Annual Report 2019

Social – Society and Customers

This section looks at the issues of satisfaction, portfolio maintenance, tenant health and safety, affordable rents and the creation of living space as well as neighborhood development and social commitment (see Materiality Matrix).

Customer Satisfaction

The activities of Vonovia focus on our customers and their needs. Their satisfaction with, and appreciation of, our products and services are directly linked to the company’s success in the long term. They expect to have an affordable home offering contemporary living standards, which is why proximity to our customers and making it convenient for them to contact us are key elements of our customer service philosophy.

Caretakers and our company’s own craftsmen work on site to ensure that our tenants’ concerns are attended to, allowing us to ensure fast and reliable service. Our multilingual central customer service center, which tenants can contact through a number of different channels, is responsible for all queries relating to lease agreements and consumption and ancillary expense bills, for example. Our availability is enhanced further by a digital customer portal that provides a full range of “self services” around the clock.

This is reflected in the CSI, the Customer Satisfaction Index, and is an element used in determining Management Board remuneration as a direct, non-financial control parameter. The CSI is determined by means of regular customer surveys. In 2019, the CSI for Germany was a few points lower than in the previous year. BUWOG Group GmbH in Austria also uses an annual customer satisfaction survey as a tool, although it is not consistent with the CSI – while customer satisfaction is a fundamental benchmark for all business processes at Victoria Park AB as well. The aim is to achieve positive development in the CSI.

Portfolio Maintenance, Health, Safety and Quality of Life

Vonovia invests in the maintenance and modernization of its own portfolio on an ongoing basis, the aim being to ensure and improve the quality of our real estate portfolio. As a major residential real estate company, we can use standardized procedures and materials to achieve economies of scale in our investment activities. We employ modern standards in our corresponding measures and select the building materials carefully. When it comes to modernization measures, for example, we use selected and tested materials and explicitly subject the companies performing the measures to the obligation to use them. By purchasing construction materials centrally via Vonovia’s procurement department, we can keep the risk of hazardous or poisonous substances being used at a minimum. In order to protect our tenants and employees alike, we ensure safety using the systematic TÜV Rhineland Toxic Materials Management (TOGs®).

Key Performance Indicator: Investment in Maintenance, Modernization Work and New Construction

in € million

2018

2019

Change in %

 

 

 

 

 

 

Expenses for maintenance

289.7

308.9

6.6

Capitalized maintenance

140.7

172.7

22.7

Modernization work

904.7

996.5

10.1

New construction (to hold)

234.3

493.0

> 100

Total cost of modernization, maintenance and new construction

1,569.4

1,971.1

25.6

(see also the chapter Results of Operations in the management report)

We offer conversion measures to meet specific tenant needs via our housing-related services – for example, senior-friendly apartment conversions – and make mobility and security solutions available. In Germany, 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. In addition, we build and design existing apartments in a way that even groups with special needs – such as people with dementia – can feel at home here. This systematic focus on senior-friendly extension and refurbishment is our way of responding to the process of demographic change within our society.

Affordable Rents and Creation of Homes

Hardly any other issue was given so much attention in the German media in 2019 than the issue of social housing or the question as to the availability of affordable housing – particularly on strained housing markets in metropolitan areas. One aspect that is of fundamental importance to Vonovia is being able to offer all tenants the prospect of being able to stay in their homes in the long term. Nobody should have to move out of a Vonovia apartment due to their financial resources, especially not because of modernization work.

This is why we are going beyond our statutory requirements and taking numerous measures to protect the people living in our properties: for example, we are limiting the costs of modernization measures that can be passed on to tenants to a maximum of two euros per square meter. An active hardship management system supports tenants who are experiencing financial difficulties and finds individual solutions. We offer tenants over the age of 70 a guarantee that their apartment will continue to remain affordable even if the standard local comparative rents change. We work in collaboration with city and municipal authorities to offer subsidized and independently financed housing for people on low incomes. Our rental prices are based on the usual local rents and – if available – on the qualified rent indices.

Key performance indicator

 

 

 

Average rent per sqm

€ 6.93

 

 

New construction is playing an increasingly important role when it comes to making affordable housing available. This is the only way to respond to the growing demand – particularly in metropolitan areas and in central and urban locations – and take pressure off the housing markets.

Vonovia does not speculate with land for construction, but builds new homes as quickly as possible after obtaining a building permit. Within this context, we take advantage of public subsidy programs for price-controlled homes wherever possible in order to build affordable apartments for our portfolio in the long run.

We are committed to using densification measures in existing settlements, vertical expansion and the development of newly designated building land. We also use modular construction over and above conventional construction methods. This allows Vonovia to create new living space more quickly. The development activities pursued by the BUWOG companies are the decisive lever for us that will allow us to forge ahead with our new construction measures on a large scale.

Around 12,000 residential units are currently planned for development in the near future. There is also medium-term development potential relating to a further 35,000 residential units (see also the chapter Portfolio in the Development Business).

Neighborhood Development

Terms such as “living neighborhoods” or “livable neighborhoods” show that quality of living is increasingly being associated with life at a neighborhood level. As a result, neighborhoods are moving into the spotlight of the housing and real estate industry. Connected neighborhoods offer particular potential for integrated and sustainable development. Neighborhood development includes key measures extending beyond modernization and maintenance to include the creation of homes using new construction and vertical expansion measures, as well as measures to shape the residential environment and social cooperation partnerships within neighborhoods. In 2019, there were 13 neighborhood development projects in the operational implementation stage across Germany comprising approx. 8,600 residential units as part of the neighborhood development investment program. The investment measures are bundled in a neighborhood development plan spanning a period of several years, expanded to include further measures and implemented with a long-term view. They comprise infrastructure improvements for any demolition measures that have to be taken, the realization of holistic energy concepts and urban development issues. These components are given due consideration during the planning phase of the development projects of the BUWOG companies.

Key performance indicator

 

 

 

Investment volume in the 2019 fiscal year for neighborhood development projects

€ 57.9 million

 

 

We take both financial and social criteria into account when assessing neighborhoods. This is a process that we involve both city and municipal authorities as well as our tenants in. We often have to take conflicting interests into account. Actively designed participation processes and civic participation initiatives help us to overcome differences and jointly develop solutions for the neighborhood. Typical areas of involvement include tenant workshops allowing tenants to actively contribute to facade and playground design, mobility issues or route/pathway design. Participation and extensive communication involving all partners is a key component for the successful implementation of large neighborhood development projects in particular.

The integrated neighborhood philosophy is rounded off by needs-based and functional cooperation projects with social institutions. This allows us to promote a sense of community, integration and interaction within the neighborhood. We use various tools for this purpose, e. g. making premises available. But conventional donations to social institutions and projects also help to foster community spirit within a neighborhood. Guidelines on how to deal with social support measures provide a framework within which the responsible individuals are free to operate on a decentralized level, selecting and implementing suitable and needs-based cooperation projects. Donations made on location to support local neighborhoods were expanded considerably in 2019 (volume of € 200,000) and are set to grow significantly again in 2020 (to € 400,000).

In Sweden, Victoria Park AB has already been pursuing a special approach for some years now: In Malmo-Herrgården, one of the country’s most disadvantaged areas, the company is hiring long-term unemployed people to work as environmental caretakers and customer advisors in the neighborhood. As well as creating specific jobs for the individuals affected, this strategy is designed to give people hope, foster trust and establish relationships between the company and residents. Ultimately, the idea is for the approach to reduce crime, damage to property and vandalism. The evaluation of the approach shows, among other things, that after six years, the number of violent attacks has fallen from 111 to 67, while cases of theft and damage to property have dropped from 223 to 142. At the same time, the employment rate has risen by 10%. While it goes without saying that these effects cannot be attributed to the project alone, there are a large number of arguments in favor of a collaborative approach that is built on measures to promote trust.

Social Commitment

Vonovia also uses foundations to show its social commitment by providing support to tenants, the rental environment and in cases of social hardship. The company is currently involved in four foundations: the Vonovia Foundation (Vonovia Stiftung), Vonovia Mieterstiftung e. V., Stiftung Mensch und Wohnen and Stiftung Pro Bochum.

The mission of the Vonovia Foundation is to provide help in cases of social hardship to individuals who need assistance, and to promote intact neighborhoods and vocational training. In this respect, the foundation makes a key contribution to shaping and ensuring social and neighborhood cohesion in Vonovia’s properties. It expressly supports active citizenship, personal responsibility and individual initiative within a residential context.

Vonovia Mieterstiftung e. V. comprises an equal number of representatives from tenants’ associations and Vonovia employees. It aims to foster a sense of community spirit between people from different generations by offering support for young people and senior citizens in the various regions in which the Vonovia Group owns or manages residential properties.

With its work, the “Mensch und Wohnen” (people and living) Foundation set up by the former GAGFAH focuses on promoting a residential environment that brings young and old people together, and fosters a sense of community spirit between these groups in Vonovia’s housing developments. The foundation finances meeting places, playgrounds and other assistance and support services with a focus on social activities.

The Stiftung Pro Bochum is a cooperation project involving numerous companies based in Bochum to assume responsibility, within the city boundaries, for the city itself and the place where the company has its registered headquarters. The project provides support to cultural, academic and sports-related projects within Bochum, in particular.

Key performance indicator

 

 

 

Funds distributed by foundations in 2019 in which Vonovia SE is significantly involved

€ 198,852.27

 

 

In addition, numerous other funding approaches are pursued both by Vonovia SE in Germany, and by BUWOG Group GmbH in Austria and Victoria Park AB in Sweden.

Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
CSI (Customer Satisfaction Index)
The CSI is determined at regular intervals by means of systematic customer surveys and reflects how our services are perceived and accepted by our customers. The CSI is determined on the basis of points given by the customers for our properties and their neighborhood, customer service and commercial and technical support as well as maintenance and modernization management.