An YIT construction site in Espoo on 9 August 2023. Amid persistent concerns about its financial standing, the construction company has permanently slashed the prices of all dwellings in a planned block of flats in Jätkäsaari, Helsinki, according to YLE. (Heikki Saukkomaa – Lehtikuva)

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YIT has permanently slashed the prices of all units in a block of flats that is to be built in Jätkäsaari, Helsinki, reports YLE.

“We decided to examine the pre-marketing prices for this location in this market environment. Real estate trade is pretty much frozen,” commented Pekka Helin, the head of customers and living services at the largest construction company in Finland.

Pre-marketing refers to the marketing of dwellings that are in the planning or construction phase.

Following the 20,000–35,000-euro price cuts, the prices of units in the blocks of flats range from over 200,000 to over 900,000 euros. The debt-saddled and loss-making construction company has yet to make a final construction decision about the block of flats in Jätkäsaari, called Helsingin Samla.

The Finnish public broadcasting company reminded in its report that construction companies have been extremely reluctant to cut the prices of new dwellings because doing so signals to investors that they are under considerable pressure to sell dwellings. The companies have instead sought to enhance the appeal of their dwellings by offering a variety of perks, including heat pumps, electric bicycles, leases to electric vehicles, gift cards for groceries and temporary exemptions from maintenance fees.

YIT is believed to be the only construction company to have permanently slashed the prices of all dwellings in a block of flats due to economic difficulties, according to YLE. SRV, though, is currently offering a 10-per-cent discount over a few-week campaign.

Also YIT has sold dwellings in newly completed flats at a discount, said Helin.

He assured that consumers and investors have no need to worry about the company.

“The location was in pre-marketing when the market was at its hottest. Now the market is different. The price cut doesn’t tell anything about the company’s finances, and there’s no need to be concerned,” he stressed to the public broadcaster.

YIT saw the number of unsold ready-to-move new dwellings in its catalogue increase to 1,359 between January and March.

The loss-making company is also saddled with significant debt, a reality that saw it issue a green-bond issue worth 100 million euros on 11 June. Helsingin Sanomat revealed that the bond comes with an interest rate of over 11 per cent, representing a 7.5-percentage-point premium over the three-month Euribor.

“When a company has to resort to such an expensive and disadvantageous solution, there’s no way we’re talking about a desirable arrangement,” Olli Koponen, an analyst at Inderes, commented to the newspaper.

“I’m sure YIT would’ve preferred to sell apartments and generate cash flow, but it didn’t succeed this time around.”

Helsingin Sanomat also reminded that the company was viewed to have overcome the worst of its financial difficulties in March, when it secured new capital and enhancements to existing loan terms from its major shareholders.

The Helsinki Stock Exchange-listed company generated 2.16 billion euros in revenue in 2023. With its losses deepening early this year due to, among other things, write-offs related to the Mall of Tripla, it had a debt-to-equity ratio of 89 per cent at the end of March.

“I don’t see a risk of bankruptcy,” said Koponen.

Aleksi Teivainen – HT

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