductory part here.
Thank you, Tuomas. We are ready now for questions. If you have a question, please use the raise hand function. The first question comes from Olli Koponen. Please go ahead, Olli.
Thank you, Essi, and thank you, Tuomas. I have a few questions, and they are both on the financing side. Could you elaborate your reasoning on issuing the EUR 100 million secured green notes? Did you underestimate your liquidity needs earlier this year, or what is the reasoning behind this?
Yeah, sure. Thank you, Olli. As a part of refinancing and a part of the big plan that we have had already during the spring, it was clear for us that we would like to return to the bond market. That was also stated back then.
As a part of managing our debt maturities and actually the debt structure as well, this was planned that we come back to the bond market. Also what we did, we, of course, redeemed the EUR 100 million bond back in April but n ow with the proceeds from this new bond, we will be amortizing EUR 40 million of term loans and EUR 50 million of RCF, at the same time canceling the EUR 50 million of the total EUR 300 million RCF in use. That was the big plan altogether.
Also, probably to add on that, at this position where we are in this cycle, for us, it was very important to have long enough maturities in our facilities altogether.
But if I understand correctly, you made your maturities longer on your term loans and RCFs earlier this year, and now you got some quite expensive loan to pay those back. Correct?
Well, as I mentioned, this was part of the overall plan that we would return to the bond market, and we had in our term loan on RCF, a plan of amortization as well. So now with this bond, we are able to manage the amortization both in the term loans and RCFs. So we are happy to have completed this new transaction to manage our total debt portfolio and actually increasing altogether the maturity.
Okay, thanks. Second question also on the financing. Could you clarify a little bit what kind of benefits you see or you get from your Green Finance Framework and the financing you get out of it? An example, why would you issue a green bond instead of a normal one?
Thanks. Altogether, the kind of a Green Finance Framework that was launched in combination with the new transaction, I think that was a natural continuum after our earlier Green Finance Framework. We wanted to stay on the green financing domain with that one. Not probably commenting directly on the terms and regarding that being green or not, but anyway, for us, on the sustainability agenda, we see that it is important that also we continue in our financing on the green agenda.
Okay. Thank you. That is all for me.
Thanks, Olli. The next question comes from Anssi Raussi . Please go ahead.
Thanks. Hi, all, and thank you for the update. A few questions left, and the first one is about reconciling our models. What is your assumption for annual interest rate expenses going forward if we think about the current run rate?
That is naturally something that we are not disclosing. But if I give you a little bit of a background. Part of the financing is moving or floating interest rate. Part of them are hedged and part of them are in fixed interest rates. That is managing the balance with them. And based on that, we see that we have quite a good capability of forecasting our financing expenses for the five or six quarters forward. That is what we are basing our forecast on.
But if you think about the Q1 numbers, was there anything extraordinary in financing expenses if we just add the latest transaction to those numbers?
No, nothing extraordinary. As communicated already back then, the one-offs from the bigger transaction financing solution that we executed in Q1. So expenses related to that deal are included in the numbers in Q1, but no other that is different from normal expenses that we have regarding our financing.
Okay, thanks. That is clear. And maybe then about the replan related to this, your long-term leverage target. Sorry if you commented this one already and I missed it, but what is the situation with Tripla Mall right now? Any negotiations ongoing or any promising activity on that side? And then on the other hand, how much deleveraging you would think that would be the best way to go forward?
Yes
think about the coming years, let's say a few years forward from this.
Yes. Regarding Tripla, first of all, I am happy to say that the mall is actually doing very well itself. Commercially, it is growing. Also the whole area around Tripla, it is growing. There is more residential housing to be constructed and also office premises and so on. The Tripla mall itself, it is on a growth track, and still improving its NOI quite heavily, actually.
It is very good to see that we are continuing on the same track as we have discussed earlier as well. That is one thing. The other thing is our ownership there, and kind of discussions that has been ongoing during this and last year with the other owners. We have active dialogue with the other owners. As stated earlier, we have possibilities to exit from that asset. The thing is that it is quite a big deal, also from a European level.
Not that many deals of that size have been executed during the last, let's say, two years or so. Yeah, two years. You need to find the right buyer and right time and then, of course, right commercial terms that would take place for us to execute the deal. That is probably all that we can comment from that perspective. Then, regarding the de-leveraging, and probably it is wise to talk about the gearing ratio that we have.
We have communicated that less than 50% gearing is our target level, and that is intact. That is definitely a place that we want to be in the coming years. It is both, of course, related to the cash flow from the capital release program and also the cash flow from the Finnish housing market pickup. The gearing development from now on depends on basically those two things.
But of course, it is very important to note, we have been talking about four cylinders in our company. One is business premises, the other one is infrastructure. They are performing well, providing good cash flows and very steady cash flows, not tying capital operationally. Then the CEE countries, cash flow that they can produce. Those are the three components or cylinders in engine. They are working well. Those are, of course, supporting the cash flow and enabling us to lower the gearing level. But 50% gearing target is intact.
Great. Thanks. And maybe a final one from me. As you mentioned, tied capital. If we think about the future, do you think that you will actually change your business plan a bit, for example, that you would use less your own balance sheet in the future? On the other hand, do you think that you will require higher reservation rates before you would start a new project because we are living in uncertain times?
Yes, those are very good questions. Starting with the first one. Definitely we see that we are aiming at the business models that would be more capital efficient. I think we have also tried to explain that our operations are currently tying too much capital, and we see that there is a lot of potential in running all of our businesses with less capital tied. Again, I am referring to the contracting segments here.
Over the cycle, both business premises and infrastructure business can be run with negative capital employed and producing steady cash flows. Then, in the housing businesses, both in Finland and CEE countries. Definitely we are aiming at a more capital efficient way of working. What was already in the introduction stated that we are happy to have formed joint ventures with RSJ.
The reasoning behind there is that actually we have sold plots and/or development projects to the joint ventures to be able to actually maintain or even increase the construction volumes so that it won't tie too much capital and then the bottleneck would be removed, which has been the capital employed. Basically what we are aiming at is releasing capital but maintaining profitable volumes over the cycle. That's definitely where we want to be. I am sorry, Anssi, you had a second question. What was that regarding?
Yeah. I just asked that, have you changed your required reservation rates?
Yeah
before you start new projects?
Yes, very good. Definitely we have changed the reservation level that will be required before starting up already, let's say two years ago, one and a half years ago because of the situation. That's why also we haven't had any startups in Finland, basically for self-developed projects. There is a link for the RS financing to be available. That's typically related to the pre-reservation rates.
From our part, what we see now is that we are very carefully monitoring the consumer demand and the reservation rates increasing to the levels that would allow us starting off with the lower risk. That's definitely what we have been actually doing for the last one and a half years, and we continue on the same track.
Okay, sounds good. Thanks.
Thanks, Anssi. Next question from Simen Mortensen. Please go ahead, Simen.
Thank you. I will drill back to the first question from the first guy here in terms of the rational for the bond, which was just issued. Based on my calculations, close to 11% you will pay on that. But you also say the reason for it is to pay down on the term loan and the revolving credit facilities. Isn't this, one, paying down debt with more expensive debt? Second, how should we look at this versus the capital tied in housing and other divisions, where you have the potential to cut the price but instead borrow at 11% per annum?
Is this a reflection of the prices you can expect to sell in the market? Is that the bids? How should we look at this combined, one, replacing debt and versus borrowing at 11% versus discounting out homes? Thank you. I will start with that.
Thank you very much. It is a very good question, Simen, and I think you are basically laying out the whole simulation out there, and this is definitely the simulation that we have done. Regarding the financing itself, it is true that the interest rates are on a quite a high level for us, but for the whole industry and also us in general. That is for sure. As mentioned already earlier, we had a plan already during the spring that this would happen and we would be returning to the bond market. We also, back then, had already agreed on certain amortizations regarding the RCF and term loans. That was in the plan originally already.
Also what comes to the other options of releasing capital, we see that all together, this bond was financially a very attractive solution for us since the market situation, especially here in Finland now, is what we see it is at least very near or even after a significant turning point. In this kind of a market, trying to, let us say, dump a lot of the apartments to the market or sell some of the assets that are included in the capital release program.
Doing those transactions at the wrong time with the wrong price would actually destroy value more. That is basically what we have considered. What I already mentioned. We have also capacity in the market, or we see the demand or capacity in the market to buy actually the whole stock of the apartments, but not attractive enough terms.
That situation may change quite rapidly, actually. Also regarding, we have talked about the Mall of Tripla here. That is also the same logic there. We are basically seeing that at this market situation in Finland, we see that it is going to change in any case. It is a question of timing and optimizing the financing or the financial simulation altogether. Pretty long answer for your very good question, but that is definitely what we have simulated, and we really think that executing this bond was very good option for us in this market situation, at least in short-term.
Clear. It's quite clear you're putting a lot of structural bets here on the recovery in the housing market, et cetera, and the transactional property market. However, September has increased VAT in Finland and the housing allowance to students, et cetera, is also being cut. How do you look at those two elements for your case of a recovery in the Finnish housing market in Q4? Could you please give us a few details on what your views are on the increased VAT taxation and the cuts in housing allowance also, and how you think that might impact the market?
Well, very good question. That as well. As we all know, it is extremely difficult to foresee what kind of impact on the VAT increase would be on the housing market. At the same time, what we really see is that the consumer confidence altogether is the triggering factor for the market pickup to happen.
The consumer confidence is very much related on the uncertainties or the certainties of the costs of housing. In near history, it has been related to the energy prices, but now it's more relying on the interest rates. What we saw, the interest rate cut of 25 basis points, ECB, that was of course forecasted beforehand. We see that as one trigger that increases the confidence amongst the consumers. Also other factors and probably forthcoming rate cuts by the ECB. Those would trigger the or let's say, decrease the answer amongst the consumers.
We see those are the triggering factors. Regarding the VAT, we don't anticipate that will have a big impact on the housing market itself. That's basically what we can comment here.
Okay. My last few questions. One, both the JVs, the one with RSJ Investments and the infra road maintenance divestment. Can you give us an indication of the volume and size of those joint ventures, please?
Starting with the latter one, regarding the sales of the. Actually, we didn't sell the road maintenance. We actually stay as a maintenance partner for Meridiam. We sold our stake of the road itself. We owned actually 20% of the whole asset together with Meridiam. Meridiam had 80%.
As a part of our capital release, it's not in the core of our strategy to own any roads or so. So we sold our ownership there. From cash flow perspective, I would argue that it's not that material. It wasn't a big deal for us. It's continuing on the capital release tracks and finding ways of capital release is more important. The deal size wasn't that big, that we can argue, but no any numbers that we can disclose here.
The both.
Sorry?
Yeah, and the other investments with RSJ.
Yeah. The joint ventures. Yes. The joint ventures that have been formed, they are material. They are for the longer period. Those joint ventures and the assets that we have sold to the joint ventures, they are larger area projects in these countries that had tied quite a lot of capital for the plot and development of the projects. So that's more material. We cannot disclose any numbers regarding those, but we are planning to provide a little bit of a more insight of the capacity of these joint ventures during the next couple of years, in conjunction with the Q2 earnings release. But those in size, those are more significant than the part of the road that we owned.
Okay, and my last question is, in terms of being positive after investment on cash flow in 2024, what can you say? What is the major moving part? How much of that will be existing homes, which is completed, being divested, and does it at all include Tripla?
I would like to actually repeat what I already said, that three of the four cylinders in our engine are working. We expect positive cash flows from the three of the four cylinders here. That is for sure. Then, on top of that, selling the apartments from the inventory here in Finland, we anticipate that we are able to decrease the inventory level by doing attractive enough deals of the apartments, both to the consumers and investors.
As we have already said, we are not expecting that the market would heavily pick up during this year, since we have now guided or stated in the outlook actually that Q2 and Q3 would stay on a pretty low level. We are not basing our forecasts and simulations on very heavy pickup of the housing market in Finland. That is for sure.
In CEE countries, we see that the market is in quite a steady state, and we expect the market continue on a good level and actually increasing or picking up even more in the Baltics. Those are on which we are basing our forecasts. We are not basing our forecasts on the sale of Mall of Tripla. That is for sure. Then again, we have stated that we evaluate our options regarding that asset, and we are continuing the active dialogue with the other owners as well. But we are not basing our case on selling our stake this year.
Okay. Thank you for taking my questions.
Thank you.
Thanks, Simen. Next, Svante, please go ahead.
Thank you, Tuomas and Essi. A couple questions left. Could you repeat what you said about the investor demand for your consumer apartments? Did you say that you basically had bids for all of it? I'm just thinking of, could you elaborate a bit on what kind of investors those are? Because I guess it's quite a limited number of investors who want to buy one apartment there and another elsewhere, rather buying entire blocks.
Yes. Thank you, Svante. We see that there are investors in the market, mainly international investors, that would be willing to buy the whole stock. That's what we said in our comment. There is capacity in the market. There is also interest and actually demand for those assets in the market. That's a very good place to be from that perspective, that if we would be in the situation that we would like to and want to sell the whole stock, it seems that it would be possible. So that we can comment.
First priority for us is definitely to continue the consumer sales, what has been stated before. Then on top of that, we have already actually this year executed a couple of smaller so-called bundle deals of apartments. Also for those kind of smaller deals, there is capacity and demand in the market.
That has actually picked up from last year, that we commented already in Q1. First priority, sell to consumers. Second priority is to do smaller bundle deals. Third would be a bigger deal to sell, let's say, a larger share of the stock or even the whole stock to the market. That's also possible. As you can see, we haven't executed that kind of a deal so far, and that's based on the terms available so far.
Thank you. That is clear. Then with your consumer apartments, and you expect, was it 12 - 16 months to empty with current pace? How do you look at At the same time, we also have quite big supply of rental apartments in the market, especially where you have unsold apartments. How do you look at the competition with that? In this light of that, perhaps the interest rate decline is slowing up a bit compared to half year ago what the expectation was.
Yes. That is very interesting one. First of all, regarding our own stock, even with the current pace of sales, which has been, as we all know, on a quite low level, even with that pace, the inventory would be sold out to consumers in 16 months or so, 12 - 16 months. It's not a long time. It's 2025 spring or summer or latest during the autumn.
At the same time, we see that there is very low new supply to the market from us and from the industry as a whole. There is a pent-up demand for new housing in the cities where we have the inventory. For us, it's clear that there will be a situation where the demand would actually exceed the supply. That's why we see that we are not that worried about our own inventory. That's one thing.
Then, comparing to the rental market. It's definitely a competition for us. Referring back to the other campaign what we have, rent-to-buy campaign, where we have two years time frame on which the consumer can buy, or actually, the consumer signs a letter of intent of buying the apartment, and then start to pay as a rent. But then if the consumer decides eventually buy the apartment, those so-called rents would be then deducted from the final price.
That has actually solved pretty much the problems what we have seen, both in capital area, but also in the growth cities like in Tampere. That has been very promising. As we today have said that we have completed dozens of deals by that campaign as well.
We really think that provide this kind of a new product or way to enter owning an apartment is quite attractive comparing to the option of fully renting one. That is something what we want to accelerate on that track and compete with the rental option that the consumer has.
Thank you. That is all from me.
Thanks, Svante. Then from Emil. Please go ahead, Emil.
Yeah. Thanks for taking my question. Just to continue on the investor demand for your apartments. Can you a little bit highlight or open up what kind of prices they are offering? Because we haven't really seen a decline in new apartment prices, so I would assume that the investors are trying to really cherry pick here and want to pay very low prices for the apartments.
Yes. Thank you, Emil. We cannot, of course, comment on exact prices here. Sorry about that. But try to give you a color on that. When looking at the market situation here in Finland, we really see that the rock bottom moment was already last year, both in terms of consumer demand, but also investor demand. Back then, also the price indications. Now I'm talking about last year.
The price indications from the investors were pretty aggressive, and we didn't see that much potential in that, in executing any bigger deals. It is clear now during this spring and early summer, these kind of investors have increasingly returned to the market. Also, that has had an impact on the indicated prices upwards, I mean. So the situation is actually a lot better in the investor market and this kind of investor market during this year.
But then again, as you can see, we haven't so far executed any larger deals regarding the stock, and that indicates that the terms and the prices are not attractive enough for us, at least so far. But let's say the development has continued to the right direction, and we see that we have actually passed the lowest point of demand, both in consumer and investor side. So that's a good place to be at the moment. And again, I will repeat that it's very comforting to see that there is demand, and the terms are not outrageous, to put it this way, to sell larger shares of the stock.
Okay. Could you just comment on, are the prices offered, are they below the balance sheet value or above that?
We can comment that, first of all, it is clear for everybody, but just for clarification, the EUR 435 million in our balance sheet the apartments, they are valued on the construction price on our balance sheet. We have not been selling our apartments below the balance sheet value. What we can comment that the price indications, some of them have been even lower than the balance sheet value. Value probably more referring back to the last year's indications. We are not in the situation that we would like to, and we would have to sell below balance sheet values these apartments. That is clear for us.
Okay, excellent. Just a last question on the sales you have had. Have you had any discounts on the prices in Finland, Baltics, or CEE, or is it just the kind of campaigns you have?
Yes, we have. As mentioned, we are basing and accelerating our sales by the campaigns because the price sensitivity of demand is not working well in this abnormal market situation. Giving direct price discount, what we have seen, what some of the players in the market have done, it has not actually increased that much sales and demand.
That is why we are continuing on the same track that we are willing to solve the problem that the consumer has at hand. That is mainly related to removing the uncertainty of doing apartment deals. Both of the campaigns are actually tackling that topic very well. That is why we see that both of the campaigns that we are running now are supporting our sales. That is for sure.
We have one which has been in the media where we have one project in Estonia where we have actually tried giving publicly a 10% discount of the apartment. That is a pilot in Estonian market, what we have done. On top of that, Emil, your question. We are negotiating one by one with the consumers, and I think it is fair to say that by these negotiations and using the campaigns, we have also negotiated on the price. That is clear. We do not see a viable option to give a direct public discount since that has not actually increased sales. We stay on the same track.
Excellent. Thank you, Tuomas.
Thanks.
Thanks, Emil. We have a question from Mika Karppinen. Please go ahead.
Yeah, hi. What kind of thoughts you have about new housing starts for consumers in Finland, any timetable indications? Do you have already some pre-marketing projects ongoing?
Thank you, Mika. We are looking at the market very closely at the moment since we think that we are near to the situation where there would be acceptable and lower risk levels and a solid consumer demand. We have several projects ready to be started. That's very good to know that we have then when the time is right, we have acceleration capability, to put it this way. We have several projects ready to be started.
There are pre-sales going on at the moment as well. We have projects where we have pre-reservations already, and we see that during the second half of the year, we anticipate that the market would be in the situation that startups in Finland as well would make sense. As said, we are very closely monitoring the situation, and that's really city by city.
For example, the situation in Tampere and Turku, it is very different from the Capital area and cities like Jyväskylä and like that. There are situations where we do not actually have any stock left. We probably have one apartment unsold in Tampere, or even that could have been sold by now. We do not have any inventory left there, and there is consumer demand. In these kind of cases, where we have the pre-reservations high enough and we have the financing in place, that would trigger new self-developed startups in Finland.
Okay, are there any more questions? If not, thank you all for the excellent discussions. We will publish our second quarter results on July 26. Wish you a great summer and talk to you again in late July. Have a nice day.
Thank you. Bye-bye.
Thank you very much.
Thank you. Bye-bye.