Tomorrow celebrates two years since Fairfax journalist Adele Ferguson executed a devastating blitz on one Aveo village in particular, and the retirement village sector in general. There have been three outcomes.
Adele Ferguson won a Walkley Award for Journalism.
Public trust in retirement villages was severely damaged, leaving it weak in the face of the declining housing market.
And weak sales and weak response from the sector has laid it open to increased regulatory intervention (most evident with the new buyback regulations). As the NSW Retirement Living Ambassador Kathryn Greiner repeatedly says: “The sector will be regulated out of existence”.
Two years on we have a voluntary Code of Conduct that becomes effective 1 January, but informal discussion indicates low take-up by operators. A new Accreditation system is also being introduced to the sector, the first take-up likely to be early next year, two-and-a-half years after the original program.
Meanwhile the Four Corners program keeps being regurgitated (see below)
And at least every quarter a new media event re-hashes the same negative story. Last week it was The 7.30 Report which targeted Lendlease and a resident who wants to ‘get out’ of the village but her home has been for sale for 15 months. There are 20 other units for sale in the village. See it HERE.
The cost to the sector has been horrific. Aveo may be an extreme example: the next story reports their underlying profit for 2019 is down to $50 million. In 2017 it was $108 million. Its shares were trading at $3.60 and today are trading at $1.97, effectively slicing more than $1 billion from its value.
With the increasing regulation every village will have its valuations reviewed by banks and purchasers.
What has been learnt? As Tammy Berghofer and Robyn Lyons of MinterEllison said in our Village Operator roadshow last month: “United we stand, divided we fall”.
The NZ market has demonstrated that demand far exceeds supply when retirement village operators are united under one peak body designed to put in place the building blocks of a mature, responsible industry sector.
As Minter Ellison point out, the “sector needs a cohesive and united approach”, because “it is one minute to midnight”.
