SBM-1 – Strategy, Business Model and Value Chain
Vonovia’s business model is based on the provision and rental of good-quality and affordable living space at the right time, as well as the management of these properties in Germany, Sweden and Austria. This means that the main customer group consists of (potential) tenants in these countries.
This business model is based on a highly digitalized management platform and a similarly highly digitalized development platform allowing all stages in the value chain to be managed.
An established in-house craftsmen’s, residential neighborhood and caretaker organization, coupled with extensive back-office functions, support us in our management and development of our housing stocks. Vonovia continues to develop its real estate portfolio through active portfolio management. In addition to acquisition, sale and modernization, this also includes developing and building new apartments for our own portfolio and for sale to third parties. The business model is complemented by the housing-related services we offer. The focus here is on offering energy supply services for electricity and heating, as well as automated meter reading. The business model is rounded off by the management services we offer to third-party portfolio holders.
Vonovia’s economic environment is dominated by four megatrends: urbanization, climate change, demographic change and the shortage of housing, as well as technological advances. Together, these factors provide positive impetus for the business model’s growth and strategy.
The tried-and-tested 4+2 strategy remains the foundation for growth. This strategy has been refined in the recent years of crisis and has evolved into a stakeholder value strategy, reflecting the importance of all of the company’s major stakeholders. This strategy consists of four basic approaches: the property management strategy, the financing strategy, the portfolio management strategy and the Value-add strategy. Vonovia pursues the two complementary approaches – acquisitions and internationalization – opportunistically.
For the purposes of managing the company, we make a distinction between the segments Rental, Value-add, Recurring Sales and Development.
The Rental segment combines all of the business activities that are aimed at the value-enhancing management of our own residential real estate. It includes our property management activities in Germany, Austria and Sweden.
The Development segment encompasses project development activities to create new and cost-efficient homes, and expands the value chain ranging from the purchase of land to completion for Vonovia’s own portfolio (to hold) and sale (to sell).
The Value-add segment bundles all of the housing-related services that we have expanded our core rental business to include. The established Value-add service areas include the craftsmen’s organization, the residential environment organization, multimedia services, energy services and metering services, and insurance services. Having its own organization allows Vonovia to provide maintenance services, in particular, throughout the portfolio in a flexible manner, making the homes it offers more attractive and boosting customer satisfaction.
The Recurring Sales segment includes the regular and sustainable disposals of individual condominiums and single-family houses from our portfolio. Vonovia can reinvest some of these sales proceeds in modernizing its core portfolio, straightening its internal financing power.
Vonovia’s size and innovative technologies mean that it can continue to make a key contribution to solving the housing shortage problem in Germany and to decarbonizing the building sector. With this in mind, the corporate strategy has been refined in recent years, in an environment characterized by a higher cost of capital and lower share prices, to enable the company to achieve this objective.
The new growth strategy (“Accelerate”) was published in 2025 to respond to market changes and to develop new sources of revenue. The resulting growth initiatives have been gradually implemented since the strategy was unveiled. What all of these initiatives have in common is that they are based on standardized and scaled business processes. They enable the company to expand its business relationships with existing end customers (B2C) on the one hand, and to explore new business areas in the commercial customer segment (B2B) on the other.
The strategic growth initiatives focus on three areas: Return to performance is about strengthening the company’s core business and growth in Development, within VTS (Vonovia technical service) and in Recurring Sales. The Accelerated tech-supported investments aim to significantly accelerate portfolio investments in line with Vonovia’s climate path. Innovative technologies are transferred to industrial manufacturing processes through standardization and industrialization: serial refurbishment, heat pump cubes and Energy, Plan and Build.
New sources of growth explore new business models at all stages in the value chain. In this area, Vonovia has developed innovative ideas that significantly expand its existing business or extend it to include new areas with the Operate Energy, Manage to Green, Occupancy Rights and Operating Platform initiatives. The HR strategy supports growth initiatives and their implementation as an enabler.
Further details on the business model and strategy can be found in the chapters entitled The Company and The Strategy within the management report.
We disclose the number of employees in Germany, Austria and Sweden in section S1-6.
Our Sustainability Strategy for the Future
The considerable social relevance of housing and the need to adapt to climate change mean that all aspects related to sustainability are an integral part of the business model. Sustainability is thus a key component of our corporate strategy and orientation. Vonovia is working towards specific targets in the three areas of environmental (E), social (S) and governance (G):
As far as its environmental targets are concerned, our aim is to make the business model future-fit in the long run by using sustainable new construction and refurbishment approaches and CO2 reduction in the real estate portfolio to achieve the current climate protection objectives by 2045 and using innovations and new technologies to contribute to a climate-neutral housing stock.
When it comes to social concerns, we assume responsibility towards customers and society by providing affordable housing that meets people’s needs and being committed to future-fit neighborhood development. At the same time, we want to boost satisfaction among our employees by promoting diversity, opportunities for participation and professional development, and work-life balance, positioning ourselves as an attractive employer in the process.
With regard to governance, our aim is to ensure sustainable corporate management and responsible business practices with a reliable compliance system. These targets have a positive impact on the working atmosphere and, as a result, directly affect our employees, as well as being consistent with the objectives of the capital market.
Vonovia’s business model addresses the socio-political challenges of housing shortages, affordable housing and climate protection, which we are aiming to make a decisive contribution to with our sustainability targets. When we talk about affordable housing, we mean that our rental prices are based on local rent prices, and, if available, on certified rent indices. We base our approach on the ratio of the average rent excluding ancillary expenses in our portfolio to the average net income of tenant households, which was below 30% at Vonovia during the reporting period.
Our efficient organizational model, satisfied and high-performing employees, optimized processes, committed service and customer orientation, and a profitable investment strategy that focuses on climate protection lay the foundation for a sustainable business while safeguarding our legitimate interests as a private-sector company. The importance of our sustainability targets is reflected in the fact that they have a direct impact on the remuneration paid to our Management Board and top management via the SPI.
Aspects of Sustainability at Vonovia
Information on our progress as we work toward achieving our objectives can be found in ESRS 2 GOV-3.
Through the preparation of the materiality assessment in accordance with the ESRS and identifying the opportunities and risks, as well as the impacts that the company’s activities have on stakeholders, transparency has been enhanced, laying the foundation for even more integrated business activities.
E: We are faced with the challenge of achieving a climate-neutral housing stock by 2045. To achieve this transformation and ensure that the commercial implementation is successful, we require a high level of refurbishment within the portfolio, industrialized technologies and decentralized use of renewable energies for heating and power in line with our climate pathway. The neighborhood is the main implementation level for climate protection targets and carbon reduction in the housing portfolio. Around 77% of Vonovia’s strategic real estate portfolio is located in contiguous urban quarters, i.e., neighborhoods that generally include more than 150 apartments. Cost-effective and series new onstruction, as well as the use of renewable energies and sustainable materials, play an important role in new construction and conversion.
S: We are confronted with the challenge of providing affordable housing for as many people in society as possible. To rise to this challenge and achieve our targets, we rely on socially responsible, transparent rents. We see the expansion of housing tailored to tenants’ needs against the backdrop of demographic change, social infrastructure incorporating innovations and new technologies as an integral part of our neighborhood development projects. We aim to design urban, environmentally friendly and affordable housing in a socially responsible manner. A sufficient supply of qualified expert staff is essential for our business activities and growth, especially given the skilled-labor shortage. This is why we offer our employees an attractive working environment characterized by diversity and scope for personal development.
G: Another challenge facing us lies in ensuring that our compliance and corporate cultures are always consistent with current (legal) requirements. Within this context, we stand behind our reliable, transparent and trust-based corporate management, which is based on German Corporate Governance Code best practice. We comply with all applicable laws and internal and external guidelines. This is an integral part of being a reliable and trustworthy partner.
In terms of the direction of its sustainability strategy, Vonovia is guided by national and international standards and frameworks, such as the German Federal Climate Change Act (Klimaschutzgesetz), the Paris Agreement, the Sustainable Development Goals, the UN Global Compact and the United Nations Guiding Principles on Business and Human Rights.
The results of the ESRS materiality assessment underscore and confirm the orientation of our sustainability strategy and areas for action. As a result, we report the following as material topics: E1, E5, S1, S4 and G1 (see ESRS 2 SBM-3)
The value chain comprises the upstream supply chain, our own operations and the downstream stages. Our core activities include construction, rental and management activities, including neighborhood development and customer service, as well as the provision of housing-related services.
Relevant inputs include construction products and materials, as well as (human) capital; outputs include affordable homes, neighborhoods with a good residential atmosphere, new construction as well as property-related services (energy supply, multimedia, metering services, insurance, condominium administration). As part of our insourcing strategy, we employ specialists in our own business areas, for example in the caretaker organization, in modernization projects or in green space maintenance. This allows us to generate synergy potential, make ourselves largely independent of external service providers and offer a consistent level of quality. Our central, multilingual customer service department acts as the first port of call for our tenants, whereas our caretakers and craftsmen look after the needs of customers on location. This allows us to ensure fast and reliable service. We run our own customer service centers in Essen, Dresden and Berlin.
Upstream of our own value chain, our supply chain starts with the production of construction products and materials. Vonovia works with over 9,000 direct suppliers (tier 1) and business partners. Almost all of our direct suppliers are based in Germany, Austria or Sweden. An important supplier group is the (construction) material suppliers and construction companies who supply Vonovia’s craftsmen’s organization (VTS and Residential Environment Service) and BUWOG with construction products, among other things, or build our new homes. The contractual partners who implement maintenance measures, for instance, on our behalf are another relevant group. The sale of our buildings, building demolition and the disposal of our customers’ waste and wastewater form part of our downstream value chain.
In line with our target of ensuring the company has good access to the capital market, ensuring that it focuses on sustainability and generating attractive returns for our investors relative to risk, Vonovia uses a broad range of financing instruments, such as bonds, promissory notes, secured real estate loans, commercial papers, working capital facilities and subsidy loans from the German government-owned development bank Kreditanstalt für Wiederaufbau (KfW) and the European Investment Bank (EIB) (see also the chapter entitled Financing). Our 12 outstanding sustainable bonds, four of which we placed successfully on the capital market for the first time in 2025, meet the demand for both green and social bonds – and play a crucial role in our financing strategy. All of our green bonds are aligned with the EU Taxonomy.
With our Sustainable Finance Framework, we have contributed to the definition and selection of social assets on the Swedish market. The criterion logic we use as well as the specific criteria we selected in this context have already been adopted by other issuers on the market. We have published our Sustainable Finance Framework, the annual impact report evaluating the effectiveness of our measures and further information about our sustainable financing strategy on our Group website.