A webinar on the presentation of the results (in Estonian only) will take place on 30 January at 13:00 (EET), more information.
Although there were no huge positive development leaps in the operating environment, there were still signs of renewed optimism in the residential property market. During the fourth quarter, we signed 34 contracts under the law of obligation (sales contract; 2024 Q3: 32; 2023 Q4: 29) and in total during 12 months, we signed 129 sales contracts (2023: 69). Most of the new sales during the quarter came from the Uus Meremaa ready for sale homes and from signing new sale contracts for the Iseära phase II terraced houses and apartments under construction. The number of new sales contracts signed during the year is Liven's highest annual performance to date.
Liven's market share of new sales in Tallinn and the surrounding area is estimated to have been around 10% in 2024, up from the 6-7% estimate of the previous two years, and highest result in the market. During the year we signed new sales contracts in the sales revenue volume of EUR 42 million.
The weekly sales ratio, which represents the number of homes going out of supply under sales contract or paid reservations, improved to a higher level in the third quarter compared to previous quarters and remained higher during the fourth quarter. Over the period average was 1.7% and even exceeded 2.0% in October. The long-term average is considered to be 1.5-2.0%.
During the fourth quarter, we handed over a total of 24 new homes in developments completed under the real right contract (2024 Q3: 27; 2023 Q4: 74). Of these, 14 homes in phase II of the Uus-Meremaa development, 3 in phase II of the Iseära development, 6 in phase I of the Luuslangi development and 1 home from the Magdaleena development. In the same order, the projects also had an impact on the financial results of the fourth quarter. Revenue for the quarter was EUR 8,164 thousand (2024 Q3: EUR 7,057 thousand; 2023 Q4: EUR 16,713 thousand) and net profit for the period was EUR -78 thousand (2024 Q3: EUR +342 thousand; 2023 Q4: EUR +2,245 thousand). The fourth quarter results were negatively impacted by a combination of factors, including a reduction in the budgeted profitability of previously completed projects, increased forward-looking costs (including marketing expenses and expenses related to Berlin operations), a lower share of capitalizable costs and general cost inflation. The result also includes a gain of EUR 286 thousand on the change in fair value of the commercial property in Türi Street.
Throughout the year, we delivered 92 new homes (2023: 148) out of possible 110, generated sales revenue of EUR 27,266 thousand (2023: EUR 35,765 thousand) and a net profit of EUR 558 thousand (2023: EUR 775 thousand).
Assets increased by EUR 5,193 thousand during the quarter (by EUR 9,739 thousand during the year) to EUR 78,298 thousand at the end of the period. The main contribution to the increase in the balance was from construction related increase in inventories of the Iseära and Regati projects and receivables from buyers arising from the sales of the Uus-Meremaa homes close to the year-end, which were received shortly after beginning of the new year.
During the quarter, we received new bank loans of EUR 4,110 thousand to finance the construction of projects. Together with home deliveries, we repaid EUR 1,302 thousand of earlier construction loans. Total borrowings with other loans increased by EUR 2,877 thousand to EUR 47,252 thousand during the quarter. Despite the increase in the balance of construction loans, short-term loan commitments decreased by EUR 3,332 thousand to EUR 6,405 thousand, mainly due to a significant decrease in the loan balance of the Uus-Meremaa project and the refinancing of the loan agreements for the Iseära development. The borrowings increased by EUR 8,822 thousand during the year with the main contribution from the issue of the green bonds (EUR 6,200 thousand).
The balance of cash and cash equivalents increased by EUR 1,110 during the quarter to EUR 5,916, mainly due to sales in the fourth quarter. The balance increased by EUR 2,184 thousand during the year.
Consolidated statement of financial position
| (in thousands of euros) | 31.12.2024 | 31.12.2023 | ||
| Current assets | ||||
| Cash and cash equivalents | 5,905 | 3,721 | ||
| Trade and other receivables | 1,270 | 1,326 | ||
| Prepayments | 385 | 321 | ||
| Inventories | 67,902 | 62,112 | ||
| Total current assets | 75,462 | 67,480 | ||
| Non-current assets | ||||
| Prepayments | 44 | 0 | ||
| Investment property | 1,350 | 0 | ||
| Property, plant and equipment | 423 | 388 | ||
| Intangible assets | 401 | 296 | ||
| Right-of-use assets | 618 | 395 | ||
| Total non-current assets | 2,836 | 1,079 | ||
| TOTAL ASSETS | 78,298 | 68,559 | ||
| Current liabilities | ||||
| Borrowings | 6,405 | 17,106 | ||
| Trade and other payables | 11,234 | 9,121 | ||
| Provisions | 99 | 2,384 | ||
| Total current liabilities | 17,739 | 28,611 | ||
| Non-current liabilities | ||||
| Borrowings | 40,851 | 21,328 | ||
| Trade and other payables | 1,398 | 469 | ||
| Provisions | 72 | 29 | ||
| Total non-current liabilities | 42,322 | 21,826 | ||
| Total liabilities | 60,061 | 50,437 | ||
| Equity | ||||
| Share capital | 1,190 | 1,183 | ||
| Share premium | 9,562 | 9,339 | ||
| Share option reserve | 317 | 363 | ||
| Own (treasury) shares | 1 | -1 | ||
| Statutory capital reserve | 118 | 115 | ||
| Retained earnings (prior periods) | 6,491 | 6,347 | ||
| Profit for the year | 558 | 775 | ||
| Total equity attributable to owners of the parent | 18,237 | 18,122 | ||
| Total equity | 18,237 | 18,122 | ||
| TOTAL LIABILITIES AND EQUITY | 78,298 | 68,559 |
Consolidated statement of comprehensive income
| (in thousands of euros) | 2024 Q4 (October-December) | 2023 Q4 (October-December) | 2024 12 months (January-December) | 2023 12 months (January-December) | ||
| Revenue | 8,164 | 16,713 | 27,266 | 35,765 | ||
| Cost of sales | -7,477 | -13,867 | -23,429 | -32,681 | ||
| Gross profit | 687 | 2,846 | 3,837 | 3,084 | ||
| Distribution costs | -439 | -332 | -1,418 | -1 022 | ||
| Administrative expenses | -426 | -266 | -1,419 | -1 200 | ||
| Other operating income | 279 | -26 | 312 | 14 | ||
| Other operating expenses | -10 | 1 | -26 | -8 | ||
| Operating profit | 91 | 2,222 | 1,287 | 868 | ||
| Finance income | 23 | 8 | 79 | 17 | ||
| Finance costs | -199 | 15 | -647 | -6 | ||
| Total finance income and finance costs | -177 | 23 | -568 | 11 | ||
| Profit before tax | -86 | 2,245 | 719 | 879 | ||
| Income tax expense | 8 | 0 | -162 | -104 | ||
| Net profit for the year | -78 | 2,245 | 558 | 775 | ||
| Attributable to owners of the parent | -78 | 2,245 | 558 | 775 | ||
| Comprehensive income for the year | -78 | 2,245 | 558 | 775 | ||
| Attributable to owners of the parent | -78 | 2,245 | 558 | 775 | ||
| Basic profit/loss per share | -0.007 | 0.190 | 0.047 | 0.066 | ||
| Diluted profit/loss per share | -0.006 | 0.184 | 0.046 | 0.064 | ||
The customer satisfaction score for the last 12 months, collected at different stages of the customer journey, increased to 9.2 out of 10 by the end of the year (Q3 2024: 8.4; Q4 2023: 8.0). The improvement in the score reflects our focused efforts on increasing the number responses and the feedback results throughout the year.
Key events
In development projects: At the beginning of 2024, the detailed spatial plan for Kadaka tee 88 was adopted, and the construction of the Iseära phase II apartment buildings began in the summer, the last five terraced houses. In the spring, we signed an agreement for long-term financing of commercial space in the Väike-Tallinn project, and in the autumn we started pre-sales of the Jalami 6 apartment building in Luuslangi phase II. In the second half of the year, design specifications were issued for the design of a 30-apartment apartment building at Virmalise 3, and the Kalda 5 property in Nõmme was acquired with the existing detailed spatial plan and building permit, and an architectural competition was held during the year. In the last quarter of 2024, we refinanced loan agreements related to the Iseära development with an outstanding balance of EUR 4,873 thousand and financed infrastructure construction. The new loan amount was EUR 5,700 thousand maturing in the fourth quarter of 2027. For a more detailed overview of events and developments in the development projects, see the "Overview of projects" section.
According to the Kantar EMOR survey, published in the fourth quarter, Liven was this time in first place in the reputation ranking of real estate developers, ahead of the competitors in terms of reputation index, attitude and attractiveness of developments.
In addition, during the year we increased share capital in connection with the employee share option program, paid EUR 635 thousand in dividends, and issued public green bonds in the amount of EUR 6 200 thousand. There have been no significant events since the reporting date that would not have been reflected in the financial statements for the fourth quarter.
Significant developments in the economic environment in the period under review
Throughout 2024, the 6-month Euribor (Euribor) decreased, with the Euribor at 3.86% at the beginning of 2024 and reaching 2.586% by the end of 2024 (30.09.2024: 3.11%)
As inflation in the euro area has been slowing as expected, the Governing Council of the European Central Bank decided to cut key interest rates by 25 basis points in December, as it did on three previous occasions in 2024. This decision was in line with previous forecasts by economic analysts.
In Estonia, the annual rate of increase in consumer prices was 3.9% in the fourth quarter of 2024 (third quarter of 2024: 3.0%). In total, the consumer price index rose by 3.5% in 2024 compared with the average for 2023. Changes in the prices of food and non-alcoholic beverages had the largest impact on the index.
According to the latest data from Statistics Estonia, the estimated annual increase in average gross wages in the fourth quarter (8.3%) exceeded the increase in prices. Despite this, consumer confidence, which had remained low for a long time, remained weak in the latest quarter. Consumers are more likely to view the purchase of durable goods as a bargain in the next 12 months than they do now, leading to a general sentiment to continue to be on hold and to delay purchasing decisions. Based on the recent data from the Institute of Economic Research, the consumer confidence indicator is at its lowest level of the year in the fourth quarter (Q4 2024 average: -36; 9-month 2024 average: -31; 2023 average: -30).
Despite the above, there were signs of activation of home buyers in the market. For example, according to the Land Statistical Office's transaction statistics, the number of transactions of apartments (residental) in Tallinn increased by 14.8% compared to the previous quarter (Q4 2024: 2,466 transactions; Q3 2024: 2,149 transactions). Activity has increased in the last two quarters of 2024. Overall, the number of transactions for the purchase and sale of apartments in Tallinn has decreased by 3% (2024: 8,274 transactions; 2023: 8,537 transactions). However, activity has increased mainly in the aftermarket and sales of new developments have remained rather subdued.
Compared to the third quarter of 2024, the offer prices of new developments remained stable in the fourth quarter of 2024, showing an increase only of 0.2%. On an annual basis, offer prices have increased by 3.9% on average compared to 2023. Based on the data collected from the market, the number of transactions increased by 52% compared to the previous quarter (Q4 2024: 559 transactions; Q3 2024: 368 transactions), which is also 33% higher than the sales performance in Q4 2023 (421 transactions). On an annual basis, the number of sales of new developments in 2024 increased by 34.7% compared to 2023.
Due to the completion of construction of several development projects in spring and summer 2024 and the modest sales volume, the stock of unsold ready-to-move-in apartments remained relatively high in the end of quarter, reaching 1,011 apartments (Q3 2024: 931; Q4 2023: 889). Consequently, options for homebuyers and market competition remain high.
Outlook for the future
Despite some recovery in the market in the second half of 2024, the external environment's impact on demand and sales will remain a key challenge in 2025. We expect a continuation of the gradual improvement in the external factors affecting the residential real estate sector, in particular the decline in interest rates and real wage growth. We are ready to quickly provide new supply to the market in case of increase in demand.
The coming years will continue to be environmentally challenging and risky, including for all levels of the public sector. Despite positive developments, significant challenges remain in Tallinn's planning procedures. We continue to expect several long-drawn-out procedures to reach a conclusion in the first half of 2025. Planned tax rate increases and additional taxes will increase the sales prices of new developments in the coming years, reducing incomes and the availability of real estate.
In real estate development, results are achieved with a significant time lag and an increase in marketing expenses in the periods preceding the sales growth. The 2025 year result largely reflects the conditions and decisions of 2024, when we started construction on the Iseära and Regati projects. In 2025, we have the potential to deliver a maximum of 194 residential and commercial units with total sales of up to EUR 75 million. At the start of the year the balance of signed sales contracts is at 88 at a total sales proceeds volume of EUR 31 million.
In the past two challenging years we have not been able to meet our 20% return on equity target, but largely as a result of the developments of the Regati and Iseära projects, we expect a significant improvement in financial performance in 2025 and 2026. Given the continuation of the past six months sales pace the projected sales revenue for 2025 is about EUR 55 million which we expect to suffice for meeting the 20% return on equity target.
With the decisions and actions undertaken in 2025, we will lay foundation for our economic performance in 2026 and 2027. Achieving good results continuously requires improvements in external factors as well as internal efforts to improve efficiency. During the year, we continue the pre-sales of Luuslangi phase II and Wohngarten projects, will start with the pre-sales of the next phases of Iseära as well as with the pre-sale of several new projects. Upon reaching sufficiently high levels of pre-sales also with the construction. There is sufficient capacity in the development portfolio for the next 3-4 years, but we continue to actively negotiate and consider acquisition alternatives to increase the development portfolio.
Joonas Joost
Liven AS CFO
E-mail: joonas.joost@liven.ee
