If this model works, why build residential aged care?

Australia needs one new aged care home every three days for the next 20 years, according to Mark Butler. But here’s the question more operators are starting to ask privately: why keep building traditional aged care homes at all?

Because some of the projects getting the most attention right now do not really look like RACs anymore – they look like high-end retirement living with care built into it.

A different kind of care model

Last week, our team attended the official opening of the Heart of Willoughby at Hyegrove Willoughby on Sydney’s Lower North Shore.

The village opened late last year. Now the operator has added HyeCare – a 47-room private care offering inside the village.

And honestly? It feels much closer to a premium apartment development than a traditional aged care home.

The care suites operate under the Retirement Village Act rather than the Aged Care Act. Residents pay around $320 a day for care, meals are prepared onsite and Registered Nurses are available 24/7.

But the really interesting part is this: Hyegrove is not competing against aged care. It is competing against the residential apartment market – and the market is buying into it.

At completion, 97 of the project’s 111 apartments had sold at an average of $2.8 million – around 28% above comparable local apartments.

That is the part that the sector should stop and think about.

Because older Australians are clearly willing to pay for care when it comes wrapped inside a lifestyle product they actually want to live in.

$1 million a bed?

At the same time, traditional aged care construction is becoming brutally expensive.

As we report in this edition, the latest WA Supply & Demand Analysis shows average build costs have climbed to around $645,000 per bed. Some operators say projects are now pushing towards $1 million a bed.

Even with RADs of $750,000, plenty of providers still say the numbers barely work.

So it is not hard to see why operators are starting to look sideways at models like Hyegrove.

We are now hearing traditional aged care operators openly asking what their next development should even look like.

Do they keep building under the Aged Care Act? Or do they build 9C retirement villages and wrap care around them instead?

The groups already moving

This is not completely new – care suites are already common in New Zealand.

LDK Seniors’ Living, Odyssey Lifestyle Care Communities and Grandton have all pioneered their own models.

Now Hyegrove – effectively the Abolakian family’s first project under this model – already has another three developments underway.

That is at least half a billion dollars of new seniors living and care projects moving ahead because customers want it and the numbers stack up.

Traditional RACs are not disappearing anytime soon.

But the projects building momentum right now increasingly seem to be the ones prepared to rethink what aged care actually looks like.