Portfolio in the Development Business
It is under the strong BUWOG 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. Residential construction projects are currently also being developed in the Rhine-Main region, Hamburg and Leipzig. Vonovia aims to expand the development business to include other urban areas, particularly now that the new construction business on property that already belongs to the company has also been incorporated into the development segment.
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, Vonovia, with the BUWOG brand, ranks among Germany’s leading building contractors and is the most active private building contractor in Austria.
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.
The acquisition of Deutsche Wohnen SE in the current fiscal year allowed the company to also acquire a substantial and very attractive development pipeline. Its regional distribution across the core regions of Berlin, Dresden/Leipzig, Hamburg, Stuttgart and Munich will facilitate the faster expansion of the development business to cover the whole of Germany. With the skills of the two companies now bundled and the options available for exploiting synergy potential, the challenges facing the residential real estate market can be addressed more quickly and efficiently.
Development Business Model
The Development segment allocates its projects to two different channels:
- 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 a serial and modular approach for new construction work. It also includes the Swedish new construction projects on the company’s own properties.
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 development 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 Sweden.
Overview of Key Development Figures
In the 2021 fiscal year, the Development segment, with its Development to sell and Development to hold areas, made positive contributions to earnings in Germany, Austria and Sweden, therefore contributing to Vonovia’s successful growth. The following key figures as of December 31, 2021 are still presented without the inclusion of Deutsche Wohnen.
In the Development to sell area, the income from disposal of properties came to € 503.7 million, with € 241.1 million attributable to project development in Germany and € 262.6 million attributable to project development in Austria. Income from interim leasing totaling € 3.1 million was also generated. A total of 762 residential units were completed in 2021, 678 in Germany and 84 in Austria.
As of December 31, 2021, there were 9,102 residential units in the “to sell” development portfolio, 2,310 of which related to projects under construction, 2,936 to projects from the short-term pipeline and 3,856 to projects from the medium-term pipeline. The share attributable to project development in Germany came to 5,772 units (898 of which related to projects under construction, 2,486 to projects from the short-term pipeline and 2,388 to projects from the medium-term pipeline). The share attributable to project development in Austria came to 3,330 units (1,412 of which related to projects under construction, 450 to projects from the short-term pipeline and 1,468 to projects from the medium-term pipeline).
In the Development to hold area, a fair value of € 362.3 million was realized, with € 296.6 million attributable to Germany, € 44.3 million to Austria and € 21.4 million to Sweden. Income from interim leasing totaling € 1.8 million was generated. A total of 1,373 residential units were completed in this area with 1,073 in Germany, 126 in Austria and 174 in Sweden.
As of December 31, 2021, there were 40,291 residential units in the “to hold” development portfolio, 3,543 of which related to projects under construction, 4,535 to projects from the short-term pipeline and 32,213 to projects from the medium-term pipeline. The share attributable to Germany came to 32,331 units (2,292 of which related to projects under construction, 4,366 to projects from the short-term pipeline and 25,673 to projects from the medium-term pipeline). The share in Austria came to 3,420 units (1,026 of which related to projects under construction and 2,394 to projects from the medium-term pipeline). The share attributable to Sweden came to 4,540 units (225 of which related to projects under construction, 169 to projects from the short-term pipeline and 4,146 to projects from the medium-term pipeline).
Adjusted EBITDA of € 187.7 million was generated in the development segment as a whole. As of December 31, 2021, the total volume of the development portfolio was 49,393 residential units (a total of 5,853 units from projects under construction and a total of 43,540 units from the pipeline).
Sustainable and Successful Development
Conceptual and technical solutions for the resource-light construction and sustainable operation of neighborhoods make up a key component of the development business model. In line with the three focal issues of urbanization, energy efficiency and demographic change, central aspects of sustainability are already taken into account in the early stages of project development. This includes designing socially diverse neighborhoods that offer housing for all generations, realizing energy-efficient new construction projects for ecologically sustainable operation by buyers, as well as for a carbon-neutral portfolio, and creating barrier-free and fully accessible housing for an aging society with changing housing needs. The use of timber as a renewable raw material plays a central role in this process, for example in the wood-hybrid construction and timber frame construction projects in Berlin and Vienna.
Sustainability is achieved at all stages in the residential real estate value chain – from the selection of building materials that are as ecological and recyclable as possible, to the commissioning of local craftsmen and service providers, and the sustainable operation of the development projects.
Certification is important to ensure that potential improvements can be made back at the planning stage on the basis of criteria for ecological, social and economic sustainability and managed during the construction process. The “MARINA TOWER,” for example, a joint project involving BUWOG and IES Immobilien, was given gold status by the klimaaktiv climate protection initiative and was also awarded the Austrian Sustainable Building Council’s (ÖGNI) gold sustainability certificate. BUWOG’s sustainable activities in Vienna have also been recognized with the Greenpass sustainability certificate for the “Kennedy Garden” project. The “BUWOG NEUMARIEN” new construction project in Berlin-Neukölln was also awarded another gold certification by the German Sustainable Building Council (DGNB). Other major development projects in the planning stages have already been registered for DGNB pre-certification, including the development of the Bayerischer Bahnhof district in Leipzig comprising around 1,300 apartments.
The application and further development of innovative solutions is being driven in collaboration with universities and networks for research and knowledge transfer. These endeavors include the areas of sustainable energy generation, innovative mobility concepts and Smart City, as implemented, for example, in the plans for the “Das Neue Gartenfeld” project.
As part of the cooperation with Open District Hub e. V., an ICT ecosystem is to be developed to support fully integrated and fully automated sector coupling at neighborhood level while also meeting the needs of the user community. A cooperation project has been launched with the raw materials platform Madaster so that Vonovia can register, document and archive materials used in buildings. This is laying the foundation for the circular use of products and materials in the construction industry.
Representative Project Development Measures
Bautz district, Hanau
Located on a former industrial site in the Großauheim district, a residential neighborhood spanning 18 hectares is being created and will feature around 1,400 apartments, a daycare center and commercial facilities to support the residential environment, including local amenities. A park approximately 300 meters long is to run through the neighborhood, combining local recreation opportunities with ecological qualities. The mixed offer of apartments is expected to consist of equal shares of condominiums and rental apartments, some of which will be rent-restricted. The site also features an existing building protected as a historical landmark that will be renovated in line with the requirements that apply to landmarked buildings and then made available for a catering property. The integrated sustainability concept includes car-sharing services and the use of geothermal and solar energy. The neighborhood is scheduled to be completed by 2030.
BUWOG HELLING HOF, Berlin
In the 52° Nord neighborhood, 109 residential units with between two and six rooms are being built as part of an additional construction phase. The BUWOG HELLING HOF residential complex consists of three new multi-family residences and a historic brick building that is being refurbished and converted for residential use. Almost all of the apartments have a balcony, a terrace or a private south-facing garden. The scheduled completion in 2023 will mark another milestone in the sustainable neighborhood, which spans around ten hectares. The project’s ecological features include an energy center, green roofs and a 6,000-square-meter landscaped pond, which, based on the model of the “sponge city,” collects rainwater and feeds it into the natural water cycle.
BUWOG KILIANSHÖHE, Kilianstädten
As a district of the Schöneck municipality, Kilianstädten is part of the Großer Frankfurter Bogen (Greater Frankfurt Arc) growth initiative and is situated within 30 minutes of Frankfurt am Main. BUWOG is currently constructing a new neighborhood spanning 6,500 square meters with 82 apartments spread over eight multi-family residences. Different building heights and the fact that the site is located on a slight slope give residents an attractive view of the surrounding meadows. Some of the apartments will be barrier-free. The project will also feature a specially designed outdoor area with play areas for children and space for recreation.
BUWOG SPEICHERBALLETT, Berlin
A sustainable residential district is being created in Spandau on the banks of the Havel river. During the first phase of construction, two historical warehouses were renovated to house 82 condominiums. Permission was granted to demolish the third historical warehouse. A new building is currently being constructed in its place with a similar cubic volume to the historical property and offering space for 46 condominiums. In addition, HAVELKIESEL will feature another 100 apartments in three buildings with photovoltaic facilities installed on the roofs and systems allowing rainwater to be used for garden irrigation and toilet flushing. 260 rental apartments are also scheduled to have been constructed by 2023.
BUWOG THE VIEW, Berlin
The architecturally impressive residential complex BUWOG THE VIEW, housing a total of 63 apartments, was built in Berlin-Grünau. The three buildings are located directly on the banks of the River Dahme, and the mix of materials and design used tie in with the maritime theme. The building in the center, made of concrete, timber and aluminum, features what appears to be a floating pier running parallel to the facade. The pier is a hybrid combining private balconies with an access feature at the same time. This building is surrounded by two buildings featuring pointed edges that rise up like a ship’s bows, while the facades made of black-glazed timber and reddish weathering steel evoke the shape of ship hulls.
DECK ZEHN, Vienna
“DECK ZEHN,” which is being built in the immediate vicinity of Vienna’s central railway station, offers the perfect environment for all lifestyles. All 229 apartments are equipped with outdoor areas and future residents will be able to enjoy an impressive panoramic view of the city from the rooftop terrace of the eleven-story project. A multifunctional communal terrace, a co-working space and a sauna area offer a state-of-the-art living experience. The project is scheduled for completion at the end of 2023.
The Marks – HELIO TOWER, Vienna
In Vienna’s third district, located in the Neu Marx complex, three high-rise residential buildings known as “The Marks” are under construction on top of an urban three-story base construction. BUWOG is developing the HELIO TOWER, spanning 33 stories, 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 the end of 2022.
Kennedy Garden, Vienna
Taking inspiration from the Kennedy Bridge named after J.F. Kennedy, BUWOG is building the Kennedy Garden project just a few minutes’ walk away. A total of 512 condominiums and rental apartments will be split over six architecturally unique building components in an idyllic green area. The project’s selling points include not only ideal public transport connections and proximity to leisure opportunities, but also its innovative sustainable and environmentally friendly focus.
MARINA TOWER, Vienna
The project, featuring around 500 premium residential units, enjoys excellent transport connections thanks to its prime location and also offers a whole host of extras for residents and the general public alike. One example is a sustainable mobility concept. A deck has also been 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.