Sustainable Future
Inside Europe’s billion-dollar wooden city
CNBC15.07.2025Read original
Part of the Swedish capital, Stockholm, is set to become the “world’s largest wooden construction project,” according to its developer Atrium Ljungberg, which will invest 12 billion Swedish krona (about $1.25 billion) into the project.
The new wooden homes, offices, schools and stores, will be interwoven with older structures, some of which have been converted into libraries or cinemas, and the area will extend to 250,000 square meters, or around 2.7 million square feet.
Håkan Hyllengren, head of business development at Atrium Ljungberg, said Sickla aims to be a showcase for sustainable development. The construction sector produces 37% of the world’s carbon emissions, making it “by far” the biggest culprit when it comes to greenhouse gases, according to the U.N. Environment Programme.
“We are really in a sector where we can make a change, if we can build differently and we can run the buildings in more environmental way,” Hyllengren told CNBC via video call.
Doing so also contributes to Atrium Ljungberg’s goal of cutting its construction emissions to almost zero by 2030, a “bold and tough” decision by the company, according to Hyllengren.
Studies show that mass timber buildings produce much lower emissions than those made from steel or concrete: a 2024 study by academics from the USDA Forest Service suggested that timber buildings have global warming potential (a measure of emissions) that is at least 81% lower than concrete, while the figure for steel was 76% lower.
Nearly 70% of Swedish territory is made up of forests, and the country has used timber in construction for many years. “We have a close cultural connection to the forest,” said Oskar Norelius, lead architect at White Arkitekter, which is working with Atrium Ljungberg on the project.
“A lot of Swedes spend time in the forest to unwind and do different activities. But it’s also a very big part of the economy, not just for construction, but also for energy, for pulp, for bio-based products,” Norelius told CNBC by video call.
But Hyllengren said wooden buildings are “usually a single house here and there,” so creating an entire city from timber is new.
Norelius designed Sara Kulturhus, a 20-story building in the north of Sweden made from timber that comprises museum and gallery spaces, an event hall, a library and a 200-room Wood Hotel.
The project helped people in the industry see the potential for constructing larger structures in wood, which can be perceived as being difficult because of the rules around fire risk. “We’ve shifted the mindset in seeing that timber is a driver for architecture rather than a restraint,” Norelius said.
The first part of the development, a residential area of 80 apartments named Kvarter 7, will be completed by the end of 2025, while White Arkitekter is working on designs for Sickla’s first office block. The project also has planning permission for dual-use buildings, meaning that homes could become offices in future, giving the buildings a “second life,” Norelius said. Around 2,000 more apartments are planned for 2027.
Beyond the sustainability of building in timber, people seem to love wood. Visitors to Sara Kulturhus have been seen hugging its wooden columns, something that has the potential to happen in Sickla, Norelius said. The structure of the buildings will be visible, including pipes and ventilation equipment, which means there may be more wooden columns that people could “lean on, or touch,” he said.
Like other European countries, Sweden suffered a real estate crash as interest rates rose in 2023, and Hyllengren said there is a “feeling it’s starting to change.” Given Sickla’s transport links — trains and trams run to central Stockholm and the city’s subway will be extended to the development — Hyllengren said he is optimistic about the future.
While a floor slab of concrete is about 20% cheaper than one made from timber, Hyllengren said building from wood is much faster than using traditional methods, meaning apartments and offices are ready to rent earlier.
And the pleasing aesthetics of wood might also lead to financial benefits for the developer. “We believe what we create is something that will be attractive — and we’ll get higher rental income for it,” Hyllengren said.
