Sustainable increase in value in the real estate portfolio – a string restructuring in practice

More than half of German apartments date from a time when energy efficiency was not an issue. Anyone working with such properties today has two options: renovate or lose. At Domicil, the decision to include a property in the portfolio therefore follows a clear strategy – with a view to the entire life cycle. Reality, however, shows that the perfect property rarely exists. Technical due diligence reviews regularly reveal considerable renovation needs for existing properties – from the building envelope to the building services and energy efficiency. In view of the increasingly strict EU requirements, it is no longer an option to ignore this pressure to act.

Domicil therefore focuses on a long-term perspective: Each property is analysed both in terms of its current weak points and its future potential. The central question is: What measures can be used to develop sustainable value? ESG is not understood as a bureaucratic obligation, but as an integral part of an intelligent value creation strategy.

With the acquisition of the residential complex in Brühl in 2022, we have secured a location that exemplifies the strategic orientation of our company. The location in the fast-growing Rhine-Ruhr region, the proximity to Cologne and Bonn, a functioning local infrastructure and the unabated high demand for affordable housing offer the best conditions for further developing the property in the long term to increase its value.

Built in 1974, the three-part residential complex comprises around 19,800 square metres of rental space with 249 apartments, five commercial units and 137 underground parking spaces. The system was already renovated in terms of energy efficiency in 2012 and 2014, followed by the renewal of the elevator systems in 2018. It is precisely this balance of substance and development potential that makes the property particularly attractive – and the opportunity to combine sustainable value enhancement with social responsibility.

It quickly became clear that the "big cutlery" was needed here: the existing building technology had to be completely renewed and consistently geared towards efficiency and future viability. The focus is on the comprehensive string renovation, which includes all supply and disposal lines. Drinking water, sewage, ventilation and electrical pipes will be completely replaced – from the central risers in the shafts to the connections in the individual apartments – and this will be done in the inhabited state. A total of 18 buildings, each with two to three strings, will be renovated by 2026.

At the same time, the heating control system will be fundamentally modernised. An analysis of the situation had shown that the existing system systematically delivers excessively high flow temperatures – a typical effect of older heating systems that are generally designed for extreme weather conditions. By integrating an intelligent control system developed by Paul Tech AG, the flow temperature will be adjusted in real time to actual demand in the future. Weather data, building data and consumption analyses are continuously evaluated, and sensors directly in the pipelines record the current heat demand.

This creates a dynamic system that avoids unnecessary heat loss and keeps the system efficiently in the optimal operating range. The effect is directly measurable: primary energy consumption is reduced by up to 20 percent, which has a direct positive effect on the operating costs and the CO₂ balance of the property.

Falling ancillary costs and the prospect of living in an apartment with intact pipes – and a renovated bathroom, if it is still from the year the house was built – is pleasing for the tenants. But for the residents, a renovation of this magnitude means first of all interventions in everyday life, temporary moves and dealing with uncertainties. Especially in inhabited stock, the quality of communication is therefore not a soft issue, but a hard success factor.

In Brühl, we have created a solid basis of trust through transparency. Each tenant was informed individually – not by circular, but in personal conversations in which questions were clarified, procedures explained and concerns taken seriously. A central component was the provision of fully equipped alternative apartments directly on site. Instead of temporary solutions, Domicil offered tenants temporary living space that made no compromises in terms of equipment and comfort. This was supplemented by a 24/7 security service that protected the vacant apartments during the construction period of around ten weeks – a signal that privacy will also be respected during the renovation.

The residential complex in Brühl is a building block in our long-term strategic approach. Depending on the year of construction, technical substance, location and tenant structure, each existing property brings its own challenges. Therefore, we take a tailor-made approach to each property. The spectrum ranges from the addition of a storey to the comprehensive modernisation of the building envelope, underground garages and building services – always with the aim of optimising energy efficiency, quality of living and marketing potential in equal measure.

Nevertheless, Brühl is a special project in its complexity. With a string renovation of this dimension in the inhabited state, we have broken new ground. The fact that the measures are not only successfully implemented step by step, but ultimately also convince the tenants, is due to a triad of transparency, reliability and consideration. We are currently experiencing how initial skepticism is turning into trust, even appreciation, for the way we are managing this project.

Brühl thus stands for a piece of corporate culture in practice – for the aspiration to understand sustainability not only as a technical or regulatory task, but as an integral part of responsible portfolio development that keeps tenants, owners and investors equally in mind.