We build on responsibility

Dear readers,

Two topics that affect us directly at Deutsche Wohnen were discussed in depth in Germany last year. The first of these was the debate regarding rent levels in our country’s cities and metropolitan areas. The second topic is one which has been with us for some time and which we have been seriously addressing for years – climate protection.

Greater regulation does not create more apartments

There have been very animated and sometimes even dogged discussions regarding a so-called rent cap and other regulations that seriously impact the market, in particular in Berlin. In spite of serious reservations, rent cap legislation was adopted in February 2020. Will it stand up to court scrutiny? The housing and real estate industry and its associations are highly sceptical, among other things in view of Germany’s Basic Law. And rightly so, in our opinion.

Something which has been and continues to be ignored is the fact that the reason why rents are increasing is simple: there are too few apartments in the cities and the booming metropolitan areas. A rent cap won’t increase the number of apartments – quite the opposite. Anyone wishing to invest in housing construction has to be able to generate the funds needed for this. We firmly believe that what needs to be taken into account is that not everyone is in a position to afford every rent amount. If this is not taken into account, those who earn more will displace those who earn less in the popular city boroughs or regions with their economic clout, because these places are precisely where apartments as a highly coveted asset are in short supply. Over time, this development leads to a change in the social structure of a district, neighbourhood or city that no responsible landlord wants. We are therefore proposing two measures that will make housing better and, above all, fairer. Firstly, rents need to be based on people’s individual income situations. And secondly, construction needs to be made simpler and quicker – a demand which has been around for many years. Approval processes that go on for years and the introduction of new regulations time and again push costs up and see to it that fewer apartments are built than would have been possible.

A new form of dialogue for new solutions

We are certain that only ever making demands and criticising is not an effective means of convincing people. We therefore want to set a good practical example. With our Berlin Dialogue, for example, we brought together Berliners, industry representatives and policymakers in order for them to jointly discuss matters as equals. The fact that our offer was accepted is no doubt attributable among other things to our having taken a decisive step ahead of this which shows that our position is not hollow words: we made a number of promises to our tenants because we want them to live good and carefree lives with us. No tenant losing their apartment because of modernisation measures or due to a rent increase are just two of these promises. You will find a complete overview of our promises on page Our promise to our tenants. I would like to make a particular point in relation to this: the promises we have made to our tenants are unparalleled in this form within the German residential property market.

As apartments cannot be built solely on the basis of our dialogue with people in Berlin and the promises we have made to our tenants, we made the city an offer – our Pact for Fair Housing. The proposals it contains include the topic of land for new apartment construction, with the towns and cities needing to put an end to unnecessary speculation. The designation of new development spaces for new construction as part of sensible urban development is essential here. And, in this context, climate protection and tenant protection must not be pitted one against the other. We need both: energy-efficient apartments and affordable rents.

Deeds rather than words – above all regarding climate protection

This brings us to the second big topic of 2019, climate protection. We have opinion formers and activists to thank for the fact that the debate on climate protection now plays a central role in public awareness. The Fridays for Future movement led by Greta Thunberg has been a driving force here. Climate protection is something which affects everyone, making it a task for society as a whole that all of us must tackle in equal measure. What we must bear in mind is that climate protection does not come for free. This needs to be openly discussed among tenants, policymakers and landlords in order to identify socially acceptable solutions. Deutsche Wohnen is part of the industry which accounts for around 40% of energy consumption in Germany as well as approximately a third of carbon emissions. We therefore need to be part of the solution when it comes to systematically and rapidly reducing harmful emissions. We actively contributed here again in the year under review and invested more than EUR 50 million in climate protection measures. We also succeeded in boosting our portfolio’s energy efficiency once again in 2019, with around 64% of our residential buildings having a better energy footprint than the average residential building in Germany. In the year under review, energy efficiency upgrading was focused in particular on three districts in Berlin: the Spring estate and the Otto Suhr estate, both in Kreuzberg, and the Uncle Tom’s Cabin estate in Zehlendorf. All in all, we succeeded in avoiding over 25,000 tonnes of carbon emissions last year with our comprehensive measures.

Greater energy efficiency, more living comfort

In the age of digitisation and climate change, new construction is about more than merely creating converted space or refurbishing and maintaining space. In the future, people will live in smart districts and there will be greater energy efficiency and living comfort. This will include charging stations for electric vehicles, smart door communication and a digital metering solution for intelligent heating and energy management, to give just three examples. With Deutsche Wohnen, intelligent buildings are no longer just a vision of the future and are in many respects already a reality. This is something else that this report covers, together with the other topics already mentioned.

Actively developing districts and society

As one of Germany’s biggest residential property companies, we are a part of everyday life and the local communities in our country. We are therefore committed to district development and also support social and non-profit initiatives. We promote the preservation of historic buildings, building culture as well as culture, art and sports. Last year, for example, we supported the Housing First project for men and women who had become homeless by making suitable apartments available for them. Another example is the extensive investments we have made in protecting and preserving historic buildings – we made around EUR 11 million available for this. It is not only things which are worth preserving that we like to look after – we also very happily nurture new things. In the year under review, we focused here on supporting urban community culture. As part of the Berlin Mural Fest 2019, ten of our facades in the capital were turned into huge paintings to the delight of the artists, the residents and visitors.

Our employees …

The people who work for us are very important to us. They play a significant part in our success, so we need to know whether they feel appreciated by us and whether the conditions are in place that they need in order to carry out their work. We surveyed our employees on this and other important topics again in the year under review. The results showed that 77% of our employees are satisfied with us and that we are absolutely on the right track as an employer. There are nevertheless a number of areas in which we can and will improve.

… and our customers

Our customers are at the heart of everything we do. Once again in the year under review, we had them surveyed by an independent institute. And we can say that the result was very good – 87% of our tenants are satisfied with their apartment and more than three quarters of them rate our work as a landlord positively. Last year in particular, this greatly encouraged us to continue on the path we have chosen. In addition, our tenants suggested a few tasks for us, which you can read more about on page Our customers: satisfied to very satisfied.

By its very nature, a sustainability report predominantly takes a look at the past. The extraordinary situation in which the world currently finds itself makes it necessary for us to touch upon the topic of the COVID-19 pandemic too, which is seriously impacting people’s daily lives right now. In addition to the ill and the seriously ill, many people are also suffering as a result of the financial impacts of this new virus. We therefore quickly took the decision to create an aid fund in the amount of EUR 30 million for the benefit of our tenants and partners in need. We hope that this will also encourage others to follow in our footsteps.

Berlin, June 2020
Michael Zahn
CEO of Deutsche Wohnen SE

Topical matter: the COVID-19 pandemic

“As this report is being prepared in spring 2020, our country is, like the whole of the world, facing a unique challenge: fighting the COVID-19 pandemic. Not only does this epidemic result in serious illness and mortalities – it is also jeopardising the economic existence of many people, some of whom are also our tenants and partner companies and service providers. We want to take the strain off them in this difficult situation and are therefore creating a coronavirus aid fund of approximately EUR 30 million. In so doing, we hope to provide them with very practical assistance to complement the steps taken by the German government and the federal states while also serving as a role model for others to contribute in similar ways. To finance the aid fund, the Management Board and the Supervisory Board have decided to propose a reduced dividend of 90 cents per share at the forthcoming Annual General Meeting.”

Michael Zahn