Challenges, Opportunities and Risks
The implementation of climate and environmental remediation in residential properties is closely interlinked with analyses of potential and economic feasibility studies. We not only take the interests of our company into consideration, but, first and foremost, those of our customers. We are currently seeing that social acceptance for modernization work that drives up costs is noticeably declining. This means that the greatest challenge we currently face is performing ecologically important measures while also keeping any resulting financial burden for our tenants as low as possible.
A number of statutory requirements and regulations, that partially even contradict one another, also restrict our plans. The form the Landlord-to-Tenant Electricity Act has taken, for example, in connection with the reduction in the feed-in tariffs for photovoltaic plants (PV) has hindered the economic operation of our planned PV program. In addition, the number of regulations and directives is mounting constantly, while developments in the political frameworks – for example, with relation to the Building Energy Act, the Climate Protection Act and the rejection of the Federal Government’s Building Commission – are stalling and leading to uncertainty and an inability to plan in this area. Higher CO2 costs – as sensible as they may be for achieving the government’s climate protection targets – could, depending on the form this takes, result in considerable burdens on both landlords and tenants. Depending on the distribution of the social burdens, however, this could also create opportunities for considerably boosting climate protection in the building sector. The building sector is fundamentally characterized by high initial investments and long useful lives. Changes in the legal framework conditions therefore have the potential to have long-term effects on the economic operation of the buildings.
Volatile energy prices also hinder planning processes and financial feasibility calculations for our energy sales.
The constant increase in the costs for construction services and materials in the past few years has also increased the pressure on the company to pay attention to value for money when making purchases in order to be able to continue to provide affordable homes. This increases the risk that more expensive – but ecologically more beneficial – construction materials are used less due to economic concerns. With our high purchasing volumes of construction materials, we can at least partly compensate for this effect.
In the field of building insurance, contributions may be increased or certain insurance services may be excluded, such as flood insurance. Due to Vonovia’s size, however, even if this risk materializes, we may assume it would have a low impact on results.
In addition, the ongoing discussion surrounding diesel vehicles also poses a potential risk for Vonovia due to the fact that the majority of our fleet consists of (modern) diesel vehicles. Court judgments and possible driving bans in cities may mean that we have to acquire new vehicles. This would result in considerable costs.
The expansion of our own services in trade professions presents us with opportunities. By employing more tradesmen, we can expand and keep knowledge in the company, including for environmental measures such as the correct separation and disposal of the materials that we use.