PROPERTY DEVELOPMENT - NORWAY

Veidekke Property is a major player in the Norwegian housing market. We develop, build and sell blocks of flats and to some extent detached and terraced houses. Geographically, activity is concentrated in and around the major cities.

Aided by low interest rates and an improved financial market, housing sales increased considerably during the last three quarters, particularly in the Oslo region. 215 homes (Veidekke's share) were sold, compared with 41 throughout 2008. Several projects are ready for start up in 2010, both small blocks of flats and small house-building projects.

123 (vs. 542) homes were completed in 2009, and 50 (28) homes were initiated in 3 (2) projects. At the end of 2009 activities in Norway included 64 (185) properties under production, divided over 4 (6) projects. Of the housing units under production, there were 4 units (72) which did not sell. In addition, at year-end there were 90 (110) completed, unsold homes spread over 12 projects. Of these, 78 properties were rented out until further notice. Exposure is still regarded as low, and housing sales from this portfolio are ongoing. All lots in the portfolio were valued at year-end which found no basis for devaluing the portfolio.

In the non-residential market, the Skien and Porsgrunn projects (total 13 000 m²) were nearing completion at year's end. Rental rate was 70% by the end of the year, and the buildings are in principal leased to the public sector. Moreover, the non-residential part of the Victoriagården project in Sandvika outside Oslo (4 400 m²), was sold during the year.

In 2009, property operations in Norway had a turnover of MNOK 349 (MNOK 632). Result before taxes was MNOK -48.2 (MNOK -49.9). No significant projects have been initiated in the past two years as a result of the weak housing market, yielding a low contribution from projects throughout 2009. As a result of the weakening market, write-downs were made on non-residential projects and shares, totaling MNOK of 27. In addition, shares in Hansa Property Group were written down by a further MNOK 13. Non-residential buildings were sold at a total gain of MNOK 20.

MNOK 1 463 (1 929) capital was tied up in property business in Norway at year's end. The land bank was equivalent to 3 400 housing units at the end of 2009.