Overall Conditions on the Residential Real Estate Market
As a major residential real estate company in Germany, Sweden and Austria, Vonovia has moved into the focus of the current social debate dominated, in particular, by the topics of climate protection and the shortage of housing.
In many cities, finding affordable homes is increasingly becoming a challenge for low and middle-income households. The higher average rents in major metropolitan areas and larger cities mean that the affected tenant households are faced with disproportionately high housing costs and rental payments. At the same time, a very large number of apartments, particularly in buildings from the years of Germany’s “economic miracle,” are no longer in line with modern standards. This is reflected in impractical apartment cuts, a lack of suitability for senior citizens and unfavorable energy-efficiency features.
According to the latest estimates from the Federal Statistical Office, at least 42.2 million apartments are on offer for approx. 83.2 million people, or 41.4 million households, in Germany. At the time of the last microcensus (2018), the proportion of owner-occupied apartments came to around 46.5%, with rented apartments accounting for around 53.5%. The vast majority of these apartments are made available by private small-scale providers. In addition to these providers and landlords, the German real estate market features cooperative, municipal, public-sector and church landlords, as well as private-sector professional landlords such as Vonovia. According to the Association of German Housing and Real Estate Companies (GdW Bundesverband deutscher Wohnungs- und Immobilienunternehmen e. V.), the latter provided a combined total of around 3.9 million apartments at the time of the microcensus. Vonovia currently rents out a total of around 355,700 apartments in Germany. This corresponds to around 1.5% of the total number of rented apartments in Germany.
According to data supplied by Statistics Sweden, Sweden has around 4.9 million apartments for approximately 10.3 million inhabitants or 4.7 million households. Around 38% of the portfolio is made up of rental apartments, with tenant-owned apartments accounting for 23% and owner-occupied apartments accounting for around 39%. Tenant-owned apartments (“Bostadsrätt”) refer to a cooperative property ownership structure that is common in Sweden. Each resident owns a share in the overall building together with a legal right to occupy a specific residential unit. Vonovia rents out around 38,000 apartments in Sweden, which corresponds to around 2.0% of the total number of rented apartments in Sweden.
According to the Austrian statistical office, Statistik Austria, Austria has around 4.8 million apartments – around 3.9 million of which are apartments used as the occupant’s primary place of residence – for a total of 8.8 million people or 3.9 million households. Just under half of all of the apartments used as the occupant’s primary place of residence are owned, while around 43% are rented. The remaining 9% of apartments include rent-free living arrangements as well as company apartments and rent-free tied accommodation. With around 22,500 apartments in Austria, Vonovia owns around 1.3% of the total number of rented apartments in Austria in terms of those apartments used as the occupant’s primary place of residence.
Given the debate on limiting climate change, it is important to note that the total housing stock has a significant influence on greenhouse gas emissions, accounting for around 35% of the final energy consumption in Germany. This means, for example, that the commitment made by the Federal Republic of Germany under the United Nations Paris Agreement on climate change, for example, can only be realized through substantial energy-efficient modernization measures.
This ecological challenge encounters a housing industry that is characterized by stringent statutory regulations and mounting concerns among the general public that they will no longer be able to find affordable homes. Some policy-makers are trying to use further regulation to solve the problem. The debate ranges from the expansion of the rent cap to the placement of a rent freeze in Berlin and the expropriation of private-sector landlords that exceed a certain size.
The prevailing opinion on expropriation, however, is that it would do nothing to help ease the short supply of housing or provide answers to the ecological questions of the future. The increasingly overloaded regulation of the real estate sector is seen as equally harmful. The solution can only lie in a further increase in the supply of apartments in a positive investment climate. This approach also has to be part of a broad-based social consensus and accompanied by moves to drastically reduce the level of bureaucracy, particularly for new construction measures. Restrictions on modernization measures as a result of further regulation and the lack of consensus regarding how the costs should be distributed also damage the climate protection objectives set by the Federal Republic of Germany.