Fundamental Information About the Group

Macroeconomic Environment

Geopolitical circumstances yet again dominated the macroeconomic environment in 2024.

Russia’s war of aggression in Ukraine continues, and has escalated further with the deployment of North Korean troops. The tension in East Asia over Taiwan’s independence is unsettling global supply chains, with the prospect that the dispute could escalate into a full-blown war only one factor of concern. The same applies to the tension in and around Korea. The COVID-19 pandemic had already brought forward voices that were critical of globalization.

These factors have sparked considerable upheaval in economies across the globe and, as a result, volatility on the capital markets, too, driven in particular by interest rate hikes in response to a marked uptick in inflation. 2024 started with a 10-year euro interest rate of 2.52%; by the end of the year, this interest rate came in at 2.37%. Overall, the capital markets have been extremely volatile since the COVID-19 pandemic and the outbreak of Russia’s war of aggression in Ukraine.

This scenario was compounded in 2024 by political uncertainty in the wake of the German government crisis and the presidential elections in the United States. Irrespective of these political factors, the overall trend is still one in which voters are drifting towards more right-wing, authoritarian politics with increasing nationalist sentiment, and away from the liberal social models that have dominated the past 50 years, as is evident from the outcome of most elections, especially in the Western hemisphere. The associated fears and expectations of imminent protectionism and nationalism also fueled volatility on the capital markets and coincided with a current weak growth environment in Asia, Europe and the U.S.

Global climate change has been thrust back into the spotlight after extreme storms in Spain, Austria, Switzerland and Italy in 2024, and the wildfires in Los Angeles in January 2025. War, climate change and global wealth inequalities are the fuel behind the current migration flows.

In the real estate industry, volatile interest rates, in particular, are leaving a significant mark on business models and enterprise values. Political clarity with regard to building regulations, tenant legislation, environmental standards, energy policy and housing policy subsidies is crucial to allow real estate companies to assess the status quo and plan ahead, and also to develop strategic and operational responses to the issues of the future.

By contrast, the megatrends of climate change and sustainability, demographic change and the shortage of housing, coupled with advances in digitalization, are currently the mainstays of commercial activity. Added to these factors is the gap between the demand for, and supply of, housing.

Thanks to its robust positioning, Vonovia has fared well during the past few crisis-ridden years, and considers itself well equipped for new growth based on these megatrends. Its key balance sheet indicators and ratings are stable, the sales programs to strengthen the company’s internal financing can be scaled back, the cycle of dwindling values appears to be over, and the company is well placed to tackle the years that lie ahead from both a strategic and operational perspective.