Vonovia has a solid business model that provides answers to the ecological and sociopolitical challenges facing us today and has the potential to contribute to the solutions. The strategy developed at the time of the company’s initial listing has proven successful and is flexible enough to allow Vonovia to adapt to the current challenges.
Vonovia believes that the main megatrends affecting the residential property market are (1) climate change and the drive to avoid fossil fuels with the aim of limiting emissions that are harmful to the environment, (2) urbanization and the associated shortage of housing, (3) integration within society as a result of social change, also due to migration to Germany, and (4) demographic change and the demand for housing that meets the needs of today’s society. Greater emphasis also has to be placed on digitalization in customer relationships, in internal processes and in the area of home automation.
- Climate change is one of the biggest and most pressing challenges of our time. As a society, we are called upon to limit man-made global warming to well below 2° C compared with pre-industrial values. One of the moves taken by the German federal government to achieve this is the ratification of the 2015 Paris Agreement, which is binding for the Federal Republic of Germany under public international law. We support these climate targets. As far as the housing stock is concerned, this means being virtually climate-neutral by 2050. Energy-efficiency refurbishments have the potential to make a considerable contribution in this regard. Despite diminishing public acceptance for intensive measures, Vonovia most recently refurbished approximately 3.7% of its portfolio per year to meet the latest standards in energy efficiency, outpacing considerably the national renovation rate of around one percent. Technical innovations, investments in renewable energy and new technologies also play an important role. Vonovia will continue to ensure that its tenants are not overwhelmed financially, while at the same time finding solutions to reduce the CO2 emissions of its housing stock. There is a need for a new social consensus for these issues in order to ensure that the costs associated with achieving the climate targets are distributed fairly.
- The shortage of housing in Germany is particularly evident in the country’s metropolitan areas. As an example, despite the high demand for homes, only 71% of the required apartments were completed in Germany’s seven largest cities in the period between 2016 and 2018. This shortage of housing means that the vacancy rate is now close to zero on the real estate markets in the country’s top locations. As a result, rents in the country’s major metropolitan areas are growing at a faster rate than wages, meaning that the burden associated with housing costs is growing disproportionately. What is more, an increasing number of apartments are losing their social housing status. In order to ensure that individuals are not overstretched financially, Vonovia has made a number of voluntary commitments. These measures are supported by a dedicated hardship management team. Germany, however, is not the only country affected by a shortage of housing. In Sweden, too, construction activity was, for a long time, unable to keep up with population growth. Although residential construction activity in Austria has been geared toward addressing the considerable shortage of supply on the residential property market for some years, Bank Austria reports that there are still substantial supply gaps in some market segments, especially the segments for more affordable rental apartments. On the one hand, Vonovia is using vertical expansion and densification in existing neighborhoods to create new apartments in areas that it already owns. On the other hand, it also plans to use development measures as part of new construction projects to create new homes, both homes to be managed by the company itself and homes for sale.
- Through the influx of people from different cultural backgrounds as well as the internal migration toward the country’s urban areas/high-influx cities, new lifestyles often meet those of the long-time population. This development impacts the social cohesion of the neighborhoods concerned. Insufficient social diversity and mounting tension in the day-to-day interaction between residents in these neighborhoods also have to be tackled in a responsible manner. Integration is the order of the day. Vonovia is living up to its responsibility in this area by taking targeted neighborhood development measures, i. e., it is developing its housing stock both by making investments in the residential environment, and also by investing in neighborhood and social structures with suitable cooperation partners.
- People’s housing needs are evolving. The population in Germany, but also in Sweden and Austria, is becoming increasingly older in terms of the proportion of people over 65 years, a trend that is presenting the housing industry with considerable challenges, particularly when it comes to senior-friendly homes. The number of households is also rising considerably in all three countries, primarily due to a growing number of single and two-person households. This development is fueling even greater demand for apartments to accommodate smaller households. Migration patterns within Germany, for example, and immigration from abroad are increasing the demand for suitable and affordable housing in conurbations even further. These changes affect an aged portfolio built under different conditions. That’s why we convert at least every third existing apartment that is newly rented to be senior friendly and ensure that vacant apartments are refurbished and spaces are redesigned to be fully accessible or barrier-free. People over the age of 70 also enjoy special protection as a result of the voluntary commitments made by Vonovia.
Another important development is the digital transformation, which is also having an increasing impact on Vonovia’s business model. We evaluate digitalization and the benefits that it offers with regard to our customers and the optimization of our processes. In our new construction activities, we are using Building Information Modeling (BIM) solutions. All stages of our process and value chain are being connected via our management platform. This facilitates ongoing improvements in how we interact with our customers using corresponding apps and portal solutions, and in the coordination of the local customer service, the craftsmen’s and residential environment organization and the commercial support functions. We are also making use of the advantages offered by innovative process automation, including “robots.” A real milestone in the service strategy at Vonovia is the new tenant app. Service assignments and damage reports can be processed simply and conveniently using the app and consulted around the clock. All key documents are available in the mobile inbox, with our customers receiving information on all of Vonovia’s housing-related services. We are also, however, increasingly seeing approaches for smart home building solutions, from smart grid to assistance systems and predictive maintenance. Another example is the cutting-edge technology that Vonovia uses to monitor elevators in its buildings. Vonovia is not pursuing digitalization as an end in itself, but rather to boost customer satisfaction, improve the basis on which decisions are made, further enhance the efficiency of its business model and reduce the use of resources.