Affordable Housing Thanks to Serial and Modular Construction

103-2, 102-15, 413-1

Creating affordable living space in central locations is the most pressing challenge facing the real estate industry in Germany. According to GdW Bundesverband deutscher Wohnungs- und Immobilienunternehmen e. V. (German Association of German Housing and Real Estate Companies), at least 400,000 new apartments will be required over the next few years – 80,000 of which will be social housing apartments and at least a further 60,000 apartments in the low-cost segment.

GdW expects around 275,000 units to have been completed across Germany in 2016 – meaning that current construction activity falls considerably short of the annual need for new construction. GdW points to the long and drawn-out processes involved in making land available for construction, a lack of planning permission capacities, high construction costs, rising real estate transfer taxes and high energy-related requirements combined with insufficient investment subsidies as reasons why new construction activity aimed at creating affordable rented apartments has been unable to pick up sufficient speed. (Source: GdW, Wohnungswirtschaftliche Daten und Trends 2016/2017)

Vonovia takes the lack of housing in Germany very seriously. We have taken a good look at how we can build new and affordable apartments, for example.

As a portfolio holder, our clear focus is on building rented homes, managing them in the long term and renting them at prices that an average earner can easily afford. This, however, also puts us under increased cost pressure because we can only rent out apartments at affordable prices if the construction costs are low. This is why our approach to construction activities is a novel one within the real estate industry: series production and modular construction. The future apartment is split into modules. They are prefabricated, transported to the construction site and assembled there. In order to take the relevant demographic and infrastructure-related requirements into account, individual adjustments are made to the building that is constructed by putting the various modules together.

At the same time, the building projects are not implemented individually, but rather in series using systematic, standardized processes. This allows us to both reduce the costs associated with the new construction measures and to shorten the construction period considerably, thus reducing disruption to residents. What is more, the precise prefabrication of the modules in the factory allows the method to meet high quality standards.

A significant advantage for Vonovia stems from the fact that we have land and vertical expansion potential in our portfolios. This means that we do not need to acquire expensive land to build on that would either show up in the costs or is not even available to begin with. As a result, we pursue two different approaches to our new construction activities: On developed land, we create new living space by adding extra stories to existing buildings and performing attic conversions. On undeveloped land, we create new buildings.

But cost pressure is not the only challenge facing Vonovia in connection with its construction projects: The process is also exacerbated by changes to, and different guidelines in, state construction regulations, meaning that it is only possible to fully adapt the modular new construction system to a certain extent. Wooden hybrid construction buildings with five upper floors, for example, cannot be erected in all federal states due to different fire protection requirements. In addition, the further requirements that apply in terms of accessibility have a significant impact on the modular concept – and, as a result, on the construction costs.

Varying municipal requirements have a huge impact on the extent to which construction projects can be realized time and again. It is sometimes difficult to meet the design requirements or furnish evidence of the required parking spaces that cannot be made available in full due to a lack of space.

We are engaged in an intensive dialogue with policymakers and municipalities at various levels in order to master these challenges. Planning that is as long term and detailed as possible, as well as a functioning regional network and good cooperation with the building authorities, also play a decisive role in determining the success of the construction projects.

When it comes to measures to add extra stories to existing buildings, it is not uncommon for existing tenants to voice concerns over the construction projects. Any initial reservations that tenants may have can be resolved by making sure that regional authorities and construction managers work together to provide tenants with information and involve them early on.

Taking Demographic Change into Account in the Construction Projects

102-15, 413-1

Demographic change in Germany – caused by an aging population on the one hand and by migration flows within and to Germany on the other – is creating not just a need for new living space, but a need for living space that also takes account of social developments and meets the corresponding requirements. Accessibility, for example, is a key issue, as is the size of the new apartments being built.

All of Vonovia’s newly built apartments exceed the statutory requirements in terms of accessibility, i. e. the apartments do not feature any floor level differences of more than two centimeters. The installation of wider apartment entrance and internal doors, which make it easy to use walkers within the apartment, are standard. In addition, all of Vonovia’s new buildings feature an elevator system. Efforts are also made to add elevator systems to buildings when additional stories are added. Vonovia is currently working on developing low-cost, viable alternatives to the current elevator concepts.

Taking Environmental Guidelines and Standards into Account in the New Construction Projects

102-15

Vonovia’s new construction projects comply completely with the more stringent requirements of the Energy Saving Ordinance (EnEV). This means that the buildings not only require less heating, but also offer excellent protection against heat in the summer thanks to extensive roof insulation and external shading devices (roller shutters) in the south and west of the buildings. Protection against heat in the summer is also taken into account when extra stories are added to existing buildings. In addition, sustainable and recyclable construction and insulation material is used both for new buildings and in measures to add extra stories to buildings.