Sector kick-off: Residential building sector

The building sector is one of the key levers for modernization Germany and, at the same time, one of the most important value chains for economic value creation in Germany. Around ten percent of – mostly – local value creation is generated in this sector. Since buildings are responsible for around one third of greenhouse gas emissions, their modernization is no longer purely a climate issue, but a central prerequisite for the future competitiveness and planning security of our location.

A successful transformation protects the real estate portfolio from massive losses in value (‘stranded assets’) and secures local value creation for industry and commerce. At the same time, the heating transition is a deeply social task: only if the financing of renovations is made sustainable will housing remain affordable and social cohesion be maintained. Therefore, the interlinking of the real and financial economies in this sector is a basic prerequisite for combining ecological ambition with economic rationality, social responsibility and long-term value preservation.

The kick-off in Frankfurt: cooperation instead of going it alone

On 10 November, at the invitation of ING and the ‘Made in Germany 2030’ initiative, leading representatives from the banking sector (including ING, Deutsche Bank, DKB Commerzbank, KfW), the housing industry (Vonovia, Nassauische Heimstätte, ZIA) and building technology (Vaillant, Fuchs & Eule) gathered in Frankfurt and virtually. The basis for the discussion was a joint background paper on accelerating the heating transition.

The goal was clear: to explore a permanent ‘residential property transformation partnership’ that would act as a guide for policymakers and develop practical implementation roadmaps.

Key points of the discussion: pragmatism and efficiency

The participants agreed that the focus must be on the stock of private residential properties in particular. Commercial and, in particular, public property owners face no less significant challenges, as this is where the greatest need for action lies. Four strategic pillars were identified:

1. The transformation plan: We need to focus on cost efficiency without lowering our ambitions. Regulatory coherence is particularly important – individual renovation roadmaps must go hand in hand with municipal heating planning, the expansion and conversion of local heating networks, and the expansion of electricity grids and heating equipment supply (heat pump ramp-up).

2. Data as a foundation: Whether for efficient and precise risk assessment or renovation planning, data must be fundamentally and more readily made available to all stakeholders, especially financiers. Processes and infrastructures must be simplified and enabled through smart interfaces and corresponding hardware.

3. Social affordability: The transformation must not become a social ordeal. The aim of the partnership is to find ways to reduce renovation costs through scaling, simplify financing models and target public funds to cushion the burden on owners and tenants in line with their needs.

4. New communication: The topic must move away from purely ideological narratives towards a factual presentation of economic risks and opportunities. Owners must clearly understand the risks of the current approach and the opportunities that intelligent action offers for their assets in the long term.

The next steps: institutionalisation and networking

The response to the kick-off was overwhelmingly positive. In future, such a partnership will be supported at board level to act with political clout – initially with a particular focus on the implementation of the European Energy Performance of Buildings Directive (EPBD).

In the next phase, the structure of the transformation partnership will be further developed. The aim is to establish close networking with other players such as savings banks, cooperative banks, energy suppliers and associations such as Haus & Grund to form a broad alliance for a sustainable real estate sector.