The right model for growth with profitability in Germany
Bonava is a leading residential developer in Germany, with operations across the country. The position in the Berlin area is the strongest. Bonava’s efficient building systems and robust offering provide a solid base for creating long-term value from continued investments.
Market potential and drivers
Inflation in 2023 dropped to lower levels than those recorded in 2022. Consumer confidence started to improve during the year, even if the recovery was slow due to economic developments and the resulting concerns about job security and corporate insolvencies. The price indices for residential property showed a downward trend in 2023, with stabilisation tendencies for newly constructed owner-occupied apartments, while the indices for rented apartments rose. At the same time, the market situation offers opportunities. There has been a housing shortage for many years, meaning that there is long-term demand for housing units. This is especially in metropolitan areas and conurbation regions around economically strong major cities and their outskirts where Bonava operates. Current undersupply corresponds to about 230 times of Bonava’s average annual production during the last five years. Experts see a construction gap of around 700,000 apartments per year nationwide by 2025 and an even higher shortfall in the years ahead.
Bonava is one of Germany’s most active residential developers and is represented in nine of Germany’s ten largest cities, covering 35–40 per cent of the German population. Historically, the German market has been highly fragmented due to a large number of regional and even local developers. The challenging market situation could lead to insolvencies and consolidation, which can be favorable for a larger player with national coverage such as Bonava.
Strategic focus going forward – growth
Germany is in the third strategic phase – growing the business. The business unit has a strong market position, efficient building systems and processes in place and an agile, fast and experienced organisation is being implemented. Once the market turns around, the business unit is well positioned to start to grow volumes. Improvement efforts will continue to focus on flexibility in production, strategic sourcing and development of our offering, which includes continued diversified offering with an increased share cost-efficient single-family/ terraced housing projects.
