NZ will need 26,000 retirement village units in next decade: JLL report

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New Zealand’s enviable 14.3% penetration rate looks set to stay in place over the next 10 years according to Jones Lang LaSalle’s ninth whitepaper based its New Zealand Retirement Village (NZRVD) and Aged Care (NZACD) databases.

The 15-page paper has found around 11,000 units are being built across the country but another 15,000 were needed to meet forecast demand by 2033.

That is around 1,300 a year required to be put on the ground.

This would maintain the country’s 14% penetration rate based on the 575,000 people expected to be aged over 75 and the estimated 81,000 village residents in 2033.

In total, New Zealand’s retirement village numbers have grown 23% from 343 to 422 since 2012, while unit numbers have increased from 21,815 to over 36,000 – a 67% jump.

The six largest village operators – Ryman, Metlifecare, Summerset, Bupa, Oceania, and Arvida – hold an estimated 43% of villages and 60% of national unit numbers.

Auckland has the largest share of retirement village development with 6,779 units followed by Canterbury, 3,766 units and Waikato, 2,201 units – about 60% of the country’s retirement village unit development pipeline.

But all three regions still require more units to cater to an over-75 population that is tipped to grow to 120,000 people between 2020 and 2033, the analysis stated.

Is this 26,000-unit target feasible however?

JLL notes that the 211 villages currently in the development pipeline – 59% existing villages with expansion or redevelopment plans, and 41% new villages – will deliver approximately 21,400 Village units.

“Deliverability of this pipeline will come down to a number of factors, including property market conditions, availability of suitable sites, sourcing of material and labour, and timing of resource consent approvals,” they write.

Without additional development, it appears demand will continue to outstrip supply.

John Collyns (pictured right), Executive Director at New Zealand’s Retirement Villages Association, says the country built around 2,000 units last year despite COVID thanks to the “very strong demand for retirement village accommodation”.

“The JLL report shows that while development is concentrated in the Auckland – Waikato – Bay of Plenty triangle, there’s still plenty happening in the rest of NZ too. For example, there are six villages building 530 units in Hawkes Bay and a similar number in Taranaki,” he said.

The 14.3% penetration rate is also an increase on last year’s figure of 13.9%, he noted.

“That means that not only is the number of 75-year-olds growing, our market share is growing at an even faster rate. Added to a NPS of +43 (UMR Insight resident research, Jan 2021) you can see why the target build rate is not only achievable, but also very necessary!” he stated.

“However, like everyone in the building and construction sector, we are subject to supply and labour shortages which may act as a hand brake on development.”