Calculating and showing the fair values of our real estate portfolio provide a control parameter inside the company and also help 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.
Major market developments and valuation parameters that have an impact on the fair values of Vonovia are assessed every quarter. Due to the market momentum recognized across Germany in the first half of 2017, Vonovia arranged for a new valuation to be performed on about two-thirds of the portfolio in the middle of the year. This led to net income from the valuation and the capitalization of modernization costs of € 1,164.7 million. The next valuation of the entire portfolio will be performed at the end of the year. Due to the development in the parameters that are already available and the continued excellent performance of the German residential real estate market, the company expects to see a significant increase in value. Based on the current estimate of the effects of the valuation of investment properties as well as capitalized modernization costs, this increase in value comes to between around € 2.5 billion and € 3.0 billion compared with June 30, 2017.
The recognition and valuation of investment properties are explained in detail in the consolidated financial statements and the Notes to the consolidated financial statements for 2016.