Is the retirement village sector half pregnant?
The retirement village sector is shrinking despite an expanding demand. Where is the plan and strategy?
Australia needs to build 7,000-plus new village homes a year to maintain the historic 12% penetration rate of over 75-year-olds but for the past 10 years we have been building between 1,000 and 2,500 new village homes a year.
Against this, we can strongly argue Australians deserve and require 25,000 new village homes a year, for these reasons:
- Villages deliver better quality of support and quality of life compared to ageing alone at home (repeatedly confirmed by research)
- Villages are the hope for delivering efficient quality care for older Australians when they can’t get an aged care bed – Support at Home and Hospital in the Home are far superior in villages compared to these services being delivered in a residential home
- Building a two-bedroom village home releases a four-bedroom (fit for young families) home when we have a housing crisis
The benefits are obvious, but the playing field for new development is not even, broken up with incentives for some players, like Not For Profits, and hurdles for everyone.
Registered charities and benevolent institutions can be eligible for land tax exemptions, transfer duty concessions and specific GST treatments, subject to use and eligibility tests. They may also access concessional finance and government grant programs unavailable to private operators.
Meanwhile, For Profit developers, who are the historic major builders of villages, face full freight on stamp duty, land tax exposure and higher cost capital.
In a capital-intensive, long-dated asset class, that matters.
Aveo CEO Tony Randello outlined a fresh landscape to turbocharge all village operators in the last edition of SATURDAY.
He wants to see:
- Dedicated seniors housing planning pathways
- Stamp duty concessions on development sites
- Removal of foreign buyer surcharges for retirement villages
- Reform of pension asset tests that penalise downsizing
- National supply targets for seniors housing
This is a plan, and the positive outcomes will be delivered fast, because the capital is there to build.
Tony knows what he is talking about. Not only has he got 20 years’ leadership experience in the sector, but he also transformed Aveo from a $1 billion company to a $3.8 billion company in just five years – its sale last year created the largest real estate transaction in the history of this country. Just think about that. Bigger than office towers, bigger than shopping centres, bigger than land lease.
But as of now, all village operators are battling in the development space on their own. The sector is half pregnant in its ambitions.
How do we get ‘full pregnant’?
