Coop will establish an Extra shop at Rodeløkka in Oslo. This makes the cooperative society a residential investor at the same time.
– We are involved in many residential projects through our property development here and there, but it has been a long time since we did anything in Oslo, says Magne Søvde, director of Coop Norge Eiendom.
He is responsible for buying and selling in the company, which has a central group function in assisting the various cooperative societies with property investments and property expertise. These days, the company has entered into an agreement with the residential development company Bonum Utvikling to become a co-owner in an apartment project in Marstrandgaten at Rodeløkka in Oslo.
Coop Norge Eiendom is involved in around 100 properties and property projects, and slightly fewer than half of these are done in partnership with other parties.
Søvde states that Coop Norge Eiendom is a partner in projects with a total of over 1,000 homes at various stages.
Not afraid of exposure
The project will, according to plan, consist of up to 100 apartments and a shop, with planned completion in the first part of 2022. Coop will take one third of the residential project plus the commercial premises.
– We have entered into an agreement in the belief that we will succeed in establishing the low-price shop Extra, but we are aware that the necessary permits have not been granted yet, and we have made reservations about this. But that's how it is – we must be proactive, says deputy managing director Bjørn Tore Skaug of Coop Øst, who will operate the shop that is planned to open in five years.
Søvde says the requirements Coop sets for participating in a residential project include, among other things, that it must be likely to establish one of the chain's shops in the project.
– And then we assess requirements for pre-sales, earnings and risk with a market-based approach, but we perhaps have different return requirements than other residential investors have, given that we enter into the projects to establish shops for our customers, who are also our owners.
He expresses that he is not particularly concerned about increasing exposure to the housing market.
– We are exposed to the housing market at national level, as we have projects in many places – including Gjøvik, Mo i Rana and the Stavanger region – but are not very concerned about the risk exposure. We are naturally curious about how the Oslo market will develop and what happens next, but we believe it will normalise. But regardless, it is important to have good projects
Wanted commercial premises
So it is Bonum Utvikling that will be in charge of the project. The homebuilder Bonum was started in 2011 by a group of friends from Tønsberg, and last year the offshoot Bonum Utvikling was established.
This company works with larger development projects in collaboration with other partners, and currently manages 10 projects.
Initially, Bonum Utvikling bought the property in Marstrandgaten, but later the company has also secured the neighbouring property located in Stockholmgaten. Managing director and partner Salman Saeed says the company has been discussing establishing commercial premises at street level in the project for some time, and when the project increased in size it was "natural to open dialogue with relevant commercial operators who also possess industrial competence in terms of property development".
Saeed says that the project's qualities should indicate that the apartments could be sold for 5-6 million kroner each, which according to conventional mathematics should indicate total apartment values of up to 500-600 million kroner in the project.
