According to the latest estimates of the Federal Statistical Office, around 82.5 million people are living in at least 41.7 million apartments in Germany. In addition to our basic physiological needs, a roof over our heads is another fundamental human requirement; as well as offering protection and shelter, our home is also an expression of our personal lifestyle.
At the time of the 2011 Census, the proportion of owner-occupied apartments came to around 43%, with rented apartments accounting for around 57%. The vast majority of these apartments are made available by private small-scale landlords. In addition to private small-scale landlords, there are cooperative, public-sector and church landlords in Germany as well as private-sector professional landlords such as Vonovia. The latter provide a total of around 3.2 million apartments.
The real estate industry as a whole plays a key role for the German economy, with real estate, renting and business activities alone contributing 10.8% to gross output in 2017. The real estate industry, within the narrower sense of the term, is home to around 302,000 companies employing a total workforce of approx. 467,000.
In this environment, Vonovia holds and manages a housing stock of around 350,000 apartments in almost all of Germany’s attractive cities and regions. The total fair value comes to around € 33 billion, with net assets based on the EPRA definition (EPRA European Public Real Estate Association) coming to approximately € 21 billion. In addition to its own apartments, Vonovia manages around 63,000 apartments for third parties. This makes Vonovia Germany’s leading nationwide residential real estate company, albeit with a very low market share due to the highly fragmented nature of the market.
As Germany’s largest real estate company, we feel a special responsibility to our customers, but also to society and our shareholders. In order to live up to this, we view ecological and social aspects alongside economic factors as highly important when making our business decisions. We look into developments and trends and engage in comprehensive discussions with various stakeholders.
As part of our business activities, we are also looking increasingly at the situation in entire residential neighborhoods, as this has an impact on the appeal of our apartments for our customers and, as a result, on the value of our residential properties. We use major investments in energy-efficient renovation and modernization to keep our properties up-to-date. We are also responding to the rising demand for senior-friendly accommodation by converting a large number of apartments to meet this demand.
Vonovia’s business model is based on two pillars: the nationwide rental of good-quality and, most importantly, affordable living space and the provision of fairly priced property-related services. These property-related services mainly relate to cable TV, bathroom renovations in response to tenant requests, automated meter reading and senior-friendly apartment modernization. This is supported by our craftsmen’s and residential environment organization.
As a modern service company, Vonovia focuses on customer orientation and, as a result, on the satisfaction of its customers, namely its tenants. Being able to offer tenants affordable and attractive homes is a prerequisite for the company’s successful development. A central service center together with local caretakers and the company’s own technical and residential environment organization ensure that our tenants’ concerns are attended to in a timely, straightforward and reliable manner. This plays a key role in ensuring that our customers feel that they have good support in their residential environment.
In addition to its successful long-term and modern property management, Vonovia also develops the real estate portfolio through targeted acquisitions and sales. The goals associated with new portfolios acquisitions include strengthening its overall regional presence in Germany, realizing operational and financial economies of scale and optimizing structures. In addition, Vonovia will be using densification and vertical expansion to build an increasing number of new apartments in order to reflect the rising demand for living space due to migration to metropolitan areas.
As one of Germany’s leading residential real estate companies, Vonovia maintains close dialog not only with customers, but also with numerous other stakeholder groups that are important for the company’s development. These mainly include its employees, investors, suppliers and service providers, as well as social interest groups, including non-governmental and non-profit organizations. Among other things, we also use our sustainability reporting to meet these stakeholders’ expectations in terms of information.
In this combined management report, we will, for the first time, be responding to the legislative initiative on non-financial reporting by making a non-financial declaration in a separate chapter. We will be using this chapter to report on the key aspects, namely environmental issues, employee issues, social issues, human rights and measures to combat corruption.
The parent company of the Vonovia Group is organized in the legal form of a European company (SE). Vonovia SE is directed by a Management Board, which is responsible for conducting business and developing the Group’s strategy. Implementation occurs in close coordination with the Supervisory Board, which is regularly briefed by the Management Board regarding the development of business, strategy and potential opportunities and risks. The Supervisory Board oversees the activities of the Management Board.
The parent company, Vonovia SE, performs the function of the management holding company for the Group. In this role, it is responsible for determining and pursuing the overall strategy and implementing the company’s goals. It also performs property management, financing, service and coordination tasks for the Group. Furthermore, it is responsible for the management, control and monitoring system as well as risk management.
Vonovia’s core operating rental business is currently divided into six regional business areas. These are, in turn, split into business units, each of which is responsible for an average of around 9,800 housing units on location as part of a decentralized structure. The caretaker, craftsmen’s and residential environment organization is also based on a regional structure.
Responsibility for product management, new construction and modernization, acquisition and sales are centralized.
In order to carry out its management functions, Vonovia has established a series of service companies, particularly for commercial and operational support functions, which are centralized in shared service centers. By pooling the corporate functions on a uniform management platform, Vonovia achieves harmonization, standardization and economies of scale objectives and the other Group companies thus do not need to perform such functions themselves. This bundling is a prerequisite for the successful digitization of the process chain.
Vonovia SE has its registered headquarters in Germany. Since 2017, its registered office has been in Bochum. The head office (principal place of business) is located at Universitätsstrasse 133, Bochum.
As of December 31, 2017, 350 legal entities/companies formed part of the Vonovia Group. A detailed list of Vonovia SE shareholdings is appended to the notes to the consolidated financial statements.
The management of the business is based on the strategic approaches of the company and is conducted via the three segments: Rental, Value-add Business and Sales.
The Rental segment combines all of the business activities that are aimed at the value-enhancing management of the properties.
The Value-add Business segment bundles all of the customer-oriented services in which Vonovia has expanded its core business. These services have close ties to and/or influence the rental business. The Value-add Business segment also includes the activities performed by the craftsmen’s and residential environment organization, our new construction activities, the condominium administration business and insurance.
The Sales segment is derived from the Operate sector of our portfolio and bundles all real estate sales from the portfolio. This includes the individual sale of apartments from the Privatize portfolio subportfolio and the sale of entire buildings or pieces of land from the “Non-Strategic” and “Non-Core” subportfolios; combined, these will be reported as “Non-Core” sales.
Details on the management of our business can be found in the chapter on our management system.