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Opportunities Arising From the Operating Business

The megatrend of digitalization is also having an impact on the real estate sector, as is reflected not least in the establishment of a new Management Board division for digitalization and innovation as of January 1, 2022. This is why Vonovia will continue to make systematic investments in testing and expanding new technologies in the future, too, e.g., in the areas of “artificial intelligence” or “robotics.” We expect the systematic rollout of these and other technologies within the company, for example aimed at “predictive maintenance," “home automation," “process automation” and “building information system,” and at the interface with our customers, to create additional opportunities.

“Predictive maintenance,” for example, could allow damage to elevators or heating units to be prevented before it arises. Smart home systems could allow tenants to consciously manage their energy costs. What is more, digital communication platforms can help to improve dialogue with tenants. Vonovia’s tenant app is a good example. The response to the app remains very positive and it is used extensively. Acquisition opportunities at all stages in the value chain to enable the further implementation of digital solutions within Vonovia’s processes, but also at the various interfaces, could open up further earnings potential in this area.

Digitalization could also, however, open up further opportunities outside of Vonovia. The digitalization of public administration could promote the much-called-for streamlining of administrative and, in particular, approval processes, with a positive impact, for example, on Vonovia’s development/new construction business thanks to the quicker approval of building applications.

In recent years, Vonovia has expanded its business activities to include attractive markets in other European countries. Within the context of these efforts, 2021 was characterized primarily by a consolidation phase, as is reflected most clearly in the future consolidation of the Swedish business under the new “Victoriahem” brand umbrella. The continuation of this strategy could give rise to further growth opportunities in Sweden, Austria, France and the Netherlands as well as in other European countries.

We also see the potential acquisition of larger portfolios in Germany, as well as the targeted small-scale “tactical” acquisitions of single or multiple buildings in specific locations and targeted measures in the residential environment as an opportunity to improve the nature and quality of whole residential districts and thus increase the appeal of our apartments for our customers and the value of our residential properties.

Vonovia manages its housing portfolios throughout Germany using standardized systems and processes. As a result, the acquisition of further residential real estate portfolios offers the opportunity to generate additional value through economies of scale on the property management side by reducing the costs per residential unit. This strategy is also reflected in the acquisition of Deutsche Wohnen, which we expect to generate synergies in the amount of € 105 million. The same applies to the corresponding transfer of expertise from the property management segment, the Value-add segment and the new construction and development segment to other European target markets. Vonovia also believes that opportunities could arise, in particular, from the fact that new construction and the development business can be made more efficient and more cost-effective by using modular construction, series construction or other innovative construction methods.

Our own craftsmen’s organization is responsible for repair and maintenance services for our residential properties. We are aiming to continually increase the proportion of building and apartment optimizing services we provide ourselves via our craftsmen’s organization as well as new building construction and reduce the proportion of third-party services that we need to purchase. In particular due to the shortage of workers with the desired skills and the availability of corresponding capacities, we intend to extend the scope of these services to cover all kinds of technical work and thus bring added value from these services to Vonovia. This is being supported by corresponding HR management concepts.

At the end of 2021 we had supplied around 330,000 households with a direct cable TV signal. Our subsidiary DMSG has also been developed into a full-service telecommunications provider that will continue to forge ahead with the expansion of fiber optics in Vonovia’s properties. This will allow us to offer our tenants various different Internet products. We plan to continue to expand our business significantly to include various telecommunications services.

The expansion of smart submetering, the radio-based recording of heating costs, is progressing as planned. By the end of 2021, the retrofitting of more than 220,000 apartments had been commissioned. We plan to further expand these business activities in our portfolio over the next few years.

In the 2021 fiscal year, we further expanded our offering in the field of energy supplies, i.e., the distribution of electricity and gas. The market response to this remains positive. In the 2021 fiscal year, 32,000 private electricity customers were supplied with 42.1 GWh of electricity, with 4,400 private gas customers receiving 22.3 GWh of gas.