Our third and final story in issue one reveals ‘years of tears’ in the rental village market. Village Life and ING Real Estate Community Living Group were the two pioneers of new rental villages in the late 90s and early 2000’s.
The basic premise was American retirees rent village accommodation on a week by week basis – why can’t we in Australia, especially for the affordable market.
They built one bedroom and studio garden villas with rent pegged at 85% of the pension. One proper meal a day was thrown in. To get the land at the right price they went regional. Pensioners quickly identified that there was no money to live on after paying 85% and they could get cheaper accommodation in boarding houses and similar.
The remnants of ING rental villages are now in the Ingenia portfolio having been massively devalued on the transfer.
Village Life and Sunny Cove mum and dad investment syndicates were left holding vacant units. These are now being mopped up by Eureka who have turned the model around after buying villages at a valuation of around $55,000 per unit when replacement cost would be $200,000.
Eureka has also grabbed the massive tax losses of up to $30 million, meaning today’s profits are tax-free.
