Opportunities Arising From the Operating Business

Demographic change towards an aging society continues, and is increasingly leaving its mark. Demand for senior-friendly and affordable homes is expected to increase further over the coming years. Studies show that Germany needs at least two million senior-friendly apartments. As a result, opportunities could arise from senior-friendly modernization of our apartments. The fact that we offer accessible, partially modernized apartments and are investing in new and innovative housing concepts in our neighborhoods means that we can expect tenant turnover to fall and rents to increase further as a result.

Vonovia manages its housing portfolios throughout Germany using standardized, digital systems and processes. Our management platform has been optimized as part of a step-by-step process in recent years and is now highly efficient: the vacancy rate is very low. Property management costs per residential unit have been reduced considerably over the years. Customer satisfaction has risen significantly over the same period. Together with the range of housing-related services and active neighborhood management, we offer our customers a service package that is extremely competitive on the housing market and opens up financial opportunities for us. We also believe that upgrading measures in our neighborhoods present us with an opportunity to improve our reputation.

Vonovia’s business model spans the entire housing industry lifecycle: from the purchase of future-proof properties to (serial) new construction and efficient management, neighborhood development and serial refurbishment systems, as well as the sustainable direct supply of energy and other property-related services. As part of the company’s growth initiatives, this platform is also to be made available to third-party customers, positioning Vonovia as a full-service management service provider. This opens up opportunities for Vonovia.

We have our own craftsman’s organization (VTS). VTS provides repair, maintenance and servicing for some of our residential properties. We purchase additional craftsman’s services. 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 over the coming years. The company is continually forging ahead with the optimization and improvement of its craftsmen’s organization, VTS. Due to the shortage of workers with the desired skills and the availability of corresponding capacities, we also 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.

The Value-add Business offers our customers services that are closely related to the rental business. Opportunities associated with additional earnings potential could also arise here at all stages in the value chain – be it through the company’s development of its own innovative services or through the acquisition of start-ups or other companies. In the Value-add Business, promising opportunities could arise both from entry into the B2B business and from moves to expand existing business models to include customer groups outside of Vonovia. In particular, a promising amount of interest has been shown in residential environment activities, with the first few activities involving third parties.

In tandem with our moves to expand our existing housing-related services (also by way of potential third-party business), we believe that digitalization offers potential to further increase customer loyalty to our business model, e.g., through customer loyalty programs, communication platforms or networking. Digitalization opens up considerable development opportunities for the real estate industry and, as a result, also for Vonovia – in terms of both technology and process optimization. We are still making systematic investments in testing and expanding new technologies. Two of the areas we are focusing on are “articificial intelligence” and “robotics”.

We expect opportunities to arise from the systematic roll-out of concepts such as predictive maintenance, process automation, building information modeling (digital modeling of real estate projects), home automation (setting up smart information systems and interfaces at the level of the customer) and a closer digital connection to the customer. One key component for the implementation of our digital strategy is the digital twin. It maps all aspects of a building and, in the future, will mirror each of our buildings with all its various structural and technical features and systems, enabling optimum management.

These opportunities for the company’s operating business resulting from digitalization and artificial intelligence will also have an impact on customer satisfaction. Targeted acquisitions and collaboration initiatives with suitable start-ups 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 and expertise potential for the company.

One factor that Vonovia cannot control itself, but which is important for successful and, most importantly, efficient project implementation, is the digitalization of public administration. The streamlining of administrative processes and the introduction of building type E could accelerate, and have a positive impact on, Vonovia’s development and new construction business by allowing building permits to be approved faster.