Sustainable Construction and Development

Sustainable Construction and Refurbishment

Disclosure

Taking responsibility for the environment, conserving resources and meeting the needs of society are the foundation for lasting success in the real estate industry. These factors are particularly important when building new apartments and residential complexes – targeted measures can significantly reduce the carbon footprint and the amount of resources consumed by the construction process and housing to create homes that are fit for the future. This trend is being reinforced by the increasingly strict rules governing areas like energy efficiency, biodiversity and the recycling of construction waste. Compliance is frequently a requirement for various funding programs, such as KfW subsidies.

We are also seeing a growing awareness of sustainability among our customers. Their focus is on high-quality, healthy housing, and the fact that energy-efficient construction which conserves resources will also reduce their heating costs over the long term. By building sustainably from the outset, we are acting with foresight and strengthening the fabric of our properties. For us as landlords, increased demand for high-quality, sustainable housing means greater customer loyalty due to greater satisfaction and attractive rents.

One of the challenges currently facing us is that sustainable development projects tend to have higher construction costs. This may conflict with our objective of providing sustainable housing for broad sections of the population. The upfront cost of installing sustainable building services can be high, and may only pay off over a long period. This is something we have to explain, especially to potential buyers. However, we believe that using sustainable building materials and technology today will benefit the financial situation of our customers and our companies over the long run, while also shoring up our ability to compete moving forward.

Our Approach

The construction projects of Vonovia create fairly priced homes that are urgently needed, particularly in metropolitan areas. Our construction and conversion projects focus on optimizing energy efficiency, renewable energy and using environmentally conscious construction methods that conserve resources.

We set clear targets and integrate sustainability aspects into our decision-making processes. We have clear, Group-wide targets for energy consumption and efficiency standards for all construction projects. The key metric is average primary energy consumption per square meter. It is also included in our Sustainability Performance Index (SPI), which is our key non-financial metric. Conformity with the defined targets is an important part of the Management Board’s decision making process for new construction projects. We are also committed to ensuring that all construction projects in Germany meet the KfW55 standard. We also take care to conserve resources and protect the environment during construction. We ensure that residential property units which have reached the end of their life cycle are dismantled with a focus on conserving resources. Our holistic approach to the planning process includes the design of the residential environment along with special features like charging stations, wild flower beds and photovoltaic systems.

We also look at the option of applying for sustainability certification for large-scale development projects from the German Sustainable Building Council (DGNB), its Austrian counterpart the Austrian Sustainable Building Council (ÖGNB), or for certification in accordance with the klimaaktiv building standard or the Green Pass. These certification schemes make it easier to compare different properties. They also provide a way for different stakeholder groups, such as investors, owners, tenants and the general public, to assess the sustainably credentials of a building’s planning, construction and operation.

The “klimaaktiv pakt” provides a framework of voluntary binding commitments and defined construction standards for development projects in Austria.

As part of our sustainability roadmap, we are continuously developing the Group-wide strategy for new construction and refurbishment across departments and countries.

More information and examples from our development business can be found in the 2020 Annual Report.

Organizational Establishment in the Company

Vonovia Technical Service (VTS) works together with the regions in Germany on new construction projects, with a particular focus on densification and the addition of extra stories. The development business operating under the BUWOG brand focuses on the development of high-quality residential neighborhoods for the company’s own portfolio (to hold) and for direct sale (to sell) in Germany and Austria. This arm was strengthened further by the acquisition and integration of the project developer Bien-Ries. The activities of the BUWOG development business in Germany and Austria are the responsibility of the CDO (Chief Development Officer). Development projects are approved by the Management Board. VTS’s new construction business is assigned to the Value-add Business and is the responsibility of the CEO.

The central procurement department is responsible for supplier management and the processes for procuring construction materials and services. Architects, technical building service engineers and structural engineers are responsible for agreeing on the best use of sustainable construction methods, insulation and technology. All plans for new construction projects are examined carefully by the Vonovia Management Board and have to be approved.

Objectives and Measures

To achieve our aim of creating new and affordable housing, we set ourselves a target of around 900 completions for the portfolio (to hold) in Germany in 2020. By completing 862 apartments in Germany, we almost reached this target despite the coronavirus pandemic. Across the Group we were able to transfer 1,442 new residential units to our own portfolio. In addition, 7,333 further apartments are in the planning stage – including for the company’s own portfolio. The overall potential (to hold and to sell) is significantly higher and comprises – including the medium-term development potential of 36,000 units – a development pipeline of approximately 47,000 residential units.

We also met our target of having 85% of the buildings completed in Germany in 2020 in efficiency class A or better (based on energy consumption); just under 86% of new buildings attained this classification.

We want to set more targets for the entire Group in the future. Since efficiency classes are defined differently in Germany, Austria and Sweden, we use metrics that can be compared more easily, such as the energy consumption of buildings. Our aim is to reduce the energy consumption of new housing in the medium and long term. 2021 is initially assumed to bring a marked increase, also due to projects that were already planned and approved based on different overall conditions before we set ourselves this target.

We will also be pressing ahead with initiatives in a variety of national contexts. One example is our participation in the “klimaaktiv pakt” in Austria. The “klimaaktiv pakt2020” climate protection initiative was launched by the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology. BUWOG has been involved in the initiative for many years. Specifically, the targets included a reduction in greenhouse gases of more than 16%, an increase in energy efficiency of at least 20% and the use of renewable energy sources for at least 34% of total energy by 2020, compared with the baseline year of 2005. All of these targets were met. We will continue to make progress with new targets as part of the “klimaaktiv pakt2030” initiative.

86% of New Buildings Completed in Germany in Line With Efficiency Class A or Better*

Breakdown in %

In Sweden, we aim for new buildings to meet the requirements of the Miljöbyggnad Silver Standard set by the Sweden Green Building Council. With this in mind we provide our employees with annual training courses on energy and environmental topics.

We rely on a wide range of different measures to achieve these goals. These include using renewable energies and connecting buildings to district heating networks as a source of energy whenever possible. In 2020 we were able to supply almost two thirds of all new buildings with district heating. Low-emission construction and energy-efficient operation are also taken into account during the planning and building phases. We carry out life cycle assessments for some of our new buildings before construction work starts.

Other measures include the use of modern and innovative new construction methods, such as timber and hybrid timber construction, as well as prefabricated parts, which can significantly shorten construction times and inconvenience for residents.

Designing the residential environment and preserving biodiversity are top priorities for us. Whenever possible we create green spaces that serve as natural habitats for flora and fauna at ground level, on roofs or on facades. In addition to their visual impact, these green spaces also offer practical added value: During exceptional weather events, for example, they can slow the flow of rainwater into overburdened sewage systems. They also make a considerable contribution to the microclimate by preventing urban heat islands in built-up areas.

In the field of modern mobility concepts, we want to develop the infrastructure for electromobility. In 2020 we installed charging stations in around a third of new buildings, with a further quarter equipped with the cable conduits needed to add these stations at a later point. Charging stations were installed in half of our construction projects in Sweden, either as public charging points or at parking spaces reserved for our tenants. We are already incorporating car sharing options in a large number of construction projects, reducing the number of car parking spaces and making sure that good connections to public transport are available. One example is the free season ticket scheme for first-time occupants moving in to the new ERnteLAA residential project in Vienna.

In addition to these measures, we take care to limit noise emissions during construction and refurbishment, and avoid using gray energy during demolition work. Here we also place particular emphasis on the possible reuse of materials on site and are in dialogue with local residents in this regard, via email or via microsites set up specifically for this purpose on the Internet.

Planned for 2021

• Completion of around 2,300 residential units across the Group (to hold and to sell)
• Creation of new metrics for the consumption of resources and energy in the supply chain for projects and materials
• Analyze completed pilot projects looking into sustainable construction methods and assess the possibility of a wider roll-out