Strategy-Related Opportunities

The decision to focus our business activities on sustainability remains at the core of our corporate strategy. As well as renting out contemporary and affordable housing and creating new homes, this also includes improving our customers’ quality of living and significantly reducing the carbon emissions originating from our residential properties.

By focusing our new construction activities and corresponding modernization measures on the latest energy and material standards, we can make a key contribution to alleviating the shortage of housing and improving the ecological footprint that we made a commitment to in the 2020 fiscal year with our binding climate path.

We are using sustainable, ecological building materials and sustainable energy concepts to help conserve scarce resources and make targeted use of renewable energy. Within this context, we see our neighborhoods as a strong link for sector coupling. We expect opportunities to arise for us from the targeted digital networking of electricity, heat and mobility.

Opportunities are also arising for us from the ecological transformation of the residential environment: The creation of tenant gardens and flower meadows and the installation of insect hotels allow us to improve its quality and make a contribution to biodiversity to the extent we are able to do so.

Relevant opportunities are also arising from the expansion of renewable energies; this refers to the direct sale of green electricity to our tenants, as well as the production (and sale) of electricity from renewable sources on/at our properties. With this in mind, we are forging ahead with the expansion of PV programs and the sale of electricity to tenants (tenant electricity), among other things. Our measures support a change in consumer behavior (use of green electricity).

As we move towards a climate-neutral housing stock, energy-efficient refurbishments are a key lever for us. The goal of reducing heating costs and, in doing so, cutting energy consumption is consistent with our goal of reducing emissions and makes a contribution to energy security in the current context of the war in Ukraine.

Optimizing the energy efficiency of our portfolio has been at the core of our climate strategy since as long ago as 2017. Since then, our modernization activities have consistently outstripped the German average with regard to the refurbishment rate. In order to manage investments in our housing stock in a manner that optimizes emissions, our company uses innovations (e.g., Energiesprong) and focuses on tried-and-tested urban quarter approaches in the implementation process.

Sociological and economic research data suggests that the population in Germany and parts of Europe will continue to grow as a result of migration. This will result in sustained high demand for affordable housing which cannot be satisfied in full by the expected levels of new construction activity, not even in the medium term. This translates directly into opportunities for us for the development and new construction business.

At the same time, the housing market will be faced not only with quantitative challenges due to the flow of migrants, but also with challenges relating to integration that Vonovia can counter using its experience of strategic and sustainable neighborhood development. Another key factor in this regard is, in particular, the demographic change toward an aging society. Demand for senior-friendly and affordable homes is expected to increase steadily over the coming years. As a result, opportunities could arise from senior-friendly modernization of our apartments and investment in new and innovative housing concepts. This is expected to come hand-in-hand with further rental growth.

In order to deliver answers to the challenges facing society, policymakers are striving to improve the overall regulatory framework: The German government coalition agreement promised initiatives to both significantly increase the supply of affordable homes through new construction and transform existing properties in a manner that is as climate-neutral as possible. This can only be achieved with private-sector investment and related incentives. Creating a positive investment climate for the residential real estate markets also means making the required ecological construction and modernization measures cost-effective, making additional land available for construction, reducing the amount of red tape and promoting the acceptance of private-sector real estate investors in general, which is likely, in turn, to create opportunities for Vonovia.

Looking at the internationalization strategy, the further regulatory changes in the residential property markets in other European countries, such as France, could give rise to further opportunities provided that the overall conditions are similar and consistent with our acquisition criteria. Other acquisition opportunities in Sweden, Austria and the Netherlands could also have a positive impact on business development. Internationalization measures are only pursued provided that profitability and internal financing requirements are met.

Making acquisitions within the value chain as and when opportunities present themselves, also with regard to the Value-add Business, could open up additional earnings potential. In the Value-add Business itself, promising opportunities could also arise both from entry into the B2B business and from moves to expand existing business models to include customer groups outside of Vonovia.

In addition to the further expansion of the company’s existing housing-related services, also via possible third-party business, the megatrend of digitalization also creates expansion potential for forging even closer links between customers and the business model, e.g., via customer loyalty programs, communication platforms or networks.

Potential efficiency gains in the Value-add processes and system are a source of additional earnings potential.

Our corporate strategy also focuses on our employees’ further development and on employee satisfaction. We aim to make use of new HR development concepts and actively shape the recruitment of new staff to fill vacant positions. We are aiming to increase the proportion of women at the first and second levels of management. All in all, further opportunities could arise for Vonovia due to the advantages associated with diversity and as a result of our increased appeal as an employer, also in the interests of employee satisfaction.