Challenges, Opportunities and Risks

The housing industry in Germany is currently in the spotlight of public attention. The associated developments within society as a whole and in the real estate business are having an impact on Vonovia’s business model and presenting us with challenges and risks – but also offer opportunities.

Challenges

• Moving our business is impossible due to the fixed nature of residential property. This means we can only react to unforeseeable developments with a limited amount of flexibility.
• The considerable demand for housing – particularly in large cities and urban conurbations – is fueling the current controversial public debate on housing. Time and again, this debate highlights just how dependent our long-term success is on the satisfaction of our tenants.
• While we perform many of our services ourselves, we buy in materials and contract work, for example, as part of construction projects. The challenge here lies in ensuring that service providers and suppliers comply with our high labor, social and environmental standards.
• A lack of trust can make stakeholders less willing to enter into constructive dialogue with us.

Opportunities

• Our customers’ expectations as far as housing is concerned are changing, and housing-related services are becoming more important. This means that we can expand our service portfolio further and step up our sales activities in the Value-add Business.
• We are using participatory measures designed to take needs, wishes and concerns into account, especially when it comes to community development and the planning of new construction projects, to strengthen the acceptance of our activities and Vonovia’s reputation. The number of single and two-person households is on the rise, and demand for apartments designed for small households is growing in line with this trend. This development is a good fit for our portfolio, which focuses on small and medium-sized apartments in metropolitan regions.
• By performing many construction services ourselves through our Technical Service, we can make ourselves less reliant on external suppliers and reduce the associated risks.

Risks

• With the acquisition of BUWOG, Vonovia has also stepped up its construction activities relating to both existing and new buildings. The cost of land and construction services is rising steadily. At the same time, building regulations are becoming increasingly stringent. This means that it is becoming increasingly difficult to implement planned measures.
• The coronavirus pandemic and its implications are a source of considerable uncertainty for society and Vonovia, and future developments are still largely impossible to predict today.

You can find more information on the opportunities and risks associated with our business activities in the Opportunities and Risks chapter of the 2019 Annual Report.