How heating affects rental prices 2024-04-03 12:21:38

Climate protection in large cities: How heating influences rental prices




































Not very sustainable, but historically valuable: the opera and theater in downtown Frankfurt are key buildings of post-war modernism. Now they are to be demolished. While critics emphasize that all the energy already invested in the building, the so-called gray energy, will be lost, supporters believe that a new building is essential. They argue: From a purely economic perspective, it is not worth renovating the municipal theaters.

In a world in which sustainability is becoming increasingly important, large cities are faced with a difficult task: how to renovate properties so that they meet environmentally friendly and at the same time economic requirements. Can the existing building be modernized without destroying architecture that is important in terms of building culture? This question is particularly pressing when it comes to preserving old buildings that will consume less energy in the future. In Germany, according to the 2024 building report from the German Energy Agency (Dena), buildings are responsible for around 40 percent of total CO2 emissions. These emissions are mainly caused by heating systems that still primarily use fossil fuels such as gas and oil.

A look at the data from Infas 360 shows what progress is being made in renovation in major German cities and what role new buildings and gray energy play.

If you want to make a building more energy efficient, the greatest effect can usually be achieved by replacing the heating system. If the federal government has its way, all heating systems in the future should be based on at least 65 percent renewable energy. According to the Dena building report, fossil fuels such as gas and oil currently account for almost 80 percent of heat generation. This means that with a current heating replacement rate of only 4 to 5 percent per year, the reality is still a long way from the traffic light government’s goal.

A closer look at the data reveals that the renovation rate in most inner cities is significantly lower than in the outskirts. Why is that? One possible explanation is the large number of old office buildings, outdated commercial buildings, but also public buildings such as offices with a backlog of renovations. The ownership structure of inner-city residential buildings could also play a role. On the one hand, there are often relatively simple apartment buildings in central locations.

On the other hand, many residential buildings in the centers and neighborhoods close to the city center belong to homeowners’ associations (WEG). In these cases, a group decides on the measures. Since both the priorities of the individual WEG members and their willingness to invest are often very different, WEG properties perform relatively poorly in terms of the renovation rate.

There is something else: Old houses from the Wilhelminian era in particular are often equipped with gas heating systems, which means that there is no common heating system for this property. Switching to a new system such as a heat pump is correspondingly complicated. In the outskirts and suburbs the picture looks different. There are significantly more private single and two-family homes there. Many of them are already getting on in years and have a poor energy balance. But it is precisely in these neighborhoods that a change of ownership has been taking place in recent years. The new generation not only modernizes their home visually, but also brings it up to date in terms of technology and energy efficiency. This explains why the heating renovation rate there is higher than in the city centers.

But there is another explanation for why heating replacement is less common in city centers: many of the buildings there do not have their own heating system, but are connected to the district heating network. This can be clearly seen in the graphic in the reverse pattern. Both new neighborhoods that have recently emerged on former brownfield sites and entire streets receive heat for heating and hot water from a nearby power plant.

District heating is generally considered an environmentally friendly system. However, it depends on the type of energy source. Are fossil fuels such as coal, oil and natural gas used, is waste burned or is biomass burned? If you want to make this heating system more climate-friendly, the power plant has to switch to a new energy source. Likewise: The question of replacing the heating system does not arise in a building supplied with district heating.

The further you get to the outskirts of the cities, the higher the proportion of oil heating systems continues to be. In the past, oil was the most common energy source alongside gas. According to the Federal Statistical Office, around every second of the 41 million households is currently heated with natural gas, and every fourth residential unit is heated with oil – especially in areas with low population density. These are therefore less often connected to the district heating network because the costs for the pipe network increase with increasing distance between the houses.

Although the Building Energy Act, which came into force this year, does not ban old heating systems, oil and gas should no longer play a role as energy sources by 2045.

For architect Natalie Eßig, how quickly old boilers should be replaced depends largely on the condition of the system: “We all know that the government has said: All oil heating systems have to be removed. There was a lot of public uproar. You have to critically question whether it really makes sense to say across the board that a heating change is necessary. You have to look at each device carefully.”

The professor of building construction and building climate at the Munich University of Applied Sciences points out that there are thirty-year-old devices that still work well and consume little energy. Other systems are broken after just ten years and have to be replaced. “When renovating and replacing devices, the energy consumption required to produce the new devices is often overlooked.”

The evaluation for the cities as a whole shows that heating systems are replaced most frequently, followed by windows and doors as well as roof insulation. Many homeowners hesitate when it comes to insulating their exterior walls. Although it is important for energy efficiency, this measure is often postponed – mostly because of the high costs, the great effort, but sometimes also because of the fear that the character of an old building will be lost. Here we see a reverse pattern: exterior walls are more likely to be renovated in inner cities, but this rarely happens in the outskirts.

Why is that? In multi-family homes it is often easier, and from a property management perspective, preferred to renovate and paint the facade. Because these measures improve the exterior of a building. In addition, the visual refresh finds approval more quickly than replacing heating systems, which, as described, is significantly more time-consuming and complicated. And finally, since there is no need to replace the heating system in buildings with a district heating connection, financial resources may be available for other measures.

Architect Eßig advocates for more holistic thinking in renovation, away from uniform minimum standards. “Whether I am in the city, in the outskirts of the city, in rural areas, whether it is a single-family home or an apartment building, whether the house dates from the 1900s, 1950s or 1980s – in my opinion, you have to look at everything individually and develop a concept tailored to the situation. I see this as the task of every architect and energy consultant.”

For example, in inner cities there are many old buildings that were built before 1970 due to historically developed building structures. Here, a standardized renovation of the external walls could significantly change such buildings and the entire cityscape. Eßig promotes alternative solutions, such as the increased use of photovoltaic systems on roofs and interior insulation. In this way, the original appearance of old buildings can be preserved and at the same time energy efficiency can be increased.

Graphic: dhaj. / Source: infas 360

The age of the building plays an important role in the energy balance, but older does not necessarily mean worse: very old buildings such as the Wilhelminian style buildings that were built before 1919 often perform better in terms of their energy efficiency than the younger post-war buildings (1950-1970). . These were built quickly after the Second World War – from materials of lower quality such as slag. Wilhelminian style buildings, on the other hand, benefit from thick walls and also from the fact that one house is nestled next to the other along the streets, which means they protect each other from the cold.

In this context, it is interesting to take a look at Dresden. In the Saxon state capital, after reunification, a large proportion of the buildings built in the GDR gave way to new ensembles. At the same time, the city is rich in old buildings.

In recent years, the construction industry has primarily focused on new construction. From 2011 to 2022, investments in new buildings increased by more than 43 percent. A new building promises higher returns and is considered easier compared to renovating old buildings. But what is often overlooked is how much gray energy is contained in existing buildings. This includes the energy required to build, operate and even demolish buildings. In contrast, the renovation sector recorded a decline below the levels of the early 2010s. The reasons for this are not clear from the available data, but the problem in rental housing construction is often highlighted. When it comes to renovations, the owner bears the costs, while the tenant benefits from new heating and better insulation. The higher costs must be covered by increasing basic rents. However, the amount depends on local rental market conditions and rental regulations.

One thing can be clearly seen from the data: the energy quality of residential buildings influences rental prices. Statistically speaking, rents increase when a building’s energy requirements decrease. Let’s look at an example:

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