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Portfolio in the Development Business

Vonovia Development Under the BUWOG Brand Name

It is under the BUWOG brand that Vonovia’s Development business area has become firmly established, primarily in Vienna and Berlin. The Development business area also includes new construction projects on the company’s own land.

The acquisition of the Deutsche Wohnen Group added an extensive development pipeline to the existing BUWOG project pipeline. As a result, the pipeline’s regional distribution covers the core regions of Berlin, the Rhine-Main region, Dresden/Leipzig, Hamburg, Stuttgart and Munich, expanding the development business to cover the whole of Germany.

In the 2022 fiscal year, Deutsche Wohnen’s development activities were integrated into BUWOG’s structures on the basis of an agency agreement, the aim being to benefit from BUWOG’s development platform and expertise in particular, as well as leveraging harmonization effects and economies of scale. With the skills of the two companies now bundled and the options available for exploiting synergy potential on both sides, the challenges facing the residential real estate market can be addressed more quickly and efficiently.

BUWOG 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.

Development Business Model

As a major player in the residential real estate segment, Vonovia seeks 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.

Sustainable and Successful Development

Development Business Model

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.

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.

Development to Sell and Hold (Number of Residential Units)

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, 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. 

Valuable Contributions to Society and the Group

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.

Value Creation and Project Development

Real estate development activities can be tackled successfully through long-standing experience, extensive market and sector expertise and intensive, ongoing market analysis, making a valuable contribution to sustainability and to alleviating the shortage of housing.

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 real estate development value chain internally makes the company more efficient and, as a result, more profitable.

In the Development segment, we make a distinction between two different areas:

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, 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 disruption to global economies and the supply and value chains that connect them, triggered in particular by the war in Ukraine, meant that the Development business area faced particular challenges in 2022 with regard to sale prices, cost prices and profitability. Although Vonovia closed the fiscal year with what was a satisfactory result against this backdrop, development projects previously allocated to the “to hold” portfolio have since been moved to the “to sell” portfolio following changes in profitability criteria and in a quest to strengthen the company’s internal financing power.

This redesignation affects a total of 17,845 units and a project volume of € 7,195.7 million.

Overview of Key Development Figures

In the 2022 fiscal year, the Development segment generated Adjusted EBITDA of € 183.2 million in total, including the contribution from Deutsche Wohnen’s projects, contributing to Vonovia’s successful business.

As of December 31, 2022, the total volume of the development portfolio was 58,906 residential units (a total of 9,348 units from projects under construction and a total of 49,558 units from the pipeline), with 13,004 attributable to Deutsche Wohnen’s portfolio.

In the “Development to sell” area, the income from disposal of properties came to € 560.6 million in 2022, with € 257.1 million attributable to project development in Germany (thereof € 12.5 million Deutsche Wohnen) and € 303.5 million attributable to project development in Austria.

As of December 31, 2022, and following the redesignation referred to above, there were 23,844 residential units in the “to sell” development portfolio, 6,538 of which related to projects under construction, 125 to projects from the short-term pipeline and 17,181 to projects from the medium-term pipeline. The share attributable to project development in Germany came to 21,329 units (6,182 of which related to projects under construction, 125 to projects from the short-term pipeline and 15,022 to projects from the medium-term pipeline). 8,049 units were attributable to Deutsche Wohnen. The share attributable to project development in Austria came to 2,515 units (356 of which related to projects under construction and 2,159 to projects from the medium-term pipeline).

A total of 1,678 residential units from the “to sell” portfolio were completed in 2022, 484 in Germany (Deutsche Wohnen: 80 units) and 1,194 in Austria.

In the “Development to hold” area, a fair value of € 433.9 million was realized in 2022, with € 265.0 million attributable to Germany, € 160.5 million to Austria and € 8.4 million to Sweden.

As of December 31, 2022, and following the redesignation, there were 35,062 residential units in the “Development to hold” portfolio, 2,810 of which related to projects under construction, 381 to projects from the short-term pipeline and 31,871 to projects from the medium-term pipeline. The share attributable to Germany came to 28,509 units (2,352 of which related to projects under construction, 364 to projects from the short-term pipeline and 25,793 to projects from the medium-term pipeline). 4,955 of these units were attributable to Deutsche Wohnen. The share in Austria came to 3,620 units (296 of which related to projects under construction and 3,324 to projects from the medium-term pipeline). The share attributable to Sweden came to 2,933 units (162 of which related to projects under construction, 17 to projects from the short-term pipeline and 2,754 to projects from the medium-term pipeline).

A total of 2,071 residential units were completed in this area with 1,338 in Germany, 592 in Austria and 141 in Sweden.