## 3 Typology of the Building Stock, Market Segments and Economics of Refurbishing
### The Economics of Refurbishing
#### 3.1.4 Deep Renovations of Apartment Buildings of the 1960s and 1970s Exemplified  
In Sweden, there were 650,000 apartments constructed during 1961-1975, 40% of these are owned by municipal housing companies [29]. The buildings are associated with socio-economic weak tenants and slum lords who neglect maintenance needs [36]. This particular context is arguably highly suited for the policy goal of improving human well-being in the built environment. Estimates of needed investments in 200,000 of these apartments _excluding_ energy efficiency measures are between 70-98 billion SEK (8-11 billion \(\upepsilon\)) or some 5000-7000 SEK/m\({}^{2}\) (570-790 \(\upepsilon\)/m\({}^{2}\)) [37]. Social housing in Denmark comprising in total 477,306 apartments (all typologies) was in 2006 estimated in need of investments of about 160 billion dkk accumulated over a 20 year cycle [33] (pp. 22-23 and p. 100), but estimates differ [25]. EXAMPLE Brogarden, Alingsas, Sweden  
Costs of deep renovations are illustrated with an example of 300 apartments in 16 housing blocks built 1971-1973 [31]. The buildings belonged to a municipal housing company who decided to undertake deep renovations as a demonstration project to show that is was possible to meet ambitious energy standards. The buildings are located in an attractive location. Calculated renovation costs were 750,000 SEK/apartment (85,000 \(\upepsilon\)/apartment) equivalent to 10,700 SEK/m\({}^{2}\) (1200 \(\upepsilon\)/m\({}^{2}\)) [37], Table 8. Renovations began in 2008 and are running until 2014. When comparing calculations of the costs with the available figures it is obvious the calculations were overly optimistic as current figures suggest nearly a doubling of costs. In terms of energy savings, the 60% reduction is impressive but fails a cost-benefit analysis. Energy savings of 200 SEK/m\({}^{2}\) is trivial compared to energy refurbishing costs 5600 SEK/m\({}^{2}\). For the energy investments to be profitable within a 50 year calculation period, unlikely assumptions about energy price increases of 4% over inflation per year is needed. Under this assumption, the energy invest \begin{table}
\begin{tabular}{c l c c c c c}  & \multicolumn{2}{c}{**Scenarios**} & \multicolumn{2}{c}{**Savings in 2050**} & \multicolumn{2}{c}{**Savings Rel.**} & \multicolumn{2}{c}{**Investment Until**} \\  & & \multicolumn{2}{c}{**Rel. to 2011**} & \multicolumn{2}{c}{**to Scenario A**} & \multicolumn{2}{c}{**2050 Rel. to A**} \\ \hline  & & **TJ/year** & **\%** & **TJ/year** & **\%** & **Million dkk** \\ \hline A & Business as usual & 60.845 & 29.2 & - & - & - \\ B & Full BR10 & 67.981 & 32.7 & 7.136 & 11.7 & 16.406 \\ A.1 & Higher standards—roofs & 61.471 & 29.5 & 626 & 1.0 & 5.818 \\ A.2 & Higher standards—outer walls & 62.546 & 30.0 & 1.701 & 2.8 & 10.589 \\ A.3 & Higher standards—when changing windows & 60.845 & 29.2 & 0 & 0,0 & 248 \\ A.4 & Ventilation with VGV & 83.271 & 40.0 & 22.425 & 36.9 & 111.621 \\ A.5 & Solar heating & 66.559 & 32.0 & 5.714 & 9.4 & 19.409 \\ A.6 & Extended life cycle +25\% & 60.520 & 29.1 & \(-\)325 & \(-\)0.5 & \(-\)1.602 \\ A.7 & All roofs insolated to 2050 standard & 62.964 & 30.2 & 2.119 & 3.5 & 8.547 \\  & Combined A1, A2, A3 & 63.172 & 30.3 & 2.326 & 3.8 & 16.654 \\  & Combined A1, A2, A3 and A4 & 85.597 & 41.1 & 24.752 & 40.7 & 128.275 \\ \hline \end{tabular}
\end{table} 
Table 7: Calculated net savings in energy for heating, and total investments in 2050 relative to year 2011 and to scenario A (Ad-hoc replacement of building components). From Wittchen & Kragh (2013) [32] (Tabel 3, p. 10). returns after about 48 years [31]. Rent levels on the other hand will increase as a result of the extensive renovation by on average 40%, motivated by the improved living standards, Table 8.  
Taking a different approach, the municipal housing company Gardstensbostader undertook extensive renovations of 255 apartments in 10 buildings built in 1969-1972 [31]. The renovations were executed in 1998-2000.