Major market developments and valuation parameters that have an impact on the fair values of Vonovia are assessed on an ongoing basis. Due to the market momentum recognized across Germany in the first half of 2019, Vonovia arranged for a new valuation to be performed for the locations that have been affected the most, i.e., on around two-thirds of the portfolio. This led to net income from the valuation of € 2,258.7 million as of June 30, 2019.
Due to the particular situation regarding data on the Swedish real estate market, it was possible to arrive at a valid value for the parameters relevant to real estate valuation of the Swedish portfolio for the reporting date as of September 30, 2019. The resulting valuation effect for the period July 1 to September 30, 2019, in the amount of € 9.2 million (Q3 2018: € 11.3 million) was recognized as of September 30, 2019.
In addition, buildings under construction (new construction/development to hold) were completed during the reporting period. A fair value measurement is performed for the first time when the properties are completed. This results in a valuation effect of € 15.4 million for the period from July 1 to September 30, 2019 (Q3 2018: € 7.5 million).
In June 2019, the Berlin State Government reached an agreement on a white paper for a rent freeze, the plan being to freeze rents in the city for a period of five years, with a small number of exceptions. A corresponding draft legislation was submitted on October 22, 2019, but still has to be passed by the Berlin House of Representatives. It has not yet been established whether the planned legislation is consistent with the constitution; so far there has been no clear market reaction to the proposed new law in Berlin. There is no evidence of any impact on fair values at the time of the quarterly financial statements.
The recognition and valuation of investment properties are explained in detail in the consolidated financial statements for 2018.