Norway's SPDE puts Fornebu project on hold

Norwegian listed property company Scandinavian Property Development (SPDE) said on Wednesday it is postponing the start in construction work on the Storøya section of the Fornebu development near Oslo due to uncertain market conditions for new residential property. SPDE will reconsider the issue in early 2009, when it will decide on a possible construction start in the summer of 2009.

Independent assessments from two real estate agents and two appraisers show that there has been very little turnover of newly developed residential property in the past six months, SPDE said. This makes it difficult to assess the value of the units in the Storøya section. In addition, several market players expect sale prices to fall in the coming months.

'SPDE therefore considers the market situation to be too weak compared with the total construction cost to justify a construction start as of now,' the company said in a statement.

SPDE acquired the Fornebu site, its first development project, in March 2007. The expected development potential at Fornebu is approximately 543,000 m2, of which about 425,000 m² is earmarked for residential, and about 118,000 m² for commercial, development.