Retirement village sector moves ahead

Retirement village developments are still moving ahead due to sound industry fundamentals, according to new research by Jones Lang LaSalle.

The number of retirement villages nationally has climbed by four per cent over the past 12 months, Jones Lang LaSalle national director of health and aged care Peter McMullen says.

McMullen says despite the 5.5 per cent stock increase, resident numbers have only increased by about 3.1 per cent per annum over the past three years. “While this growth confirms the continuing appeal of retirement villages, it’s below the rate of approximately five per cent per annum at which the population over 65 years is aging,” he says.

“This is mainly due to the slower rates of sale for both secondhand and new stock as potential entrants have been unable to sell their family home to fund their move into a village.

“This slower rate of growth has also been compounded by the loss of confidence amongst retirees created by the uncertainty surrounding the current economic climate.”

McMullen believes once consumer confidence returns, the pent-up demand created by the current economic conditions will see a strong development increase.

“Research compiled using our National Retirement Village Database has also revealed some interesting trends in the development pipeline – that while there has been a decline in the number of proposals to develop new villages, the number of proposals to expand existing villages has remained steady,” he says.

While the number of development projects put on hold has doubled, there has been an increase of nearly 10 per cent in proposals put forward to councils.

With a 30 per cent decline in the number of new villages under construction in the past 12 months, the demand for sites has understandably weakened and land values have fallen significantly.

McMullen says, “One can sense from the levels of enquiry we’re receiving that there’s a general feeling that land values may have hit the bottom, and the best time to acquire sites will be over the next six to 12 months.”

The retirement age increase from 65 to 67 years announced in the recent Federal Budget is unlikely to stifle this growth as life expectancy is also rising, McMullen says.