With a billion euro profit behind it, germany’s largest real estate group vonovia plans to almost double the construction of new apartments.
After 1,100 apartments last year, at least 2,000 units are to be completed in 2019, almost exclusively in germany, as CEO rolf buch announced at the financial press conference in dusseldorf.
Lack of building permits put the brakes on even rougher new construction. "It’s not the properties and it’s not the money," said buch. Vonovia rents out a total of around 400.000 owner-occupied apartments in germany, austria and sweden.
Due to the significant increase in the cost of land and construction services, new buildings in large cities could often only be realized as a combined package of rental apartments and owner-occupied apartments, said vonovia CEO daniel riedl. The majority of land costs will be covered by the sale of condominiums.
CEO buch sees a pressing problem in the provision of age-appropriate housing. In germany, around three million apartments have been needed in just over ten years for older people to live in. "We have less than one million," buch said. These figures also show that society as a whole needs to make an effort when it comes to housing construction.
Acquisitions abroad and higher rental income pushed operating profit after interest and taxes over the one billion euro mark for the first time. At 1.07 billion euros, the dax company’s earnings were up 16 percent year-on-year. Dividend for 2018 to rise by 12 cents to 1.44 euros per share as planned.
Rental income rose by a good 13 percent to just under 1.9 billion euros, with vacancy rates remaining low. Average rent increased by around 4 percent to 6.52 euros per square meter. "These are not luxury rents," said buch. Vonovia is not a price driver, "neither for existing tenants nor for new tenants".
Vonovia plans to invest around 2 billion euros in modernization, maintenance and the construction of new apartments this year, up from just under 1.6 billion euros last year. Buch reaffirmed its announcement to limit rent increases after modernization to 2 euros per square meter. Vonovia had thus reacted to protests by tenants.
Complex renovation projects cannot be implemented with the reduced rate, buch emphasized. The previous level of 5 percent of modernized apartments per year could therefore probably not be maintained. Last year, he said, rents were raised by an average of 1.50 euros per square meter after refurbishments.