Annual Report 2019

Portfolio in the Development Business

The takeover of the BUWOG Group in 2018 marked a key step in Vonovia’s quest to expand its business model by including established real estate development and new construction business (development business). The subsequent integration of these activities has allowed Vonovia to build on its position as a market leader in Germany and Austria, not only in the rental segment, but also in the development business. The integration process expanded Vonovia’s pre-existing potential to include extensive product and process expertise in the field of construction and in the development of residential construction projects, creating synergy potential for Vonovia. The BUWOG brand that Vonovia uses to run its development business was also assigned a value in its own right as part of the takeover.

It is under this strong brand that the development business area has become firmly established in Vienna and Berlin and associated with the very highest levels of customer satisfaction for our stakeholders. The first few residential construction projects are also being developed in Hamburg and Leipzig, and Vonovia aims to expand the development business to include other urban areas.

This provides Vonovia with an end-to-end development platform spanning the entire value chain – from the purchase of land to its development, project planning, construction and sale. With its substantial product pipeline of residential construction projects that are currently being built, planned or prepared, with the BUWOG brand Vonovia ranks among Germany’s top 5 building contractors and is the leading building contractor in Vienna according to the project developer ranking (a study commissioned by the analytics company bulwiengesa).

As a major player in the residential real estate segment, Vonovia is able to use its property development expertise to offer targeted solutions in response to current challenges such as the shortage of housing, climate change, integration and cross-generational housing. These challenges can be tackled successfully through long-standing experience, extensive market and sector expertise and intensive, ongoing market analysis, making a valuable contribution to society and to Vonovia.

Development Business Model

The Development segment allocates its projects to two different areas:

  • Development to sell includes the units that are sold to investors or to future owner-occupiers directly.
  • Development to hold refers to those residential construction projects whose apartments will be added to Vonovia’s rental portfolio upon their completion. This area also includes Vonovia’s pre-existing new construction business, which involves building new residential units on property that already belongs to the company using serial and modular construction approaches. It also includes the Swedish new construction projects on the company’s own properties.

Development Business Model

Development Business Model (Graphic)

Value Creation and Project Development

Vonovia is the leading residential real estate company in Germany and, together with its subsidiaries in Germany, Austria and Sweden, makes a key contribution to alleviating the shortage of housing through its real estate development activities. The strategy of incorporating process steps into the company’s own value chain allows Vonovia to provide stringent and targeted support to residential construction projects and to exploit cost synergies with regard to technical solutions and the pooling of procurement volumes. Being able to cover the entire residential property value chain internally allows the company to generate additional earnings contributions.

These additional earnings contributions can be generated sustainably thanks to Vonovia’s extensive development pipeline, which is distributed among Germany, Austria and, in the future, also Sweden.

Valuable Contributions to Society and the Group

Valuable Contributions to Society and the Group (Graphic)

Overview of Key Development Figures

In the 2019 fiscal year, the Development segment, with its “Development to sell” and “Development to hold” areas, made positive contributions to earnings in Germany and Austria, as well as in Sweden for the very first time, allowing it to contribute to Vonovia’s successful growth.

In the “Development to sell” area, the income from disposal of properties came to € 249.5 million, with € 131.8 million attributable to project development in Germany and € 117.6 million attributable to project development in Austria. A total of 791 units were completed in 2019, 350 in Germany and 441 in Austria.

As of December 31, 2019, there were 2,957 units in the “to sell” development pipeline, 1,659 of which related to projects under construction and 1,298 to short-term projects in the preparatory stages. The share attributable to project development in Germany comes to 1,583 units (836 units from projects under construction and 747 units from short-term projects in the preparatory stages), while the share attributable to project development in Austria comes to 1,374 units (823 units from projects under construction and 551 from short-term projects in the preparatory stages).

Development to Sell (Number of Units)

Development to Sell (Number of Units) – Completed projects in 2019 and Projects under construction and short-term projects in the preparatory stages (Graphic)

In the “Development to hold” area, a fair value of € 266.3 million was realized, with € 164.3 million attributable to project development in Germany, € 96.3 million attributable to project development in Austria and € 5.7 million to project development in Sweden. A total of 1,301 units were completed in this area (1,079 privately financed units and 222 subsidized units), with 870 in Germany, 401 in Austria and 30 in Sweden.

As of December 31, 2019, there were 8,827 units in the “to hold” development pipeline, 2,688 of which related to projects under construction and 6,139 to short-term projects in the preparatory stages. The share attributable to project development in Germany comes to 7,129 units (1,905 of which related to projects under construction and 5,224 to short-term projects in the preparatory stages). The share attributable to project development in Austria comes to 1,318 units (682 of which related to projects under construction and 636 to short-term projects in the preparatory stages). The share attributable to project development in Sweden comes to 380 units (101 of which related to projects under construction and 279 to short-term projects in the preparatory stages).

Development to Hold (Number of Units)

Development to Hold (Number of Units) – Completed projects in 2019 and Projects under construction and short-term projects in the preparatory stages (Graphic)

Adjusted EBITDA of € 84.5 million was generated in the development segment. Including medium-term development potential of around 35,000 units, the development pipeline comprised a total of approximately 47,000 units at the end of 2019.

Sustainable and Successful Development

As one of the most active residential building developers, Vonovia is aware of its responsibility for society as a whole. As a result, the topic of sustainability is firmly entrenched in our development business model. Sustainability aspects are taken into account early on when a project is still in the planning stages – that is, long before it is ready for occupancy. Building certification plays a key role in demonstrating to investors, owners, tenants and interested members of the general public how sustainably a property is planned, built and managed.

The “MARINA TOWER” project, for example, a joint project involving BUWOG and IES Immobilien, was awarded the Austrian Sustainable Building Council’s (ÖGNI) gold sustainability certificate, as did the “SeeSee” project in Vienna’s Seestadt district. The “BUWOG NEUMARIEN” new construction project in the Berlin district of Neukölln had already been registered for sustainability certification by the German Sustainable Building Council (DGNB e. V.) while it was still in the planning stages; it has since been successfully awarded the DGNB’s Gold standard certificate.

Sustainability is also, however, a top priority within the company’s “own four walls,” such as at the new company site in Vienna. Vonovia is planning to move the registered office for its Austrian business, which is operated under the BUWOG name, from the Viennese district of Hietzing to Rathausstrasse 1 in the city’s 1st district in May 2020. The new customer and administration center will be located in the heart of Vienna and was planned giving explicit consideration to sustainability aspects, which is why the new building has already been awarded DGNB pre-certification in gold. It will be certified by the Austrian Sustainable Building Council following its completion in the spring of 2020.

In addition to the company’s own development activities, Vonovia also cooperates with research institutes in both Germany and Austria. A prime example of how to create green spaces within cities, for example, is emerging on land previously used for industrial purposes on Triester Strasse in Vienna’s “Biotope City” as part of a cooperative planning process. The project will result in natural cooling effects, for example, that will benefit the future residents of the “Biotope City” and the “AMELIE” BUWOG project on the site. One project that is particularly worthy of mention in Germany is “52 Grad Nord” in Berlin. Together with scientists from the Technical University of Berlin, a sustainable self-cleaning pond has been designed, which uses the vegetation around its perimeter and substrate filters to filter the rainwater that it collects using a biological process. The habitat and areas next to the banks of the pond have already attracted various types of insects, fish and microorganisms. “Smart city” initiatives are also being pursued in collaboration with the Institute of Urban and Regional Planning at the Technical University of Berlin.

Vonovia’s long-standing experience in the development business also includes extensive expertise in matters relating to sustainability, neighborhood development and integration. Real estate development projects regularly comprise an appropriate proportion of subsidized housing construction, such as “ERnteLAA” in Vienna, “BUWOG NEUMARIEN” in Berlin and the development of the Bayerischer Bahnhof district of Leipzig, with 30% of these developments made up of subsidized rental apartments.

Representative Project Development Measures


Under construction

52° Nord, Berlin
The southeast of Berlin, close to the new Schönefeld airport, will be home to the 52° Nord neighborhood, featuring around 1,000 residential units for sale and for Vonovia’s own portfolio. It is an innovative and, with regard to energy efficiency, sustainable housing concept that offers a whole range of different homes to meet different personal needs and lifestyles.

In the Berlin suburb of Spandau, 82 attractive condominiums are being built following the renovation of the historical warehouse buildings on the banks of the River Havel in line with preservation order standards (also with an energy efficient sustainability concept). There are also plans for this innovative neighborhood to feature a childcare center.

Vonovia, under the BUWOG brand, is creating 41 apartments in a development behind an existing building in Kreuzberg as part of an urban densification project. The project will restore the historical courtyard structure that Berlin is known for, creating new homes at the same time. BUWOG XBERG LIVING has been rigorously designed to be car-free. The courtyard will also feature various communal and play areas following its completion in 2021.

Preparatory stages

The NEUE MITTE SCHÖNEFELD project also offers good transport links to the airport but is not located directly below the flight path. Vonovia will be creating a total of 330 apartments here from 2020, ranging from one-room to four-room apartments that are suitable for various generations. The concept will be rounded off by a smart energy supply concept, a living environment designed to harmonize with the natural habitat and play areas for children and teenagers.

Stadtraum Bayerischer Bahnhof Leipzig
A new district is emerging in Leipzig on an area spanning 36 hectares around the Bayerischer Bahnhof district: In line with the urban development planning objectives, Vonovia is building 1,600 apartments, once again under the BUWOG brand, 30% of which are rent-restricted apartments. The new residential neighborhoods are being developed as reduced-traffic districts offering environmentally friendly and innovative mobility concepts. Together with other project developers, Vonovia is developing a new public park for the district, tracing the outlines of the former railway route, a green strip running from south to north and covering an area of 8 hectares.


Under construction

The residential tower project, featuring around 500 premium residential units, enjoys excellent transport connections thanks to its prime location and will also offer a whole host of extras for residents and the general public alike. One example relates to the plans to implement a sustainable mobility concept. A deck will also be used to connect the development to the right bank of the Danube, opening up generous open spaces for public access and also making a key contribution to urban development.

Grünstück, Vienna
Under the BUWOG brand, Vonovia is constructing 84 independently financed condominiums in Vienna’s 22nd district with the “Grünstück22” project. All of the apartments will include outdoor areas such as terraces, balconies or loggias. The location of the project should appeal to families, as it offers family-focused surrounding infrastructure as well as the nearby leisure and recreation opportunities, including the Alte Donau area. The project is scheduled for completion in the spring of 2021.

The Marks – Turm 3
In Vienna’s 3rd district, located in the “Neu Marx” complex on Landstrasse, three high-rise residential buildings known as “The Marks” are under construction on top of an urban three-story base construction. BUWOG is developing one of the high-rise buildings spanning 33 stories for Vonovia as part of the joint project. The development will include a total of 228 independently financed condominiums and 173 rental apartments as part of Vienna’s Housing Construction Initiative, with completion scheduled for 2022.

Preparatory stages

Gatterburggasse – BUWOG Inside
Vonovia is implementing the “BUWOG Inside XIX” project in one of Vienna’s most preferred locations. The former official building located at Gatterburggasse 12 is being given a new lease of life and is also being expanded to feature a newly constructed wing. The project will create a total of 116 premium, traditional-style residential units also featuring smart home controls. The project is scheduled for completion in June 2022.

Penzinger Straße 76 – Kennedy Garden
In the heart of Penzing, Vonovia is working on a total of 511 residential units of various sizes and with various different features spread over several structural elements. 124 rental apartments are being developed as part of the housing initiative focusing on “homes for single parents,” with 114 apartments planned as independently financed rental apartments and another 273 as independently financed condominiums. The project is scheduled for completion in the spring of 2022.

Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.