During 2025, economic conditions gradually improved, while global uncertainty persisted. For Hufvudstaden, the year entailed a continued strong focus on its core business. Our strong financial position enables us to continue developing the properties and strengthening our offering to remain a first choice in the market.
I am proud to lead a company that, for the fifth consecutive year, reports an increase in gross profit. It is also gratifying that in 2025 we once again won the annual customer satisfaction survey for offices, a confirmation that the strong partnership we have with our customers is highly appreciated. Behind the numbers are dedicated employees who, through daily customer interactions, have presented solutions, resolved issues, and further strengthend long-term relationships. These relationships create profitability and the foundation for effective sustainability work. The year has, of course, also brought challenges, but in a changing world, I feel confident in Hufvudstaden’s position. We are a stable and long-term company with the willingness and ability to adapt, make decisions, and implement changes when conditions require it.
Development projects generate future cash flows
An important part of Hufvudstaden’s operations is to developstrong marketplaces where architecture, design, and urban environments interact to attract a good mix of tenants. When all elements work well together, they reinforce each other, contributing to increased attractiveness, long-term customer relationships, and higher revenues over time. Against this background, we have intensified efforts to further develop our central locations. A clear example is Fredstan in Gothenburg, where Kvarteret Johanna is undergoing extensive redevelopment and new construction. Leasing progress has been strong, with many new agreements signed with stable tenants at favorable rent levels. At the end of 2025, approximately 75 per cent of the space was leased. Tenant adaptations are now underway ahead of occupancy by new tenants in 2026 and 2027. The project is expected to reach full economic effect in 2028.
In Stockholm, work continues to strengthen Bibliotekstan’s position as the most attractive shopping destination in the Nordics. Together with the City of Stockholm and other property owners, we are upgrading the streetscape to improve accessibility and make the city center more inviting.
Toward the end of the year, we made an investment decision to add two additional floors to the Orgelpipan 7 property in Stockholm. The project will provide highly sought-after office space in one of the city’s best-connected locations, with construction scheduled to start in 2027. In addition to physical investments, we also see how AI is creating new opportunities for the real estate industry. We are actively exploring and implementing AI solutions to optimise energy use, streamline processes, and enhance the customer experience.
Quality in demand in the office market
During the year, the vacancy rate in the office market increased in both Stockholm and Gothenburg due to a weak economic climate, hybrid work, and changes in office usage. Gothenburg was also affected by a significant addition of new office space. Market activity increased somewhat during the second half of the year, but leasing processes were prolonged. We continue to see strong demand for high-quality offices in the best city locations, which benefits us. For example, all offices in the NK properties are fully leased to stable tenants. At Kåkenhusen 40 in Stockholm, an extensive tenant adaptation of 5,400 sqm of office space is underway. At year-end, 90 per cent of the space was already leased, with occupancy planned for the end of 2026. Cecil Coworking has continued to perform very well, with nearly full occupancy. In autumn 2026, we look forward to opening our second Cecil location, situated in Kvarteret Johanna in Gothenburg. Together, our three office concepts—Eget kontor, REDO, and Cecil Coworking— form a flexible offering that meets customers’ needs over time.
Signs of a turnaround in the retail sector
Retail has continued to be affected by household caution and increased savings, but during the year we have seen clear signs of stabilisation. The discount segment has shown the strongest development, while the premium and luxury segments have faced greater challenges. Conditions for increased consumption in 2026 are better than in several years, which has contributed to increased interest in new store openings in prime locations. In Bibliotekstan, interest remains high and vacancy low. We are particularly pleased that Dior and Arc’teryx have chosen to open their first standalone stores in Sweden here, confirming the area’s leading position. In Nordstan in Gothenburg, the properties Fyran and Femman have developed positively despite the economic downturn. We see that the range of businesses is changing, with fashion stores increasingly being replaced by other types of businesses. Two examples are Paradox Museum and the activity center Activate, which help the marketplace reach new customer groups. The transformation work within NK has intensified with the goal of strengthening the customer experience and profitability. The focus has been on cost savings and activating all areas of the department stores with attractive brands. Measures implemented have already resulted in improved performance, and the work will continue in 2026. Weak retail sales have affected the wholly owned subsidiary NK Retail. To mitigate the impact and create profitability, changes and efficiencies have been implemented in both the organisation and the assortment. During the year, the jewelry and watches category was transferred to Nymans Ur, whose specialist expertise strengthens NK’s customer offering.
Increased shareholder value through share buybacks
The Swedish property market was stable thanks to lower inflation, more normalised long-term market interest rates, and good access tocapital. Investment appetite improved somewhat, but buyers remained cautious about their balance sheets and selective regarding acquisitions. Demand for high-quality properties in central locations in Stockholm and Gothenburg was strong, but there were few sellers in the market. Yield requirements for offices and retail in our central locations remained unchanged. Market values were mainly affected by changes in net operating income linked to rents and vacancies. The gap between attractive and less attractive properties widened, which benefits our well-developed properties in the best city locations. Hufvudstaden’s Board of Directors decided, with the support of the Annual General Meeting mandate, to adjust the capital structure through share buybacks. A total of 8 million shares were repurchased, contributing to increased shareholder value.
Long-term approach reduces climate impact
During the year, Hufvudstaden took further steps in its long-term sustainability work, focusing on saving resources, reducing risks, and strengthening the business over time. Energy efficiency is a priority area where technical investments, optimised operations, and daily monitoring have reduced energy use in the properties. A clear example is that the target to reduce energy use per square meter by 16 per cent from 2019 to 2025 was exceeded, as we achieved a reduction of 25 per cent. We are also adapting properties to address climate risks and participating in projects with the city and other property owners to create safer and more attractive city centers. In close collaboration with our customers, we have increased the share of reused materials in our projects. A priority is to create flexible layouts for longer life cycles and reduced need for reconstruction. At the same time, we have strengthened processes for supplier evaluation to achieve our goals in responsible business practices.
I am proud to lead a company that, for the fifth consecutive year, reports an increase in gross profit.
Increased Gross profit for the fifth consecutive year
The Group’s gross profi t increased by 5 per cent to SEK 1,635 million. This demonstrates that our business model works well even in uncertain times and weaker economic conditions. It is gratifying that the NK Business Area contributed most to the increase in gross profit despite challenges in the retail sector. Net result for the year after tax was SEK 837 million (365). The improvement is mainly explained by lower negative unrealised value changes in the property holdings.
Outlook
I start the new year with an optimistic view of the future. The overall assessment is that the Swedish economy will gradually recover, which should create better conditions for both the office and retail markets in our central locations. One of our top priorities is to increase the occupancy rate in the properties. At the same time, we continue to drive major development projects. In Kvarteret Johanna, we are pleased to welcome new tenants who contribute to strengthening the Fredstan area. The development of Orgelpipan 7 is also entering the next phase, where we are creating new office space of the highest quality, which will strengthen cash flow over time. Efforts to create profitable growth within NK will intensify in 2026. The focus is on attracting more visitors and increasing sales while maintaining good cost control. Our long-term strategy remains firm – to own, manage, and develop the best properties in Stockholm and Gothenburg. It is a business model that has proven its strength over time and which I am convinced will continue to create value for both customers and shareholders.
I am deeply grateful for the commitment and expertise I encounter among our employees and look forward to continuing the company’s development together in 2026. I would also like to take this opportunity to thank our customers for the trust they have placed in us and for a strong collaboration.
Stockholm, February 2026
Anders Nygren
President
