An examination of villages.com.au new village listings reveals Australia has averaged 16 new retirement villages each year for the past 10 years – but when the data is analysed, it uncovers 92 villages hitting the ground in the last three years, an average of 30 a year. This is encouraging.
30 projects a year, with average build cost of $400,000 and average size of 85 units, means $1 billion a year is flying into a retirement village construction.
The challenge for operators is that the majority of new villages are vertical, requiring a big upfront investment by the operator. Staged sales are difficult.
The second challenge is the number of years required to deliver a project – increasingly seven years are required from the decision to build a project to first residents moving in.
To prove these points, the photograph above is of James Wiltshire, Executive Director of the DCM Institute, who visited Marine Views aged care home and retirement village in Perth last week. It’s a $160 million commitment by the single-location community Not For Profit operator Curtin Heritage.
The vertical residential care home and one retirement village tower have been completed, and another retirement village tower plus a commercial space building are due for completion in late 2023. It is stunningly good.
We need 60 new projects a year to maintain 5% penetration of all people 65+ living in retirement villages. It is unlikely to occur. We have to ask: will traditional apartments with a concierge service (CAPs development) fill the downsizing 75+ market? “Yes” is the likely answer.
