Oxford Economics: Retirement villages a “compelling” investment
- Investor confidence: Oxford Economics backs retirement living’s long-term outlook
- Capital flows: More than $5 billion in recent deals signals growing institutional interest
- Strong returns: Sector yields outpace other living asset classes
- Supply shifts: Future development will increasingly favour urban vertical villages
Australia’s retirement village sector is emerging as an increasingly attractive investment opportunity, according to Oxford Economics Australia.
The firm, which provides data-driven economic insights, has released a research briefing titled “Retirement villages moving into focus for living sector investors in Australia”.
The drivers, according to Oxford Economics Australia, are strong demographic demand, an evolving supply pipeline, and an income model that is becoming more accepted by a growing pool of institutional and offshore capital.
“The pipeline is set to strengthen materially over the rest of the decade, highly weighted towards vertical formats in urban locations,” the briefing states. “Rapid 65+ population growth sustains the target market, with a growing cohort of higher wealth households sustaining a wave of high quality development.”
Their research estimates the investment yield in the retirement living sector is around 7.3% in FY26, which is above other living sector alternatives, reflecting the complexity of the deferred income model.
Brookfield’s $3.85 billion sale of retirement village operator Aveo and Invesco Real Estate’s $845 million purchase of RetireAustralia account for most of Oxford Economics Australia's “recent landmark transactions totalling over $5 billion”, and “signal growing conviction in the sector’s demographic certainty and scope for further yield compression.”
The report also states that 2,600 independent living units (ILUs) are being completed in FY26, taking the stock to around 173,000.
The retirement village sector is becoming increasingly attractive to investors due to:
- Monthly service fees growing broadly in line with inflation;
- Entry prices are estimated to grow more robustly;
- Total returns are forecast to remain solid, slightly above that of the
comparable land lease sector.
