It is now just 6 months to the fourth anniversary of the GFC, and things aren’t good for most village operators. ILU turnover – new or resales - is moving slowly. A malaise has taken hold and nobody seems to care.

This is indeed alarming, to the point where one RVA Board Member says that retirement villages are in danger of becoming irrelevant.
Consider this. I know of one leading village operator that has new apartment blocks still empty after 2 years, tying up $18+ million in capital each. Aveo had just 8 new sales last July to December. At this rate they will require 8 years to move their existing new stock (before they consider their development pipeline).
In the November McCrindle Baynes Villages Survey of 10,600 Private and Not For Profit residents, just 39% believed their village home would resell within 3 months of their leaving. 33% said 4-6 months and 28% said longer. If anybody would know the real story it is them.
Pre GFC over 120 new villages broke soil each year. Today the number is closer to 45.
‘Distressed’ operators are facing banks rumoured to be planning a clean out sooner rather than later. The banks have held on for nearly four years so one can’t blame them.
The fact is our sector is valued at over $50 billion but market penetration is declining in real terms while demand is increasing. By example, in November 2008 we had 680 unique searches per day for village accommodation on villages.com.au and today we average 2,800 – a 310% increase.
Less available cash over a long period creates an inward looking mentality – a negative attitude – which becomes self fulfilling. New initiatives, even necessary initiatives, are put on hold.
People, especially quality people, are not hired. Every penny is checked, leading to conflict, especially with residents who themselves are under financial pressures. This is now leading to onerous Tribunal decisions that were not a factor four years ago.
So all village operators are now entering budget development phase for the next financial year. Are we going to put in a depressed, backward looking budget or are we going to be aggressively optimistic? I believe it should be the latter.
Here at villages.com.au we have been positively investing in our future (to be revealed soon). We believe we all have reason to be confident.
Why? First, because our residents and clients truly like village life. Only 3% of the 10,600 survey respondents stated they were ‘not happy’ in their village.
Second, there are positive operators who have not faulted since October 2008, achieving pre GFC sales rates month in month out, and without discounting. They understood that the market can still grow. You just have to position your offer clearly – and proudly.
We all need to get ‘on tune’. Our sector doesn’t have a common, united positioning. Our McCrindle Baynes focus groups demonstrated that few potential clients understood that villages’ appeal is to people with health issues. In fact, in our experience, few operators and fewer sales people understand this absolutely fundamental dynamic.
Where too is leadership engagement in the marketing and selling process? Here at villages.com.au we deal daily with a large number of operators. We see property developers, not property marketers. We see accountants behind desks. We do not see management in the field, understanding their product and leading the sales process.
To prove this ‘health’ point, our survey included 2,700 residents who had bought in to village accommodation option within the past 24 months. Health related issues accounted for the Top 8 reasons they bought in. Yet not one ad or offer that we know of in the sector has this basic appeal.
Ageing Australians will continue to have health problems in increasing numbers. We have the solution many are seeking. As a sector we have to get the message out that you are not buying into a resort, you are investing in safeguarding the longer term quality of life for your partner and yourself.
This is a good news story that leadership can make a reality. Why hesitate? A positive budget, setting the bar higher, will focus all on positive outcomes rather than ongoing negative outcomes. We will become irrelevant if we force our potential clients to find other solutions to their health needs.