Hornbach-Baumarkt-AG Group

GROUP MANAGEMENT REPORT Outlook 77
Opportunities due to sustainability
Construction work on existing buildings (the modernization
and renovation market) has become an ever more important
factor in the business performance of DIY and garden stores
in recent years. The share of construction work involving new
housing, by contrast, is declining across Europe and most
recently accounted for significantly less than half of total
housing construction investments. In Germany, sales in the
modernization market have exceeded new construction volumes
since 1998. In 2011, more than three quarters of the
total construction volumes of around € 166 billion involved
modernization projects. Three key trends are responsible for
this development:
• The age structure of existing real estate indicates an
increasing need for maintenance and modernization. In
Germany, for example, three quarters of all apartments are
more than 30 years old. Less than 5% have been built
since 2000. Almost one in three detached houses in Germany
is in need of renovation. Half of the owner-occupied
houses built between 1949 and 1960 have not yet been
comprehensively renovated and no longer meet current
technology standards in terms of energy efficiency. Given
that the property will decline in value and attractiveness
on the housing market unless renovation measures are
undertaken, the need for construction services and materials
can be expected to increase.
• In view of the long-term increase in energy costs and climate
protection, renovating buildings in terms of their energy
efficiency is becoming an ever more important factor –
one promoted not least by numerous laws, directives, ordinances
and subsidies on European and national levels. Energy-efficient
construction and renovation enable a residential
property's energy costs to be cut by around three
quarters and the property's operating costs to be sustainably
reduced over its lifecycle. At the same time, energyefficiency
renovation makes a major contribution towards
cutting CO 2 emissions. Energy efficiency is therefore one of
the top themes in the European DIY sector.
• Given demographic developments in Europe, barrier-free
construction involves the challenge of adapting existing
living space and urban infrastructure to enable elderly
people to retain their freedom and live independently in
their familiar surroundings for as long as possible. Demand
for senior-friendly construction solutions, such as
barrier-free access to buildings and apartments, the installation
of elevators, and doorway-widening and sanitary
conversion measures, will therefore continue to rise.
These three megatrends can also be summarized under the
heading of "sustainability". The ecological, economic and
social dimension of sustainable construction is ever more
important as a key competitive factor, not only in the real
estate market. At the same time, by offering the right range of
products and services, high-performing industrial and retail
players, as well as tradesmen, stand to benefit from the ever
greater sales potential resulting from this development.
Opportunities due to consumer trends
Past experience shows that people are more likely to withdraw
into their private sphere during periods of uncertainty
than at other times ("homing"). Consumers spend more time
at home again and are prepared to invest in decorating and
equipping their own four walls. This is not just a German
phenomenon but also a key international motivation for home
improvement as a popular leisure activity. This is all the
more relevant at present, as consumers in numerous regions
across Europe are benefiting from low mortgage interest
rates and prefer to channel their resources into private house
construction or renovation projects than into alternative
capital investments that are increasingly viewed as unsafe
or unattractive.
The realization of "living worlds" is playing an ever greater
role in modernization projects in consumers' houses, apartments
and gardens. Consumers are showing growing awareness
of trends and influences from the realms of fashion, art,
architecture and the media. Consumers' desire to map these
living trends onto their own four walls is socially motivated by
a desire for durable values, quality (of living), individualism