Fair Values

Major market developments and valuation parameters that have an impact on the fair values of Vonovia are assessed every quarter. The portfolio was revalued at the end of the year. Due to the extensive investments made in the energy-efficient modernization of our buildings and to improve the fittings in our apartments, Vonovia’s portfolio showed very positive development in 2016. This is evident from the development of rents, among other things. At the same time, the residential property market in Germany was particularly dynamic in 2016. Sale prices for multifamily residences rose considerably in 2016 and not only in expensive and very dynamic locations such as Munich, Berlin and Hamburg. Similar developments (albeit to a lesser degree) were also observed for the areas in the direct vicinity of these cities and for locations with lower growth rates. Since the return expectations of property buyers have dropped at the same time, the increase in market values is ahead of rent developments in these locations (yield compression). This means that in 2016, the value of our property portfolio rose considerably by 16.3 % compared with 2015, after adjustments for acquisitions and sales.

In addition to the internal valuation, the property assets are also assessed externally by the independent property appraiser CBRE GmbH. The market value resulting from the CBRE expert opinion deviates from the internal valuation result by less than 0.1%.

Regular Determination of the Fair Values Creates a Transparent Valuation of the Company’s Properties

Calculating and showing the fair values provides a control parameter inside the company and also helps to make the development of the value of our assets transparent to people outside the company.

The value of the entire portfolio of residential properties was determined on the basis of the International Valuation Standard Committee’s definition of market value.

The valuation methodology used by Vonovia is based on the discounted cash flow (DCF) methodology. Under the DCF methodology, the fair values are derived from the income and costs associated with a property. Under the DCF methodology, the expected future income and costs of a property are forecast over a period of ten years and discounted to the date of valuation as the net present value. The income mainly comprises expected (current in-place rent, market rents as well as their development) taking vacancy losses into account. These are derived for each location from the latest rent indices and rent tables (e.g., empirica and IVD), as well as from studies on spatial prosperity (Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), Prognos, empirica, Bertelsmann Stiftung, etc.).

On the cost side, expenses and management costs, as well as other cost items such as ground rent, non-allocable ancillary costs and rent losses, have been taken into account and inflated in the reporting period, carried out in the housing stocks are factored in by decreasing the current maintenance expenses and adjusting market rents. The commercial properties in the portfolio are mainly small commercial units for the supply of the local residential area. Different cost approaches were used to those for residential properties, and the capitalized interest rates were adjusted to reflect the market specifics.

The recognition and valuation of investment properties are explained in detail in the Notes to the consolidated financial statements (note [21]).

The of the real estate portfolio of Vonovia comprising residential buildings, commercial properties, garages and parking spaces as well as undeveloped land and any inheritable building rights granted was € 27,115.6 million as of December 31, 2016 (2015: € 24,157.7 million). This led overall to net income from fair value adjustments of investment properties of € 3,236.1 million.

The fair values for each real estate portfolio cluster are as follows.



Residential units


Fair value (in € million)*












Dec. 31, 2016


Dec. 31, 2015


Dec. 31, 2016


Dec. 31, 2015


Fair value of the developed land excluding € 103.0 million (2015: € 70.5 million) for undeveloped land, inheritable building rights granted and other




























Upgrade Buildings









Optimize Apartments



























Non Core


















The value of our real estate portfolio is a crucial factor influencing the assessment of our asset position and therefore the development of our net asset value, which is an important performance indicator.

Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding rent agreements before the deduction of non-transferable ancillary costs.
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or handicapped-accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Fair Value
Valuation pursuant to IAS 40 in conjunction with IFRS 13. The estimated value of an asset. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
The “Strategic” subportfolio contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy.