Then we will open up for a panel and Q&A discussion, and we will close with some final remarks of our CEO. With me in the studio, I have my colleagues. In addition, I also have Helena Nordman- Knutsson. Welcome, Helena.
Thank you very much. I look forward to this morning, and I hope you send in a lot of interesting questions.
Exactly. Because Helena will help us with receiving all your good questions. During today, you will be able to send in questions. You can post them. You can see the green button on the right-hand corner. Press there, and you can post in questions. After each presenter, we will open up for a few questions. During the panel discussion, which Helena will moderate, we will also make sure to address all your questions. Please just send in questions throughout the day. With that said, I would like to welcome up and kick off the day with our CEO and President, Peter Wallin. Please welcome up on stage.
Good morning, everyone. We are happy to have you all here today. I hope you're safe and sound in this very challenging world we are experiencing. I'm very excited to be standing in front of you today together with my great team to talk about our revised strategy. Let me kick off by starting with introducing a little bit of flavor of Bonava. We have eight countries in 22 different regions. We have a strong financial position, SEK 16 billion in net sales, and we have 2,100 employees. You can see the beautiful map there. First and foremost, we have a great purpose. We create happy neighborhoods for the many.
In that way, we know that we want to make a customer promise whole, as well as building sustainable homes in the society. If we start by looking into the timescale of Bonava. Bonava, as a separate entity, has been here since 2016, when we were spun off from NCC. Long before that, we have developed homes in all of our markets for many, many years. It's not that we are basing everything we are talking about here today on the last five years. The portfolio of businesses we have is also offering a number of diversities. We have a broad geographical reach, we have a balanced product portfolio, and we are driven by customer insights. In all of that, we have built in the sustainable part.
We also have a very solid financial position, which is supporting great fundamentals for growing this business going forward. Yes, we have struggled with profitability if you take a look over the past couple of years. This has been the cause of a drop in market in a Swedish context, and also very quickly falling volumes in the German market, for example. Quite volatile performance in many of the other markets and regions. Because we are reporting numbers on completed contracts, it takes some time before this is visible. As you also can see, we have starting to turn that corner, but we are not performing at the level we should perform as a group and as a company.
When I started as the CEO in February, we embarked upon a very rigorous review of the business. We were looking into the macro trends impacting our type of business. We were looking into each and every specific business unit and region and the conditions for them. Lastly, we were also looking into the gaps. Where are we performing from the bottom all the way up? This was a great fact-based part of knowing what next steps to be taken in order to improve performance. We came to a number of insights based on this. Firstly, all of our markets are attractive. The need for sustainable homes is tremendous out there. Actually, how you play is more important than where you play.
Our markets differ if you compare them, so we need to have different delivery models and operating models. We can't do one size fit all. Thirdly, our markets are in transition. This is a highly competitive industry, and we need to stay on our toes to stay relevant. The best way to stay relevant is really to focus on our customers. We have a clear understanding on how to become a top-performing player. We need, firstly, a well-managed and strategically refined land bank. In each and every one of the regions we have selected, we need to have a footprint to offer us with continuous volume over time that will offer stable and solid margins over time. Another part of this is regarding efficiency.
To be efficient when it comes to costs and other resources, we need to increase the degree of repetitiveness. The more you train, the better you become. It's a well-known fact in sports, and it's the same thing when developing new homes. Customer focus I've talked about. Being relevant in the marketplace and offering customer satisfaction is key to be successful. To do all of that, we need the fifth pillar, which is a very clear operating model. We need a more decentralized way of operating in order to leverage all the other parts we have in the group. Let me talk a little bit on the market dynamics which we can capitalize upon. Firstly, we know that the underlying fundamentals are strong.
The graph that you can see here depicts GDP growth weighted proportionately by the net sales we have in the various marketplaces. We have seen the markets come back after the first COVID implications in 2020. We also know that we have a low interest rate environment. Lastly, unemployment is decreasing since the first implications of the pandemic, overall on a very low level. All of that bodes in the disposable income and the level of robustness into the fundamentals. Another part which we have mentioned before and which is very strong is, of course, the very favorable demographic trends. The growth in population per se, the urbanization, and the low historic supply. In many of our markets, we have a pent-up demand, where demand is far outstripping that of supply.
When we talk about urbanization, you can take a look here. It shows the graphs represent from 2000 up until 2030 in forecast. You can see how quickly the urbanization percentage is increasing across very developed countries. This trend means that the supply on a national level needs to be looked into the larger city areas where we are living and working. Another part which my colleague Sabine will talk about in a while is this doughnut city concept, where people are moving away from the absolute city centers outside, where you are supported by good transport and infrastructure. That has caused the term doughnut city because you grow in a doughnut around the inner city centers. This is something we clearly see developing, and it's been even more so during the pandemic.
No one has been able to escape the fact that, we have had shortages of material and quick increases in costs. These graphs represent Sweden and Germany, and, the darker, upper line is representing the growth in sales prices on average, and the bottom line is showing the average cost increases. On average in these two markets, you can see a threefold increase of sales prices over that of cost increases. If you take a look on the whole Bonava Group, the same is true. Now, our business models are different. Sometimes you need to fix the sales prices before you actually conduct and start the project, and other times you are able to move the sales prices, along with the market.
In essence, this has meant that we have been able to mitigate the cost increases to a fair degree in the ongoing projects. We also believe that we are in a robust level when it comes to starting the new projects. When we start a new project today, we will need to have certainty in the sales strategy and the sales situation. We need to have super secure the cost estimates for the project. Thirdly, we need the right team to be in place for the project. It's only then we will start a project regardless of having the building permit or not.
Those are really strong for us going forward because this will make us much more credible when we start the project and see the final outcome of the project. Take a look at some of the global trends that we believe that we are successfully addressing. ESG at the core, this is extremely important for our customers, our employees, and our partners. This is something which we need to address big time today. The way we have responded to this is that we was the first developer that adopted the Science Based Targets in measuring the climate and climate actions. Another way we are looking into this is also more and more going over to brownfield development in order to save greenfield land development.
The digital part is something which we have worked with over a long period of time, and that has been very beneficial for us during the pandemic, of course, where we are offering a digital customer journey for our customers, and we are also for the production and selling part using virtual design and construction. This is also making it possible to do some things within the Science Based Targets and the sustainability part on environmental issues. We also have been able to adapt quite quickly to the changed customer preferences on the back of the pandemic. Because this has been built on the customer insights. The way that we have laid out the floor plates in the projects and in the homes, and then of course, having access to green areas.
Now all of this needs to be built in how we are choosing the land bank we are investing in as well. Taking a look into the housing dynamic, let's first revisit the two major parts of the projects. We have the multifamily houses and the single-family houses. The multifamily houses we are developing and selling across our six different operating units. When it comes to the single-family houses, that is three of the markets. That's Germany, Sweden, and Norway. Another part of our business is also then selling to investors. That's more business to business. This is a great source of mitigating risks when we are starting the project or building up a project over time.
Also because of the growth in value in this part of the market, it's also meant that the pricing and value in the business to business is very much equal to that of business to consumer. This is of course meaning that we have much greater room to move in between the two different segments. Within all of this, with investors and consumers, with multi and single-family housing and with various countries, that is why we say that we have a balanced portfolio. We are offering a balance which I think makes us unique and stand out in the marketplace looking across our competitors. When I spoke about repetition, one thing which is key in repetition is that of having a standard system. You can say a ready Lego on how to build the products we have.
If you take a look across our markets in Germany, in Baltics, St. Petersburg, and the single-family houses in Sweden, we have progressed, and we have very standardized and well-working system. Whereas in the Nordic region, Finland, Norway, and Sweden, on the multifamily housing, we are less advanced. We need to recognize the fact that we have various local demands and expertise levels in these markets. We will hear more about Germany and the single-family housing Sweden later on. But when we talk about standardizing and repetition, it sounds boring perhaps, and it is a tedious process, but I can promise you that the rewards are so much greater, not only to the cost and economies of scale, but also into sustainability and health and safety.
Given that we look so different across the markets, we need to operate differently in our markets. If you take a look on the screen behind me here, you have the design and build contractor that is buying external services, building our homes completely. That requires a certain set of skills, a certain set of expertise. The middle part here, it's divided contract, where we are having the management. We are taking the responsibility that normally a general contractor would take to coordinate, procure, and to manage the various subcontractors. This offers, I would say, much higher level of expertise and know-how because all the things that falls in between, we need to manage.
I think this is something we only can start and embark upon when we have the needed expertise level. Lastly, we have our own resource actually on the blue-collar side, partly. When looking at the various markets, we have categorized them depending on the level, the status of the business. Starting with Finland and Norway, they have struggled quite a bit with profitability, high deviations in product margins. Here we need to get the things and the basics right to start with. It's attention to leadership and management and building up the necessary know-how and getting stability in. The next step, where Sweden is, we have to ensure profitability.
We have the major part of the know-how, we know what to do, and we are on a higher level. We just need to increase consistency, and we need to increase the level of profitability. Lastly, we have growth business, where you have Germany, St. Petersburg, and the Baltics. Here we have well-functioning systems, good track records over many years. When you are in this last bucket, you can drive growth and a growth agenda because you have the prerequisites to grow. Let me go into each and every one of the various markets we have now. I will touch base shortly on Germany. We will hear more from Sabine coming on in a while. It's a very attractive market where we are in 8 regions. We are building both single-family and multifamily housing.
You can see that the share of Germany is actually 46% of the group's net sales. This is a very important part of Bonava in many respects. As I said, this part is in the growth business. If you take a look on the top right-hand side of the graph here, you're gonna see the volumes. We are quite far away from the numbers that we posted on the number of levels up until 2018. This was also one of the comments I made when I commented on the struggling profitability. We will get up here again, gradually, and perhaps even above those numbers.
The nice thing about this from a business model point of view, we can adapt the sales prices as we go along in the project. That's number one. Number two, we invest in the land bank, but when we start the project, it's actually co-funded with our customers. So that is a very cash lean part when we start the project, which is not the case in the other markets, which you will see. Our second largest market is Sweden. It accounts for 22% of our group net sales. Here again, we are doing both single and multifamily housing. Then we have the payment system is that you pay a very small part when you sign the agreement, but then you make the large payment when you take ownership of your home.
Here we have a large balance sheet as we're building the project, and then we have a large cash inflow as we are handing over the keys. Here we have to ensure profitability. Sweden has been performing extremely well in the past, and I'm sure that we have the right prerequisites to come back to that. Part of it is coming back also in terms of the volume, as we'll be talking about a little bit. Coming into Finland and Norway, and those two markets then account for 23% of our group net sales. Here we are doing predominantly multifamily housing, but also in Norway, some single-family housing. The payment model here is either down payments on getting the ownership or gradual payment as you go along.
It's very much similar cash flow pattern to that of the Swedish business. All the Nordic business are very similar with that regard. These two countries, they are stabilizing business. I would like to make a few comments here when it comes to these markets. We have Oslo here, which we acquired back end of 2019. Since then, we have had the pandemic. For this business, it's very much to getting them integrated into Bonava and getting them going. In Finland, we are active in three different regions right now, and we have closed one region during the course of this time. Now we are getting the right geographical mix, and gradually we will see us growing accordingly.
It takes time, and it's absolutely right for this business to focus on the stabilizing part. Last but not least is the St. Petersburg Baltics part. Here we have quite small net sales, but please don't only look at that, but also look at the numbers up here. The number of units shows that this is a very large business. A business where we are doing multifamily housing, and here we have a mix of business models. In St. Pete, we are investing our money into the land bank. Then as we are starting the project, the same business model as in the German operations, we are then getting proceeds and building it for money from our customers. It's cash efficient.
In the Baltics, it's a down payment system with a larger component when we are handing over the keys. In these markets, we are also more offering gray and white finishes. What does that mean? Well, it means that we're not building them and speccing them out with kitchens and toilets and everything there. We're handing more into the structure and our customers is doing the last parts themselves. This is part of the growth. To summarize that of the market, today, the license to operate is divided into the way I've talked about. Norway, Finland in stabilizing, Sweden ensure profitability, St. Petersburg, Baltics and Germany into the growth part. Mid-2024, we should have stabilized the businesses in Norway and Finland. In 2026, all of our businesses in the portfolio then will be in the growth part.
We should be stable, ready to take on to grow the business. That is how we need to set out for growth.
Thank you, Peter. That was really interesting. I will now follow up with a few questions for you, and we'll also open up soon for the audience. I'll have a first question, and it's regarding competition. We see that there are new competitors entering our playing field. My question to you is, how do we make sure that we are competitive in this changing market situation?
That's a very good question, Sophia. Firstly, I love competition because it makes us stay on our toes, and it also creates a good benchmark where we need to be. At the end of the day, the customer is gonna decide because they are the ones that are actually conducting and doing the buy. We know whether we've done a good job or not with all the metrics that we have. That's very good. I would say addressing competitiveness is how we are addressing our sort of three strategic themes that we will talk about in terms of land bank, repetitiveness, and being commercially excellent.
Exactly. I thought, now let's invite Helena as well. Do you have any questions from the audience?
Yes, I do have one.
Great.
Yeah, I have several. I have one from Stefan Andersson at Danske Bank. He's asking on a market-related question. The cement issue in Sweden is only temporarily solved. If Slite will not be able to deliver cement after 2022, in what position are you then? Do you already now have alternatives, or is this still on the agenda to solve? Or do you calculate with Slite remaining open?
Slite is the production site in Gotland. We are talking a part of the Swedish business. For our Swedish construction industry at large, this is an extremely important question to be able to provide the very large and important input factor as cement, of course. For Bonava, as you saw from my map here, Sweden is accounting for 22% of net sales. Yes, we will be impacted if this situation is not solved on a long-term basis to a smaller degree in the group level. Coming into the Swedish context, we are looking into alternative deliveries and methods. All of it being, of course, challenging in different degrees because moving prefabricated with the transportation cost right now is a challenge.
The same is true for ready mix because you will need to move it for a long period of time. We are very much active on that part. Remember, we are a client to the client. We are not a big construction company with direct contact and in all kinds of cement into the production. It is extremely important for a Swedish context, and we're working hard to resolve it.
Thank you. I have another one relating to the market dynamics, which you partly answered already in your presentation. Again, from Stefan Andersson at Danske Bank. Is the price inflation on material a concern, or is it the increase of end prices more than well covering for this? Just to repeat maybe.
I would say that we are in balance. I'm still very confident that we are able to mitigate the cost increases and still hitting the margins that we need to hit in our business. As I said, we need the three fundamentals in place. We need the sales status and sales strategy. We need to have super secured the cost estimates, and we need to have the right team in place.
I still have one here from Stefan, and that is actually on prices as well. Could you elaborate on your view on access to land and prices right now?
I would say that, when you saw the graphs on the prices and the cost increases, you can see that the gap widens. What kind of implications will that mean? Well, it will mean actually that the cost of land is still increasing. Land will always be viewed, could be viewed as always being expensive. We need to be investing in land bank over time and not at the one-go approach, of course. We should always be in the market and buying land. The most important part about buying land is that it may need to be suited to the concept for our building system and the customer demand that we find in the specific market segment.
I have another as well. If you look at the market dynamics and so on, what do you consider are the three major drivers to optimize Bonava's overall return to shareholders and other stakeholders, of course, both in the short-term, mid-term, and long-term perspective?
Growing the regions and markets where we have the best performance according to this, stabilizing, ensuring profitability and growth mode. In the short term, we have the land bank, and we have the project pipeline and everything. Mid-term we are fine. That comes into the second part, and that is shoring up the land bank. We need to have a land bank which offer us robust buffers to the changes we are seeing in the permitting processes and developments, so we are able to offset, so we are not depending upon starting the projects without having the right prerequisites. That is very important. The last thing is the team, the quality of the team. We need to further recruit and attract the expertise people.
I have one other than from Stefan on this theme. Are there differences in the need of land in different regions or markets? If so, how does it differ?
It differs a lot. If Stefan could wait for a few minutes, Lars, our CFO, will talk more about that.
Thank you. Yes. Well, that was the questions that we have. Well, thank you very much. Now we will go on with a coffee break. Please have a coffee break and be back here at 9:45 A.M. See you all then back here again in the studio. Thank you very much. Welcome back. I hope that you all got the chance to grab a coffee. Now we are ready for our next presentation, where we will connect the market dynamics and Bonava's starting point with looking into the future of our targets and also the roadmap and strategy to get there. I would also like to remind you to continue to send in questions because after each presentation we will have a short Q&A. Just send in your questions throughout the interface. You find the green button on your right-hand corner on your screen.
With that said, I would like to hand over to CEO of Bonava, Peter Wallin. Welcome.
Thank you very much, Sophia. Great to see that summer pictures on the film here now in the current darkness outside. As you also are aware of after all the things I've been talking about now is the importance of handing over the keys. That is a great moment for our customers, and it's also a great moment for us, partly because we can report the net sales, but also partly because we can see the happiness, taking control and ownership of your new home. Let me take you a little bit through our revised objectives and strategy of Bonava. We are using this symbol to hone in on the various bits and components. In the center rests our purpose, creating happy neighborhoods for the many. They rest upon three strategic themes: land bank, repetition, and commercial excellence.
I will talk about that later on. They are built upon our foundation. They will result in the strategic objectives you can see on the right-hand side of this symbol. Firstly, we have profit, then we have the growth, health and safety, the customer satisfaction, climate action, and last but not least, the employee engagement. If we dig a little bit deeper into these six objectives, our profitability metric is earnings before tax because with that we also get the interest component, which is so important when you have a big balance sheet. The 2026 objective is to reach SEK 2.2 billion. An increase of 120% over full year 2020. Secondly, growth component. We're gonna hit 8,000 homes sold in 2026. I said sold, which means not started. The sold part is when you have a binding contract.
It is, of course, a function of the projects that you start, but this also shows the continuous level we're gonna be at. Thirdly, health and safety. Everybody that works within Bonava, with Bonava, needs to come home safe every day from our sites and offices. This is in both in the short term and in the long term. Fourthly, customer satisfaction. We are measuring this at a very tough level at wanting to be over and above 50. That means that the super positive customer scores that we get is outramping all the others being 50 and over. That's a very tall task, but we know that it will give a lot of impact to the profit and loss and the continued sustainability in our business. Fifthly, climate action. We have embarked on the Science Based Targets as the only Nordic residential developer.
It's a very tough metric. We're gonna hit the Paris Agreement with reducing the greenhouse gases emission by 50% to 2030. 2030, taste that year. It's not too far ahead. I get extremely competitive when I hear that because I really want to be successful there as well. The sixth part is the employee engagement. We should be on the in line with the top-performing companies, no matter what business, no matter what industry. All of this will rest, of course, on the equity assets target of 30%, and then the dividend policy, 40% over a business cycle, not each year of the business cycle. Let's take another step into what I've just talked about, starting with the first part, the earnings before tax. These bars represent the history.
When you look at this, you're gonna find the lilac part is sale of land, and the rest is the other operating profit, or sorry, profit before tax in the business. At the bottom part, you're gonna find the percentage where we have related the operating income, EBIT, to net sales, and the same for EBT, including sale of land and including items affecting comparability. As you can see, the lilac part has in our history been quite large until 2020. That has, of course, manifested itself that the company has left and changed a number of markets. But also, the fact that the company has been moving towards a much lighter balance sheet.
If we look into the business plan period of 2024 and 2026, sale of land will be a part, but not as big a part as we have seen in the past. When we are at 2024, we want to hit SEK 1.6 billion in earnings before tax. That equates to an EBIT margin between 9% and 10% and an EBT margin, earnings before tax, of 8%-9%. If you compare that to the history, we have been at those levels, albeit with sale of land. I think it will symbolize two things. One, we know how to do it. Secondly, it's a little bit different quality of the numbers going forward. The end game for the business plan is 2026 is the SEK 2.2 billion.
We are talking about operating income margins of around 10%-12% and an EBT margin between 9%-11%. Lars will then talk more about how we underpin this trip. It will become visible because of gradual increase as we go along. Because as you already saw from the graph I showed previously, where we are turning the corner, the words I put to that, we have taken steps to improve efficiencies. We have taken steps to improve profitability. Gradually, we will build this up. We are not starting from scratch here. If we take a look on the volumes, this year's history represents the number of thousands sold, which is the light green bar, and then the dark green bar is the started. You can see how it fluctuates.
When this fluctuates, it's very hard to be efficient when you are developing new homes. We need to be on a consistent level. If I then take a look into the target levels, in 2024 we should be in 7,000, and in 2026, 8,000. The way it will happen is that the lead, of course, will have to be started projects. When you start a project, you do that with a certain presale hurdle. Roughly 30%-40% is sold already when you start a project. You will sell some 30%-40% during production, and then at the very end when it's completed, you sell the remaining part.
The curve is very much visible if we look across our different markets, that when people can see and feel the project, then you are selling the last homes. This is gonna be led by increase in starts, and then the sold units gonna come afterwards. Of course, over time, these two will be in balance. If I turn to the net promoter score as we have as a target, you can see the journey that we have taken. This should not be confused by only looking at the index of happy customers. This is much tougher, because here we are taking away the customer that is medium happy and not happy at all. This is a tougher metric.
We believe it's the right metric because we need to be on our toes, as we talked about previously, in order to stand out from the competition. The only way we can stand out is meeting our customer demands and wishes. Again, this metric also will give us a good economic development in our projects because happy customers are also leading to that we have less claims and less costs of rectifying issues in projects. The word of mouth, you can just recognize how you are sitting around the dinner table and talking about this experience you've had with the developer. Health and safety, as I said, is extremely important to us to have all our partners, employees, subcontractors to walk home safely from sites and offices. The bar on the right-hand side is showing the frequency rate.
The number of people being hurt on sites or in the offices, but predominantly on the sites, that has to be away from the site for at least one full working day, over 1 million working hours. I would say that this frequency rate is not acceptable because it actually exposes the people we have on our sites to a great degree. We need to be better than this. We can be better than this. The way we are dealing with it during the strategic plan is working with two parts. One part being a proactive measure, making sure that we're getting the right culture and actions into place in our businesses and on our sites and offices, so that we ensure plan fulfillment.
Everyone is also showing that we all have a responsibility to work for a safe work environment. We are looking in the mirror and looking at the reactive target. It's the severity rate that needs to be reduced. It's a little bit similar to this frequency rate, which is adopted across the various industries across the globe as the metric for whether you're good on health and safety or not. The severity weighs in also on how serious the accident is, i.e., how many number of days is someone staying at home. This is not a situation where we are not taking smaller injuries lightly, but it's also reducing the bigger implications for people hurting being hurt and damaged over a long period of time, impaired. We have this science-based target.
It's complex, so let me try to explain it a little bit. It measures two parts. Scope 1 and 2 are all the actions, all the emissions that we are responsible for in our work sites, offices, travel, and the like. You can see how small proportion we can actually control. It's 2%. The rest, 98%, is Scope 3. That is before we have bought the material and get the material to our sites, and when the actual home is being used over 50, 60, 70, 100 years. Here we need tough measurements because we are actually measuring both of these. We need to reduce both of these by 50% to 2030. We are using 2018 as the base year. How are we faring right now?
When it comes to Scope 1 and 2, the target is reducing the emissions from 13 to 7. That's 50%. In 2020 we were at 10%. We have taken roughly 24% reduction, so half of the half. Now, I'm not so proud to talk about our achievement on the Scope 3, the bigger part, because here we are actually lost 2% since 2018. Now, I'm not saying this as an excuse, I'm saying this as an explanation, because we are producing, you can say, carbon budgets per projects, per regions, per business. It also means that some part you are sharing all across the units we are selling and having on the production. When our volume is shrinking, it means that the emissions we have gets distributed on a smaller number of projects, which means that we are worse off.
If you take a look on our volumes in 2020, they shrunk. That means that the number has increased. I'm very sure of the all the work that is going into our new projects and and our new homes will also manifest itself that we are starting to hit back on track when it comes to the reduction of Scope 3 as well. This is a tough measurement, and it should be a tough measurement. This is how we need to continue to report our success and failures when it comes to increasing the emissions. You remember engaged employees. I remember it very much because I think about 24 hours per day.
You can see that the energy and clarity here when it comes to the way we are portraying the engagement level in our employees, you know, as in all matrices, you should be in the top right-hand corner, and it's the same is true in this graph, right? At Bonava, in this year, 2021, we hit 85 in score, and the top high performing 10% of companies hit 87. We are quite close here. The target is that we should be. The global benchmark is here. We should be happy and proud, but not satisfied. Let's talk a little bit about our three strategic themes. You're going to find them listed up here as well to the reference to the model I showed previously.
Firstly, we need to optimize capital allocation in the group to get the most bang for the buck, to get the capital invested where it needs best return, given a certain risk level. We need to also shore up the land bank in the various regions to be able to hit this consistent volume I've been talking about. This is to ensure economies of scale and also being efficient when it comes to resource usage. Securing the land bank here is something which we will need to do over time. It never ends. We need to replenish the land bank over time and suit it to the concepts that we have.
Something we will also do much more of is investing in land bank with a higher footprint where we can develop a part of the city, a part of a region over many years in different phases. Because here we are building up a value which we can leverage on in our own business. Repetition is key, I've been talking about. Here we have two examples behind me. It starts by having a system, a solution, a Lego in place. The examples we have here is the building system we are doing in Saint Petersburg. When you have a standard system, you know the exact time it will take, you know the costs it will take, you know the resources it will demand, and you know how to plan the procurement in time.
Everything sort of builds into being a very efficient process. The other example is that of single-family housing. My colleague Fredrik will talk about this concept a little bit more in detail in a while. Here we have reduced production lead time big time, and we have a really good concept which we now can leverage out with the large demand that we have for having larger areas, and we also have greenery nearby. We all know now during the pandemic that the rush for single-family housing is huge. We have the solution here. The third part of the strategic things is that of commercial excellence. What is commercial excellence about?
It's about having the right product for the customer needs. We need to meet or exceed the customer's expectations because otherwise it's gonna be unhappy claims and a lot of costs. When it comes to commercial excellence, we also need to look into different variants of business models. The drive experience. You know, we have this great Bonava brand. We need to leverage it much, much more, both digitally and also the way we are existing and present in our great projects, in our happy neighborhoods. Switching gears a little bit, talking about new business models. We are looking into starting a build to hold. Building and managing rental properties. Why are we doing that? Firstly, we increase the learning of our great products.
It also adds another tool in the toolbox when it comes to how we can choose to develop the different parts. Because all in all, we see that when you go into the brownfields I talked about, you do get into more complex situations, and we can address this much more if we have the toolbox. We are still seeing a huge interest for sustainable, well-built, rental properties. That is meaning that the yields are compressing even further when you can see the secure cash flow. Now if you build up a portfolio of this project, we believe that you can get an even better yield than just pro-project by project. Diving a little bit into the nitty-gritty details here, where? Well, in the Baltics, we have a leasing market and a tenant market that has formed and stabilized.
We have a huge demand from tenants, and we also have a very huge demand for investors. We believe that this is a very good opportunistic time to start investing in these projects. Other markets where we're looking into this is the well-tested markets of Sweden and Germany. We can build a portfolio of the existing pipeline where we have already identified the right types of projects. Imminently, we are prepared to start with the first project. If you look into the financial principles, the development of the property itself will be in the normal course of business. We are looking into or how we should form the unit taking over this, but we will come back to that. I think the principle of transferring a completed project is on a market value basis.
The development business makes its margin based on external market valuation, and then the asset management entity is taking over the property at the market value. The new items that will appear then in our profit and loss will be rental income, and then you will also have mark-to-market value changes on a quarterly basis. We will come back with more details of this, but this will be the principal foundations. When it comes to size, we aim to build up a portfolio of SEK 2 billion-SEK 3 billion in market value over the course of 3 years. We will report these units as sold units when we're conducting a project like this. We will be transparent when we start these projects.
When it comes to competencies, we already have these competencies in-house to a large degree when it comes to designing these kind of projects, but also the leasing part. Because we are leasing to some of our clients that we are selling to. It's more coming into the asset, the hard FM, the hard facilities management issues. We will gradually grow the organization where it is relevant. I'm very excited to have this opportunity for Bonava.
Thank you very much, Peter. Now it's time for a few questions, and I would like to ask you a question regarding the targets. How would you consider them if I, on the one side, talk about them as conservative, or on the other hand, talk about them as challenging and with quite some risk built into them? How would you respond to that?
I would respond to that the thorough business plan that we have been working with our businesses now is we have created a bottom-up approach, which means that there is a lot of commitment to the numbers up the line. Now, we are all dependent on how the market is developing and so forth. I would view them as a good balance of challenge and being on the safe side. All in all, I think they are realistic but ambitious.
Thank you, Peter. Let's also open up for some questions from the audience. Helena?
Yeah. Thank you very much. I have one here from Stefan Andersson, SEB again, and that is regarding the dividend. Should we interpret your comment on dividend as if there will be no dividend from now on, or that the dividend will be adjusted depending on investment levels reached and then gradually being reduced?
I would say that the way we have portrayed this is over a business cycle. You can always debate how long is the business cycle, but it lends itself to, if you look on our investments, it is over a longer period of time. It is 6-7 years when we have the inception of land to selling and completing an investment. Perhaps shorter than that, but in that range. It will mean that depending on the investment opportunities, the stability, the macro, and everything weighted in, the annual part can sort of be moved, of course. Over the whole period of time, we should have reached 40% in dividend readout of the net income. It's a little bit more flex built in, and that is to address, of course, the investment opportunities that we see in our markets.
We have a question regarding the units target for 2024 and 8,000 for 2026 coming from Fredrik Stensved at ABG. B2B projects have historically often been divested early in the project phase, while B2C units are sold gradually. Should we interpret this target as 7,000 and 8,000 completed recognized units in these years? Or is there a difference here between sold units and completed recognized units we should be aware of?
Thank you very much. Yes, it's good that we're asking the basic question. The answer is yes, there is a difference between sold, that's the signed agreement binding contract, whereas the handovers is the key I showed behind that. That is the basis for recognizing net sales. In other words, could there be a lag between the numbers and the bars I showed on the numbers of solds and started? Definitely. It's a gradual build-up.
Do we have time for one more?
A short one. A short one.
Well, the thing is that this one is quite long, but let's see if we can take it anyway. If you complete recognized 8,000 units in 2026, and we assume that the average price per unit is some SEK 3 million, this leads to a top line of SEK 24 billion. The EBT target of SEK 2.2 billion hence means that the EBT margin is some 9%, which is lower than the EBT margin in 2016 and 2018. How should we view top line growth versus margin expansion in order to reach the target? And how does your goal of 8,000 units tie to the sales top line that's needed to reach the EBT target? It's partly for the finance, but.
Absolutely. I will hand over a big chunk of that part to Lars, which will come after me. Long question, short answer. I would say that profit is the number one, number two, number three when it comes to when we start the project. We need to be sustainable here for the long run, and then the profitable level needs to be there. Top line is not what we are focusing on big time. Of course, as I said, the levels that we hit in each of the regions need to be on a consistent level in order to be efficient in that sub-market, but that's a different story.
Thank you very much.
Thank you, Peter. Now it's time to go to the next section. I think we're all ready to get into the financial numbers and the financial roadmap ahead. With that said, I would like to welcome in on stage Lars Granlöf, CFO of Bonava.
Good morning. Yes, as Peter was elaborating on, he was reiterating our targets for 2026 that we launched by the end of October. He was also giving you some of the figures, the mid-term targets that we have for 2024. I would like to take you through a bit how we reach the 2024 and the 2026 figures as we have reported. Let's start with the profitability. We are going to increase that, as we said, with 120% over the years up to 2026. The main part of that is coming from improved profitability, i.e. gross margins in particular, in same volumes that we have today.
In addition to that, we are going to add more volume, growing our business at higher margins, which is also then a very important part of adding to profitability. In order to reach that, we also need to invest both in more organization, more people, but also that we are going to borrow more funds, of course, to finance this growth. If you look at the margins in our segments, you see that all of our segments are moving in the right direction, but from different starting points, of course. You have the Nordic that where we are going to stabilize. We have the Swedish segment ensuring profitability at lower margins, but increasing.
In the growth segments, we are going, of course, to grow that business and also then adding on more profitability. There will be a mix effect with them growing more than the others. Looking at what do we mean with increasing, improving profitability in the business in the current volumes. Of course, with our cycle of projects, about two years on average from start to completion, means that none of what we have in the portfolio of ongoing production today will be there in 2024. Going back, we have too many projects in different levels of profitability. We also have a number of projects, of course, where we have margin erosion, even though we have a number of projects that are on a good level in terms of profitability today.
We need to reduce this into a future state. We need to see to that we are carefully selecting the projects that we are going to run, that we have strong requirements for profitability. We have the cost control, we have the competence in place, and we are running the projects with a clear mandate. If we're looking at the situation as it was by the end of Q3 this year, we had 9,900 units in production. If you look at that, more than 75% of those units will be completed before the end of next year, 2022.
Additional 16% will be completed in the first half of 2023, which means that there will be a very little portion of the ongoing production today that will still be in production in 2024. If we then move over to what Peter was mentioning, the replenishing of our building rights of our land bank. Starting with the land bank as it was by the end of Q3, we had about 35,000 building rights altogether, an increase compared to where we started the year. But it's about 19,000 of those building rights that we have in the balance sheet on balance. The rest, they are either options or they are conditional agreements that we are not recognizing in the balance sheet. But that is not to be interpreted as that these will be utilized far out from now.
They will be utilized in the near term as well when there are the right opportunities. You see we have about SEK 7 billion in book value of land bank, and we're coming back to that. If we try to dissect, try to analyze what we have in the land bank today then. The 35,000 building rights that we have, they have been acquired, of course, at different points in time. We can see that about 45% of our land bank today actually were acquired before 2018. It's also 60% that actually were acquired before 2020. If we then look at how are we going to utilize that the way that we are planning it today based on zoning and building rights, et cetera.
We estimate that almost 60% of the current land bank will be utilized up till the end of 2024, i.e. starts up till the end of 2024. We have some 50% for starts in 2025 and 2026. Here we need, of course, to add more land in order for us to deliver on our business plan and our targets. If we look at the 60% that we are going to utilize up till 2024, about 20,500 building rights. Split in the segments, they are 15% single family and 85% multifamily. Please remember what Peter then showed you, that we are not in the single family segment in all our business units, in all our segments, Germany, Sweden, and Norway.
If we look at those, we have a stronger, of course, larger part of their land bank being single-family houses. Another distinction is the consumer versus the investor market. It's 85% consumer, 15% investor. Also here, remember that these tend to change over time. Sometimes we are planning it as a B2C project, and we are converting it before we start to a B2B project. It's not something that is absolutely rock solid. Moving over to how do we target the starts? The starts, like Peter was also mentioning, 6,000 now in 2022, more than 6,500 in 2023, and more than 7,000 in 2024.
I think it's good to reiterate here that, when we look at starts and sold units and net sales, they are different. It's different terminology. Typically, we see that about 30%-40% of the units are actually sold before we start a project. It's a presale. Then additional 30%-40% are typically sold during the production time, and the rest of the units are being sold after completion of the projects. Hence, that means, of course, that we have less units in completion than units sold normally. When you look at the 8,000 units by the end of 2026, that is not correlating to the number of completed units that year, of course.
2024, we are not targeting and looking at net sales, as Peter said, but you can actually, based on the figures that he gave you, calculate roughly what will be the net sales in 2024. We said that about SEK 18 billion of net sales based on our targets and our figures, we will realize in 2024. You see that started before, it started in 2022 and before 2022 represents 60% of that. We have a good visibility of the net sale that way because the rest is also then coming from 40% of starts coming from 2023. In the starts before 2022 and in 2022, we have 100% coverage in the land bank.
It starts in 2023, 80% and working on it. There will be coming in more building rights, of course, to build up that for us to be able to realize the figures for 2024. I'm going to move away from the 2024 and the target and comment a bit on what we mentioned in connection with us releasing the strategy and the objectives for 2026. We said that one part here will be that we are going to realize some additional costs, some items affecting comparability now in the fourth quarter. It's SEK 150-200 million, as we said, by the end of October. They will be coming in these buckets.
65% of that is right on the land, meaning land that is not suitable for our building systems, for the repetitive cost-efficient processes that we are going to work with. About 20% of it is coming from projects, some cost in projects, where we totally have to revise these projects to adapt them to our strategy going forward. Some 15% is coming from write-down of intangible assets, i.e., capitalized development costs from the past that is not in accordance with the strategy then going forward. Going from land bank and the income statement and how that looks, and looking into the prerequisites and looking at the balance sheet where we now are heading for the growth. Peter showed you this slide earlier on. I think it's important to reiterate it.
We see that our businesses are in different stages. We have the stabilized business in our Nordic segment. We have the ensuring profitability in Sweden. We are going for growth already now in Germany, Saint Petersburg, and Baltics. Over time, when we come to the midterm, we will not have any of our businesses in the stabilizing mode. Everything should have been stabilized, should be stabilized by then. Of course, when we come up to 2026, all of our businesses should be in the growth mode, continuously delivering on the number of sold units and also improve profitability where we are. It should be done on SEK 2.2 billion by the end of 2026.
One of the prerequisites, and this was also then mentioned in connection with us releasing our strategy, our revised strategy by the end of October, is that we need a step change in the land bank. We have underinvested in the land bank over the last few years. There need to be a step-up of about SEK 3 billion. But it's not to be interpreted as that we are going now to go out in the market and buy everything that we can get hold of at this point in time. We'll do a careful selection. Most of it will be coming in our growth segments. But of course, we need to continue to invest also in our segments, ensuring profitability and stabilizing the business to grow these businesses for the future.
Probably a bit messy, a lot of information in this slide. But this is to try to give you a picture of how the balance sheet will develop in terms of the assets and in terms of the equity and liabilities. Starting off with assets, if we add on the SEK 3 billion in the step change that I just talked about in terms of the land bank, we are moving from a balance sheet of SEK 26 billion in assets in 2020+ up to by the end of 2026, growing that to SEK 41 billion. One part of the growth is that we are going to add additional SEK 3 billion in the land bank, growing that up to SEK 13 billion. The SEK 25 billion, the main part of that going from 16 to 25, is going into the ongoing production, i.e.
Us then being in production of more units than we are today. On top of that, we are also adding the build-to-hold element that Peter was mentioning, that we are targeting a SEK 2 billion-SEK 3 billion volume in a few years' time. That is something that we estimate that we will have an ongoing volume of that going forward. If you look at the financing, similar step over to the SEK 41 billion. How should we then finance that? One part is, of course, that we are estimating to retain certain part of equity, the part that is not dividended out, will adding to our stability, adding to our strength of the balance sheet even further. We are then, of course, adding loans into this.
We have, as I will show you in the coming slides, we have got significant facilities, credit facilities unutilized today. We will of course utilize them, but we also will need to to negotiate further funding, looking into other ways of funding as well. But we have the prerequisites for that. Also, when we're looking at the net working capital, we are growing the net working capital in ongoing production, and the major part of the interest-free debt is of course increase of advances from customers that is funding the business as well. If you look at the equity to assets ratio, which is one of our KPIs and one of our covenants in our funding agreement, our target level is to be over and above the 30%.
By the end of 2020, we are on the 35% level. At that point in time, we could have added SEK 3.5 billion more. Over time, when we are adding equity through increased net income, through increased profitability, we are then of course increasing the potential of adding more assets and thereby funding to our business. Just to mention that there is a hurdle rate. We are far from that when we are looking into our objectives and where we are, but there is a hurdle rate of 25% in the covenants in most of our funding agreements. Looking into the financing, we are of course looking into the green financing as a prerequisite. We are going to look at it in the long-term financing.
We are looking at it in the short-term financing as well, because we need to be able to mitigate the seasonality in the cash flow in our business. We're also looking into project finance, of course, which we have in Sweden and Finland and in St. Petersburg. In terms of the green financing, we have the framework established last year. We are now looking into the taxonomy and to integrate that into it. We have SEK 1.8 billion of our funding outstanding in green financing. Just also to remember, we are actually consolidating the loans for the housing cooperatives in Sweden and Finland that we are working with. That's SEK 1.5 billion of our funding.
To finalize, this is the way that our facilities are looking right now. They have maturity a number of years out. We have significant portions, SEK 3 billion of revolving credit facility and some short-term facilities as well, unutilized at this point in time.
Thank you very much, Lars. I will also take the chance to ask you a question, and I thought I'd pick up the profitability. It seems like a large part of the improvement of the profitability is about gross margin.
Yep.
My question to you then is what tools do you have in your toolbox to ensure the increase in the project profitability?
Yes, Sophia. The number one thing is, of course, the project. All the projects, as I said, that we are running today, they would have been handed over, completed and handed over long before we come to the 2026 timeframe and even 2024 timeframe. What we are doing is, of course, ensuring that the new projects that we're entering into are at the higher level of profitability. We have the right people, we have secured the cost, we have tighter cost control, et cetera, securing that when we are actually delivering them, we are delivering better margins.
Thank you. Let's also see if we have any questions from the audience. Helena?
Yes. I want to start with one that is what level of return on capital employed would you be satisfied within the group level over the next 5 years? Do you have any comments?
Yeah, absolutely. It's a great question because return on capital employed was our previous, one of our previous financial targets. With the current situation where we need to invest more going forward, I think even though we're not expressing this as a target, the lower level of the range, 10%-15% is probably the right level for the coming years.
You would agree that you will surpass the 10% then?
Until 2025
That depends on the, as I said, the investments, but we are in heavy investment period. As you know, investing in land bank, that is really having a negative impact on return on capital employed because we're adding to the assets, and we are not getting return right away on them.
Well, if you then add the new potential strategy of holding real estate assets coming from Simen Mortensen at DNB. What is the rationale in terms of ROIC here, and how competitive will ROIC be here versus the rest of the development operations?
I think it's a bit too early to really get into the details of that. It's like Peter was telling you that we are in the early days of this. We are sorting out organizational structure, et cetera, et cetera. Of course, we need to be in a competitive stage in this area as well, knowing that this is also a fierce market in terms of competition.
There was one question also on the gross margin. What profitability in terms of EBIT margin or on EBIT first do you expect in 2022, 2023? This is Staffan.
Mm-hmm.
Bülow from Nordea asking that question.
Good question. Peter showed that the 2024 and the 2026 margins where we estimate to be in order to deliver on that. What we are going to see now in 2022 and 2023 is a gradual improvement from where we stand right now, coming to what he showed you in terms of 2024 and up to 2026. We are not foreseeing step changes. We are foreseeing a gradual improvement when we are renewing the project in our project portfolio at higher levels.
We had from Fredrik Stensved at ABG also that you mentioned that gross margin, taking up that one too, will be the main driver for your EBT target. He would like, could you please give us a gross margin range?
We have carefully chosen not to get into the gross margin range. We have given the EBIT, we have given the EBT, of course, in that. As I showed you early on here, our segments are in different stages, and we are changing that over time, improving that over time. We have to come back to that. We haven't got any gross margin targets for the external market right now.
Thank you very much, Lars. It's now time to get to the next agenda point, the sustainable foundation. At Bonava, we've had a comprehensive sustainability agenda since the birth of Bonava five years ago. Two years ago, we actually got an approval from the Science Based Targets initiative, and we were the first residential developer to do that. I would like to welcome back on-stage Peter Wallin, that will have a discussion with me regarding the sustainable foundation. Welcome back, Peter. You will start with showing a few slides to explain how we work with the foundation at Bonava.
Thank you, Sophia. I will be happy to do so. I can't speak without my slides. If we first look into the foundation, it's a beautiful word because it means that we would rest steadily on our feet in order to go into the future. A clear and stable foundation, I will talk about what that means for us. Starting off with the model that I have showed you previously, where we can also see the strategic objectives. The purpose they impart is actually in the center, and it's all the way out to how we work in creating this foundation.
This is a Capital Markets Day, so sort of the questions and some of the comments we make are very much focused on the profit part and the growth part. We have chosen six different objectives because we think that these six objectives in unison describes how we are performing as a company. The other objectives than profit and sales are not soft per se objectives at all. They're also extremely hard. The terminology ESG, the environmental, social and governance, is actually depicted in the model as well, as you can see from this slide. When I talk about these parts as being hard, it is, for example, we need to be sustainable over the long run. That is why we need to hit all of these six.
If you look into the health and safety metrics, the happy customer and the engaged employees, for example, and the environment, it all builds in to how well we are performing also in the projects. If you have a poor safety record, I'm sure you're gonna have a quite poor financial performance in that project. If you have a poor customer rating of the project, I know for a fact you're gonna have a poor financial record. The same is true for not having engaged employees. All in all, it's all embedded into this. You know, the resource efficiency, that is all about looking into the environmental impact and footprint that we have. Again, coming back to how we are performing over the long period of time.
Here we can see where we have climate action, sustainable use of land, circular production models, sustainable materials, and efficient buildings as part of this. As for society, the health and safety is very important. The engagement, as I alluded to, the labor conditions that we offer, and the diversity, making sure that we have a good atmosphere in the offices and on our sites. Diversity is also a very good sign of if we are representing the customers. The customers do not look like me, thankfully. They look like Sophia and others in the studio. We need to reflect on how our customers look and feel like because it's their values and it's their perspective what is a good home that we need to address to.
The way we're gonna run this is we're gonna decentralize the business in order to leverage on the local market conditions. We need to be absolutely in control over the customers and the situation in our local markets. That will need to be balanced with an integrated approach where we know we have this great Bonava brand, we have the great set of values, we have the great opportunity to work with our financial allocation of resources across segments and markets, and then also we have the opportunity to develop our employees with this very diverse type of business. Thirdly, we will need to increase the skills when it comes to production and cost control, that's for sure. Overall, we need to develop a learning culture, and we need to build on what the group can offer.
I would also very much draw on the fact that very much when we talk about the digital journey and the way on how we are both addressing production, design, and our customers, the demand there is developing very quickly. Without having that know-how, we can't take the necessary steps. All in all, this chain of different parts is the solution on how we're gonna address this going forward.
Thank you, Peter. The foundation is really about how we operate on a daily basis. Sustainability is embedded into our daily business. Well, we talked about the Science Based Targets. We talked about that we have targets for 2030. It seems like very far off. It's not. We know that. My question to you is, how have we divided the targets on an annual basis or on a BU level basis? How can we work with this?
Well, you can see the beauty of a very strict and rigorous system that the science-based target is, that we have broken it down to, you can say, budgets. Budget levels for the businesses, for the projects, et cetera. We know what levels to hit and what levels to improve upon. That also means that we are very proactive in the way we're looking into designing new projects, looking into new suppliers, looking into new materials, because we know what it all sort of is about. That is why it's very visible for everybody working in this system what to achieve.
If we then think about, you know, we will have quite tough targets on the sustainability side, and how is that then balanced with the value creation and the financial targets that we have?
Yeah. It's a commonly asked question.
Mm.
Hopefully, the address here, I've been able to respond some of it. I think there is no other way to become a sustainable company. A sustainable company, it's not only talking about the environment. That is being here over the long run. Then you need to integrate and build in a lot of the things that we have built in when it comes to environment, employees, and customers, and so forth over the long run. We use the term it's built in, not bolt on.
Exactly. If we look at the facts, 40% of the carbon emissions globally come from the built environment. We also saw your slide previously about that it's also for us and for the whole built environment. It's a lot about Scope 3.
Mm.
It's about when you build, and it's when you operate or when our customers actually move in and live.
Yeah.
How can we then make sure that we focus, and how do we focus into Scope 3? What can we do?
Well, we can't do everything. I think it shows that we can't do this alone. We need the right partners, and we need the right type of behaviors. But this is the beauty of being customer-focused because our customers demand it. The employees that join this journey of Bonava, they want it as well. The funding slide that Lars showed, they are our funders and shareholders, they are also requiring it. You know, the pressure is here, and we, as a chain in the industry, need to work with solutions.
A lot of the solutions, of course, on the sites is regarding will be to reduce resource when it comes to traveling, moving material. It has to do with how we are creating energy for the sites and so forth, but then it's also the long-term energy usages. There is a lot of development here.
Mm.
Sort of car-sharing, bicycles and cars and what have you. There's a lot of things going in, and then you need to build that in already when you start to develop the concept. It will look very strange if you put it at the very back end.
Exactly. Thank you, Peter. That was very helpful. As you see, we really embed sustainability as part of our business. It's now time for a break, a well-deserved break. Go out and grab a coffee. Be back again at 11. Thank you very much. Welcome back from the coffee break. I hope you had the chance to stretch your legs. Now it's time for the next agenda point, and we will get some further insights into the German business. With me here in the studio, I have Sabine Helterhoff, BU President Germany. Welcome, Sabine.
Thank you, Sophia.
Before we let Sabine take over the stage, I would like to invite you to one of our Bonava neighborhoods. To be a bit more precise, I will take you to Berlin, outside Berlin, to a neighborhood in Schönefeld, not far from the airport, where we will have a chance to look into how a Bonava neighborhood develops. Please enjoy the film.
We are situated directly on the southern border of Berlin and close to the new Berlin Brandenburg airport. In 2012, we acquired the first plot of land. Later, a study confirmed the potential as a residential location. Developers and investors found many areas and were welcome, whereas in the capital, lengthy development plan processes and regulations make construction projects difficult. To this day, Schönefeld has grown significantly. In parallel with the construction activity, the infrastructure has also been expanded. The price difference between the capital and the suburbs makes it possible, especially for families, to acquire or rent property here. The sales speed is dynamic, as many purchases are made on recommendation. The mix of two to five rooms in a quiet and green small-town atmosphere, but still on the edge of the big city, is well received by families with children, but also by the older generation.
Almost 1,000 households will live in houses and apartments by Bonava in this quarter. Half of the quarter has been sold to institutional investors, who will rent out the units. The other half was bought by private individuals, the majority of whom will move in themselves.
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Good morning. I'm really glad to get the opportunity to present Bonava Germany's business. I would like to start with presenting what Maria is already explaining, how we are handling larger projects. You can see here that we split the investment into projects.
The original plan for the Schönefeld project was that, we wanted to build just single-family houses and row houses for private customers. With that, we started project number 1. Then, as Maria also outlined, we started to ask our investors if they were interested in rental flats in multifamily houses on that, location.
In parallel, we also tested multifamily houses with condominiums for private customer. Both worked. Then we switched the whole project to, or the whole investment into multifamily houses and selling to investors rental flats and condominiums to private customers. With that, we increased the living space, we have sold and constructed, and we improved the financial performance of the whole project or the whole investment rapidly. As already also said, when we execute a project within a larger investment, we divide that into smaller sales and construction phases. That allows us to adapt our product to the market demands, to have the sales speed under control and adapt the sales, the construction speed to the sales speed. Starting with the market fundamentals in Germany. We have a very stable market, very strong economy, as Peter already outlined.
The GDP growth was increasing after the start of the big pandemic. The average unemployment rate is stable below 6%, and the interest rate for loans is still on a stable level, also intended to be very low. Going a bit deeper into the real estate and the market for housing, you can see here the large drop caused by the pandemic, 2020. You can also see that both indices recovered, and the real estate climate index less than the residential one. The residential reached a level like before the pandemic. What is also really important to know is that we in Germany have a yearly demand of 400,000 rental new builds. Rental or owned new builds per year.
We have never reached that level during the last 19 years. With that, we have built up a gap of 1 million flats. What differs our German market from the others, for example, the Swedish one? One fact is we have a really huge rental market. 22 million rental households in Germany with a low ownership rate. We have also this trend of counter-urbanisation Peter already mentioned, and that is mainly caused by the price development, especially in the larger cities, but also supported by the pandemic and the development on that. In our segment, for the many, building a new home is very often a once in a lifetime decision in order to be on the safe side when entering the retirement age.
On the other hand, our customers very seldom have to sell their current apartment in order to be able to buy a new one. That makes our newly built housing market in Germany much more independent from the general real estate market. Which market trends do we see in Germany? We have a fragmented market with large potential. As a market leader within the top seven cities, you have a market share of 2%-3%. We also are faced with a harsh competition on plots and on people over several years now. We also see that our competitors and other players extend their business models. For example, by implementing development and construction capabilities, but also by entering new markets or new market segments. We have visualized that on that slide.
You see here the number of households and the household income. You can see here also a mark, the Bonava market, for the many. We are targeting the majority of the German households with middle income. We have also competitors following us into entering into that market. As Peter also outlined, we are also of course faced with the rising costs of plots and building materials and supply, but that has been outperformed by the rising sales prices in Germany over the last year. All in all, we have very good and very stable market conditions in Germany, but we also have some challenges. Our largest challenge currently is the longer-lasting zoning and permitting process.
That is caused by the always understaffed local authorities being faced on the other hand, with an increasing number of zoning and permitting processes. We have increased influence of the politics on zoning processes, and all this has been boosted by the pandemic. Being faced with that, we have adapted our sales process over the years. Until 2018, we started selling when we have handed in the building application, because we knew that we will get the building permit within 3-6 months. 2019, we started sales at a moment where we have been much more secured about the timing of getting the building permit. From 2020 now, we just sell when we have the building permit within our hands.
On the left side here, you can see an example of a master plan procedure in Berlin. There's a long-lasting zoning process, then you, when the master plan is granted, you can apply for the building permit, and then you will receive the building permit. That process can last between 2 and 8 years. In earlier times, some years ago, it took us 2-3 years, and now it is 4-5 or 6 years. With that, it is really important that you have a really well-balanced land bank, which covers every single step of this zoning and permitting phase. That is shown here on the right side.
We have 46% of our current land bank portfolio in master plan or zoning processes, meaning also that we have 54% of our building rights in with a granted master plan or applied or already received the building permit. Talking a bit more about Bonava Germany. 2012, we decided to grow our business. During the time, we have tripled our net sales and we have increased our EBIT by four. We also have been faced with a drop of the EBIT margin, as you can see here. That is caused by the two early sales in 2017 and 2018, where we waited for the building permit, had the prices fixed, and the costs were running out. Both years 2019 and 2020 were also influenced by larger legal disputes that also influenced the results.
Our land bank over the year changed rapidly. We have more multifamily houses. 68% of our current portfolio is multifamily houses. We are going into larger projects, and we have also more projects in master plan procedures, which has a huge size as well. We have delivered a stable development with an average of EBIT growth over five years by 8%. Comparing 2020 with 2021, you can see that gross margin as well as EBIT margin are back on track on the right level in the right direction. Peter talked a lot about value creation. We in Germany have the key elements in place. We have a land bank with 8,400 building rights.
It's as outlined in several stages of permitting and zoning process that is sufficient for the next 2-3 years, and we will extend that. We have a footprint in 8 regions where the demand is. We have the full value chain under control with in-house capacities. Key for us in Germany is repetition. We have built up a technical platform complemented by a process platform and a design platform that makes us cost efficient and fast in our preparations and project execution. When it comes to market offering based on customer insight, we are guiding our customers through the whole process until the handover. It is very important to mention that we have increased our customer satisfaction, but it is very inconsistent, and that is one of our improvement areas for the coming years.
We also have a clear operational model, meaning that we have our processes in place. We have a given framework. We give trust to the organization with the freedom to act within this framework. We also take decisions as close as possible to our projects. I already talked about the whole value chain. Starting 1991, being a production unit, a construction company which was bought by NCC AB, we extended our value chain, and now we are covering everything from the plot acquisition over the development of the project, designing it internally, marketing and sales, bringing on the market, selling it, producing it with own capacities, and handing it over to the customers and guiding the customers through the whole process. Very important for us is that the internal design is steered and led by the production.
That leads to the fact that the development managers can develop his or her ideas, and then the internal design secures that we always use our technical platform and that we have control about our repetitive processes and that we have secure our costs and that we also have the time schedule under control. We are operating in eight attractive regions, as you can see on the right side. On the left side, it is shown where demographic increase or growth will take place until 2030, marked in green there, and we have also marked our regions. We are there where the demographic growth will take place in Germany also in the future.
Operating in eight regions means that we have different regions in different stages with different sizes, as outlined in the PowerPoint or in this slide. In this row, the percentage share of net sales 2020 and 2021. All regions have the potential and also the opportunity and also the plan to grow organically. We have different focus areas as well for some regions. For example, Hamburg, Rhine-Ruhr and Rhine-Neckar, Stuttgart needs to focus even more in improving their project performance, especially when it comes to infrastructure work, soil handling and so on. Hamburg and Rhine-Main, they have the largest gap when it comes to the current land bank portfolio. Those regions have even more to focus to get the right plots bought.
We have three regions, these are the, beside Hamburg, the largest regions, and these are the regions with a stable growth development and good financial performance over the last years. Those regions have also common that they have already a very well-balanced land bank for the coming 2-3 years, and that they have extra potential for further growth. Talking a bit more about Berlin, with 5.3 million inhabitants. Berlin is our largest region, and Berlin is also our region which is key for our success in Germany. We have our headquarters here for more than 30 years. We are well connected within the area we are operating in. We are market leader there in Berlin.
Berlin as a city has not reached really the potential of a, being a European capital when it comes to the price sales price development. There's room for much more. That trend also leads to this counter-urbanisation I already mentioned. This counter-urbanisation goes into the federal state of Brandenburg. In Brandenburg we have our headquarters and we are already there with several projects in execution and also in preparation. Region Cologne Bonn, consisting of three individual markets with high purchasing prices, very mature markets, with large companies having their seat there, for example, Deutsche Bahn and Bayer. In Cologne- Bonn, we have the right land bank, we have the right people on board.
There we see huge potential for additional growth and especially for dealing with larger projects than in the past both in B2C and also in B2B. When it comes to the region Saxony, it consists of two different markets. Dresden with a small office, a few people, few projects to be developed. We see Leipzig as a rising star in Germany as well as in our business. It is a hotspot. Leipzig has increased their inhabitants by 20% over the last 10 years, and it is still growing. We have BMW, we have Porsche, we have DHL there. Leipzig is now on the way really stepping up to a level like other university cities like Stuttgart or Düsseldorf or Dortmund.
We see huge potential and we are preparing the Leipzig organization for further sustainable and larger growth, with already some projects in preparation. When it comes to our strategic positioning for Bonava in Germany, it consists of two pillars. The first one is our core strategy, organic growth in existing markets. We have 128 current investments under development, and we will there focus on some improvement areas like, as already mentioned, customer satisfaction, customer journey, but also the preparation process of projects. It is very important to be really good prepared before starting selling the projects. We are also focusing on strategic procurement and also on further development of our technical platform, steady improvement, and also building up a second platform.
Furthermore, that core strategy. It is really important for that core strategy, as already mentioned, that we extend our land bank in order to get a land bank, which is very well-balanced in all phases of the development of a master plan procedures and permitting procedures, and that we have a predictable status of building right within our land bank. On the other hand, we will add that core strategy by further acquisitions. Meaning we are targeting to invest in other companies, and we think that our competitive landscape offers a lot of potential for doing that, such kind of business. With that, we think that we can even more increase our existing market performance and also potentially enter into new markets. Very important is also what we are calling Bonavorization.
Meaning that before implementing these acquired companies into our portfolio or into our organization, we need to adapt them and onboard them when it comes to culture, when it comes to processes, tools, and so on. Summarizing, I would like to mention that Bonava Germany is very well-equipped to deliver on continued profitable growth. We are well-established in a promising and strong market with strong potential. We have a legal payment plan, as Peter already mentioned, which ensures our financing. We are market leader for 10 years there with a proven record of growth. We also are always learning company, always improving, and we have the people on board and also our processes. Thank you very much.
Thank you, Sabine. Sabine, I have a few questions for you as well. I thought we would ask a question regarding the new election and the political landscape. I think many of us have followed, of course, and after 16 years, now a new chancellor is taking office. My question to you is really, you know, how will this new political landscape impact the housing business and market, and in particular then, of course, Bonava?
Very interesting questions.
Mm-hmm.
Yeah. Yes, we are coming from a grand coalition with Christian Democrats and Social Democrats, and 16 years, as you already said, 16 years chancellor, Christian Democratic chancellor. Now we have a Social Democratic chancellor, and we have the Green Party and the Free Democrats in the government. They have put a really tough agenda on their table. What is important for us, for our market, we get a building ministry and housing ministry back. That is really important. That also shows the importance of this kind of question. They also put this 400,000 newly built per year on their agenda with a plan really to make that happen.
They also decided to bring all market players or important stakeholders for the housing development on the table discussing how to improve processes, especially this very complicated application process and zoning process. A lot is ongoing. We have also new tax regulations. We have subsidies promised, and they are also, of course, looking what they can do for the tenants.
Yeah.
A huge package which is on paper promising. We'll see how they execute on that.
Yeah. Very interesting indeed. I think we will also see if there are any questions from the audience. Helena?
Yes. I want to pick up on that 400,000 in new housing units. Do you view this as a threat to price levels or as an opportunity for Bonava to grow?
Of course, I see it as an opportunity for Bonava to grow since we are stable in the market. We have our footprint there, so we know our markets, we have our processes. Best conditions for us to further growth.
This is a question from David Flemmich, and he also asks, what has to be done from a regulatory perspective in order to increase the volumes towards these 400,000? What is your opinion on that?
I think most of all, create a dialogue on the same eye level to really get to know the different opinions and needs, and then try to shorten and deregulate the zoning process.
Yes. That is actually also an answer to the question what can be done to mitigate the importance of achieving building permits in time in the German market, just to avoid the lumpiness in it.
It's the same.
Yeah. Yeah.
What we can do is to provide the best possible material to the authorities and also to continue to have a dialogue with them.
We had one also from Simen Mortensen at DNB asking about digitalization, which I know that we talked about as well, and how that has been developed in Germany during the pandemic. Are there any progress in that sort of way in zoning process as well, of course?
Definitely. We progressed a lot. We all have got more digital, even if in our way of working together since we had to. We also have digitalized our communication with the customer. We are much more digital when it comes to the customer journey, when it comes to how are we reacting with the customers, communicating with the customers, and that has been improved a lot over the pandemic. Where we are working on and focusing on is to being much more digitalized when it comes to our project preparation and execution. There is our focus on. What we think is that digitalization is even more as just to use digital tools. It's much more, and it will change our whole way of working over time, and we are starting to do that now.
Thank you. Okay, thank you very much, Sabine. It has been really interesting to follow the growth journey in Germany. Now it's time to move on, going from Germany over to Sweden to the single-family house business case. This time, I would like to bring you with me to a housing site and the Bonava neighborhood outside Stockholm in Nacka, Ältadalen. Please enjoy the film. Welcome back to the studio. It was great to see the Swedish single-family house case in Älta, and we will now continue to talk about the Swedish single-family house business. In the studio with me, I have Fredrik Hemborg, BU President Sweden. Before we dig into the single-family house business in particular, I would like to ask you a little bit more about the Swedish housing market in general.
Mm-hmm.
What is your view? Please elaborate a little bit more also on how well Bonava is positioned.
Okay. Thank you, Sofia. The housing market in Sweden is really strong. We have had a good price development, and although we have seen the prices, the price development flatten out a little during the autumn, we do see a great demand in all our markets, and we expect the price development to continue also next year. During the pandemic, we have seen some consumer trends that will be really interesting to follow. The home is getting more important to many people. We have seen an increased interest for single family housing. I think we have 15% price increase rolling 12 months, and we have also seen the interest increase for larger apartments. Our offering with happy neighborhoods really meet this demand in many ways. When it comes to our position in the market, Bonava can improve our position in greater Stockholm and also Uppsala.
Here we need to grow to be a stronger player. In the other markets, we have the main markets, Gothenburg, Umeå, and also Linköping. We do have a strong position and a good market share also. This we can use as a platform to expand our business in a wider footprint, but also with a greater part of our product portfolio.
Mm.
Actually one example of that is the recent deal we did when we bought building rights in Linköping, 300 building rights, almost 300, single-family building rights. This is a good example of how we can work. We have the know-how, we know the market also, and we have the systematic and very structured way of working within our single family concept. Then it's easy to export it to new markets. We see these opportunities in other places also.
Exactly. That seems so interesting with the Swedish single-family house business. How do you see that the single-family house business can actually support the strategy going forward in Sweden for Bonava?
From a strategic point of view, I see single family and multifamily as two parts of our business which really complement each other. We can add on more business opportunities working with these two offerings, and we can also combine them and do mixed offerings in a project-
Mm.
which is really strong and unique, I would say. That's good. The main advantage with single family business is the speed as we do it. We are super fast. From when we start the design to when we hand over the units to the customers, hand over the keys, we have approximately one year, and that's almost half of multifamily. We can be really fast because we have this internal, in-house design studio where we design it ourselves, mainly landscaping actually, because everything else is set. Then we have a very prefabricated production scheme.
Mm.
We can be fast, and that makes small risks on site, a scalable business, but also very cost efficient. Being cost efficient and fast, we have a good speed in internal processes. That is really a competitive edge when it comes to land acquisition, buying more building rights.
Exactly. Also you're talking about repetition. We saw it here in the film from Ältadalen.
Yeah.
Could you give some more examples? Especially if you can link it to the profitability.
Yeah. We saw it on the movie.
Mm.
We have a very defined building system. We have a repeatability when it comes to the product, but also the processes around it.
Mm.
Because of that, we can work with the small adjustments, the small improvements, rather than inventing the wheel in every project. This gives us cost efficiency, this gives us better customer satisfaction, we reduce the lead times, and we can also improve quality. That is the basis to be profitable. It's really interesting to work with this, with the single family concept which we have then.
Thank you, Fredrik. Very interesting to follow the Swedish single family house business, both from a profitability and growth perspective. Now it's time to move on to the next agenda point. I would like to open up for a Q&A and panel discussion. I will ask Helena to come up here on stage, who will facilitate the panel discussion. Hi, Helena.
Hi.
Welcome.
Thank you very much. I look forward to this. We have plenty of questions to answer.
That sounds good. For the ones of you who haven't sent in questions, please go ahead and do that now. With that said, we're ready to go, right?
Yes, we are.
Okay.
This will be fun. How nice to see you all here again. I will ask you a few questions. There are a few coming in here, and I will actually start with you, Fredrik-
Mm-hmm.
Because you were there. It's quite a long one.
Mm-hmm.
Breathe. Volume growth is an important factor for improving profitability in Sweden. Where do you see the main growth? Are Bonava looking at geographical expansion? That's one. What split between co-op and rentals should we expect in Sweden ahead? Looks like the demand for single family homes is strong across all geographies in Sweden. Couldn't expansion to smaller cities in the proximity to existing market be a way to improve volumes and ultimately profitability, given less competition? I'll stop there. It's more to follow.
Good but long question.
Yes, it's very. It's not finished yet.
If I remember correctly from the start, yeah, volume, we need to increase the volumes. As I said just recently, we see that we need to improve our position mainly in the Stockholm region, and also Uppsala. We are quite strong in the other markets we are working in. Based on that, we can also expand our footprint, working in more location, more sub-markets where we are actually situated today. Then we can utilize on the competence we have, the resources we have.
When working in more locations. Single family, yes, very interesting. There are more markets which we can tackle, but we need to also keep our systematic way of working-
Yeah.
When we address new plots, we need the resources in place, the production management in place, and we need a lot of things to do this the way we have found out to be so good.
David Flemmich, who is asking from Nordea here, and he still has one question that I would like to ask you is, we have seen other residential developers expanding into development of care homes and other, and schools, et cetera. Is that something that you would consider?
To consider what?
Is that something that you would expect also Bonava going into? Would that be something that you would consider?
We develop happy neighborhoods. We need all sorts of things, not only housing. We work with partners to create schools and whatever needed to support a good living environment.
that would be then one of the things that you
Yeah.
We have a finance question for you, too, maybe. Is it reasonable to expect you to become a frequent issuer on the bond market in order to finance future growth? And if so, is it only the domestic Swedish market or SEK market interesting? Or do you want to broaden the funding also to the Euro bond market? And this is Gustav Johannesson from SEB who's asking that one.
Thank you. Very good question. You know that we are already in the green bond. We have a tap issue. We're looking into our framework here. It's very interesting, and I think we have the capacity and interest to expand, not only in Sweden. Of course we have not got a rating today. If we are going to go for more international, I think we also need to look into the rating perspectives.
We have one that is both for you and for you, Sabine, and that is the fact of the sort of the German market. Given the fact that you have to ramp up the land bank in a very competitive market where building rights currently are fairly expensive, especially here in the Nordics, do you see more attractive levels to acquire building rights in your main growth market, Germany? And will you drive more early-stage development plans to be able to achieve lower building right costs per square meter and in turn, higher project margins? This is Johan Henriks from Länsförsäkringar asking.
Very good question. Should we start with ladies first, or?
Thank you very much, Peter. Yes, I would definitely say yes, and that is a development we already have been gone through over the past several years. Yes, we will definitely invest in more early-stage zoning processes. As I also said is we need a balanced land bank. In every stage of the zoning process and permitting process, we will take care of that. Yes.
Mm-hmm. For me, I mean, I'm looking like at Germany from a market point of view as this steady, stable machine. Which we saw from the market slides, you can see very steady growth, which also means that you have a very steady condition on how to base your investment decisions on. I think we need to be in the marketplace the whole time. Land is always expensive, and then after a few years it becomes cheap if you bought it a few years ago. We need to always be in the marketplace.
We had one from Simen Mortensen again. How is the sold unit target also depending on the potential, build to hold strategy?
I mean, it's an add on that we are currently investigating what we are going to do. It's an add on to the business. We haven't factored in a significant portion of our profitability in that yet.
I will come to Peter again. If you think about, I mean, if you go back to the six targets that you have, how will you break down the targets internally for execution purposes, and how will you follow up them internally?
Exactly the way we have presented it here. This actually is showing the balanced scorecard we will use for the group. It also comes from the same balanced scorecard I will use for Germany and Sweden and for the other business units. In respect, Sabine talked about the regions. When she looks at Leipzig, her favorite region sometimes. She studied in Leipzig, that's why it's her favorite.
Yeah, that’s why. Exactly.
You need to know that.
Yeah.
She will look at the regional managers and look at the very same balanced scorecard. You have sort of a line of sight, and then, tracking is one thing. When you track, you can also act and adjust as you go along.
I was thinking that what is the business rationale behind having all these markets, so many markets? Is it so that the gross margin expansion and profitability expansion for 2024 and 2026 is partly achieved by excluding the so-called worse performance?
Yes, it's the worse performance, but also expanding and growing what is performing extremely well. It's the combination, right, of driving the average performance or up. That is exactly why we are doing that. When I spoke about the opportunities we have on the integrated approach, the learning curve, we can take so many steps up here on the value chain.
You don't say that does both Finland and Norway have the potential to stabilize the business, or is it Norway only?
Both Norway and Finland. That's the first step of the ladder. Of course, when you are in the stabilized part, you will need to prove. That's why we use the term license to operate. It's not until you have proven that you can take the next steps and join Fredrik. But then, you know, Fredrik has already progressed into the growth part. This is the evolvement we are looking for in our business units.
That sounds promising. I also have one for you. Because you were also touching upon the pandemic, and I suppose you too have it in you. How much did the pandemic impact the number of starts in 2021? And in terms of 2022, are you assuming back to normal? Are we safe now?
Very good question. I mean, we haven't finalized 2021 yet, even though it's only two and a half weeks to go. I mean, it's a very hectic period of our business. I think
Yeah.
You are all handing over and you are going for starts still in this period. Of course, the processes, you know, the authorities have been affected and still are affected by this. But there are also other reasons for sort of things being delayed. A few hundred units maybe when we end the year, but it's still possibilities, there are risks of course going into this figure. If we move into 2022, we are foreseeing or we are building this on a gradual improvement of course. We are seeing the Omicron, we are seeing all the things happening right now, so we don't think that everything is over, and we don't think that the processes for building permit, the zoning, et cetera, will be back to normal again by the end of 2022.
I still have a question on Germany and for both of you, and maybe Peter would start on growing the German business. What is actually the major upside here, the upside potential in the German market? And what is the potential in expanding the business in Germany within the existing footprint? Or let's say, why is Germany so important? Maybe it is only to mitigate the Swedish volume and a bit underperformance. May I say so?
You may.
Mm.
Let me talk a little bit about Germany because I really like that topic. If you look at the German business and the way it's built up its volume over time, its presence, we have the building system in place, we have the land bank in the near future in place. We have much more attractive margins than in the Nordic markets on average. Then you have a fantastic team in place. Why not going into Germany? Then when you enter into Germany, you know, the culture, the playing fields, everything is very well defined and it's not a novelty for us to enter into that market. I really like it.
Because we have one issue which is always coming up when it comes to Germany, and you know, you had one of your competitors revising its guidance for 2022, commenting on delays in building rights. I mean, you've been talking about the building permit approvals and all of that also related to the corona situation, as well as a reduction in, I mean, just construction speed because of supply issues. Are you expecting the same or experiencing the same challenges? Will this impact you for 2022? Could you elaborate a little bit about that, please?
Of course, we are also faced with the same facts. We are operating in the same market and that comes to the conclusion we are faced with the same facts. We have managed to deal with it in the past and we have, as I said, adapted, for example, our sales process, our processes in general. Until now, we also have managed to work with these price increases and material shortages. I think one of our advantages is that we have these production capacities and these purchasing capacities in-house, and that we are always working with, you call it, divided contracts. We don't have a need to look to a general contractor offering something without being precise when it comes to the price of their work.
It is a difficult situation. As Lars mentioned, nobody can foresee how the pandemic situation will develop. What we can do is be prepared on the current situation. What do we see now, and how can we react on what we are faced with currently?
Thank you very much. If we want to sum it up a little bit, maybe you could start with the key takeaways, and I'll go through you all in one second. If you start with that, what is the key takeaways that you would like us to remember when we leave this screen?
Key for Bonava Sweden.
Yes.
is to secure the pure project execution, to be really in control over our projects. That and through that, we also get the profitability and the ongoing production. After that, of course, securing a stable, big land bank for future project opportunities. I would also like to highlight the benefits of repetition. How we can work with a very repetitive product and processes. We have great learnings in single family, which I talked about, and we shall of course use that in the multifamily business also.
That sounds interesting. What about you, Sabine?
Yeah, I repeat myself now. The key takeaway is, Bonava Germany is ready for further sustainable growth, with more profitability. We have the people and processes in place. We have the land bank secured for the shorter period. We will secure it for the longer period. We are operating in a very stable market with very large possibilities, and so we are ready.
Sounds good. Lars, you're the last one, but not the least.
I think definitely we have the land bank in place on the group level for delivering in the midterm perspective up to 2024. We have the visibility of the project and the profit improvement that we see in the project. We, of course, need to add land bank for the coming years, 2025, 2026 in particular, and to grow from there. We also have a very strong balance sheet. We have facilities today that we are not utilizing, and we have the capacity right now to negotiate more, to issue more green financing. With the growing balance sheet, with the growing profitability, we will increase this capacity.
Thank you very much, all of you.
Thank you.
Thank you.
Thank you.
Thank you.
Welcome back. Now we are zooming in on the end of this Capital Markets Day. We would like to hear how we should conclude this day. To do that, I have with me here Peter Wallin, CEO of Bonava, who will give some closing remarks and summarize the day's sessions.
Thank you very much, Sophia. Well, it's been a pleasure standing here, together with this great team, in front of the cameras talking about our revised strategy. I'm also very grateful for, of course, you joining us here, and watching this. I'm also grateful for all the work that has gone into preparing this Capital Markets Day, including those that are behind the cameras and in the production. What I've heard, hope that you have heard, is we have the market fundamentals that are in our favor. The demand for sustainable homes is very robust across the markets. We can continue to expand the fact that we are in a good position, in a leading position as a sustainable developer of homes. With the updated strategy and revised strategy, we have high ambitions, but I see them as fully reachable.
We have the people, we have the project near term, and we need to shore up the long-term land bank. When it comes to the focus areas, it sits on the land bank, the repetition and resource effectiveness, and the commercial excellence, all of it underpinned by a solid financial position. Let me just repeat our targets for 2024 and 2026. In 2024, we are aiming to reach and beat SEK 1.6 billion in earnings before tax. That will equate to some 8%-9% in EBT margin in relation to net sales. That will mean that we are up to 7,000 sold units. In 2026, we are at SEK 2.2 billion in earnings before tax, and then we are at an EBT level in relation to revenue of 9%-11%.
The sold units are 8,000 then at that point in time. All of this is based on growing the assets by SEK 15 billion-SEK 18 billion, including that of buy to hold with the ambition of SEK 2 billion-SEK 3 billion. Six billion into building rights, roughly, and SEK 9 billion-SEK 12 billion into product investments. That is the situation at the end of the business plan period and not the accumulated portion. Thank you very much for spending the time with us here today.
Thank you, Peter. Thank you all who have followed us throughout the day. It has been a pleasure to be your moderator, and I hope that we see you again for the year-end report presentation on February third. Before that, I wish you all a wonderful holiday season. With that said, thank you all and take care.