An inspiring year

The reporting year has been a successful and positively revolutionary one for SATO. For me, it has been an inspiring and educational year. Customer driven strategy focus at the centre of our sustainable success accelerated us towards better customer service, which can be seen in most results. By making record-high investments, we are helping to build an urbanising Finland and increase the number and quality of our rental apartments.

 
 

Urbanisation is vital for Finland's success. Being a long-term developer of housing, SATO is in a significant position to enable the urbanisation process.

The impact of trends can be
seen and felt in our strategy

Our entire personnel were engaged in the preparation of SATO's new strategy. We looked for inspiration and understanding in major societal trends and examined other factors affecting our operating environment. In the autumn, together with the Board of Directors, we specified SATO's future direction and strategic goals.

Globalisation, digitalisation and the requirements set by sustainable development are significantly shaping societies such as Finland: innovation, businesses and jobs are mainly created in urban environments where people and ideas meet. Urbanisation is a key factor in our international success.

According to our strategy, we are targeting our investments at the most rapidly growing urban areas.

Megatrends and urbanisation are influencing people's behaviour and values. For this reason, the range of housing must also be able to change. At SATO, we see changes in trends as huge opportunities to renew and improve our housing services. According to our new mission: “We will revolutionise housing – it is more than just walls.” A key change in our operations is our strong “Customer first” attitude, which represents our engagement in continuously improving our customer services and customer experience. This will be materialised by the recruitment of close to 30 new employees during the early 2017. We are also committed to developing new digital services to improve the everyday lives of our customers.

Housing prices raised discussion – construction volume will improve the situation

The range of affordable housing is felt to be insufficient, particularly in the Helsinki Metropolitan Area – as in other major global cities. The question is simply one of an imbalance between supply and demand.

This positive development is based on sufficient zoning in major cities and successful decisions on future rail transport solutions.

In Finland, we are making good progress but we still have some catching up to do, even at the current pace of construction, if we intend to fulfill the estimated lack of 20,000 apartments in the Helsinki Metropolitan Area and 3,000 apartments in Tampere (VTT). In addition, at least 25,000 apartments should be built in Finland every year to respond to the population development (VTT). The lack of apartments is largerly due to decreased ARA production volume caused by tightened restrictions in the 2000s. The new ten-year interest subsidy model leads us in the right direction, but we also need other options to match housing needs. It is vital to avoid any regulations and activities that disturb this positive development in construction and in increase in housing capacity.

Uncertainty over the development of the global economy has created a situation where real estate investments have become more attractive. In Finland, this change is reflected, for example, in the increased number of real estate funds and the increased activity of private investors. These in turn support growth in supply and help curb price increases. This development may change rapidly if the attractiveness of other investment objects improves.

Price levels can be changed the most by increasing supply to meet demand in terms of quantity through sufficient zoning and plot availability. By developing zoning and construction more clearly on the basis of a true understanding of the customer, and by reducing regulations that increase costs, we can extend impacts to everyone.

Within the scope of current regulations, SATO aims to promote affordable housing through partnership zoning, the active promotion of complementary construction, more effective housing design and the development of production standardisation, in a way that enables a living cityscape. Good examples include our new concepts SATO StudioHome and SATO IdealHome. Together with major growing cities, we have ongoing zoning changes that enable complementary construction for building 2,000 new apartments. I hope that the partnership zoning between municipalities and private companies will increase in order to enable the targeted development of new residential areas on the basis of the wishes and opportunities of future residents.

 

We renewed our range of apartments through record-high investments and divestments.

 

 

Successes in 2016

It has been a true pleasure to see how our personnel have been eager to develop our customer driven service. Our performance improved in many areas from the year before. We were more actively present for our tenants: at meet ups in home buildings, during apartment inspections, by telephone and at different customer events. All in all, the largest family event gathered approximately 1,000 of our customers. As a result, the Net Promoter Score (NPS) among our tenants improved clearly, and our occupancy rate increased during every quarter.

We renewed our range of apartments through record-high investments and divestments. Our housing stock increased by roughly 1,800 apartments. Through the active development of our housing portfolio, we have divested apartments in towns with a smaller population and focused on smaller apartments in growing cities to support urbanisation. This speeds up the value development of our housing assets, which in turn enables our future investments.

Investment financing was strengthened by SATO's shareholders who invested roughly EUR 113 million in the company, and by finding new sources of financing. Significant steps in our changed financing structure included the second issuance of a bond of EUR 300 million in March and the loan arrangements of EUR 200 million, without using properties as securities, completed in the autumn with Aktia and the European Investment Bank (EIB).

The strategy work carried out with our entire personnel was a valuable experience and laid a solid foundation for future successes in accordance with our new guidelines.

We will revolutionise housing

We will do our part to develop urban Finland and Finnish housing, together with our customers and partners. As the values of our customers are changing, we aim to enable customised housing through different services.

We will do our groundwork even better and renew our way of serving our customers. In the future, SATO customer relationship will stand for personal service, benefits, communal living and various housing options. To fulfill these objectives, we have launched three strategic development programmes. Customer firstMySATO and Diversified housing concepts.

All SATO employees are eager and engaged to make a change. This was visible, for example, in our personnel survey results that improved further from the year before. We are in an excellent position to continue our journey forward.

I wish to thank SATO's shareholders who made a significant investment in our company and urbanisation in Finland in 2016, and all members of our Board of Directors, our partners and our other stakeholders for their productive cooperation. Above all, I wish to thank our customers who fill SATO homes with life.

Saku Sipola

 
 

 

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