The Stockland top chart above demonstrates the hit delivered to the perception of retirement villages – it is very slowly recovering. And with it ‘trust’. 40% don’t trust villages, or more correctly, village operators.
The core dynamics of retirement village sales was changed. Prior to the TV program the majority of village customer enquiries and site visits were by the residents themselves. Now the children accompany their parents and want detailed explanations of the contracts.
Comparison shopping has increased dramatically. See the Stockland graph above for cumulative monthly leads – significantly more enquiry in FY18 but actual sales for Stockland’s established village homes is below FY17.
Brand and reputation of the operator is now significantly more important (see consumer research story below).
Reported sales July to December by Aveo, Stockland and Lendlease varied between 14 and 30% down. Our back of envelope calculation says this meant these three operators lost $40 million in Deferred Management Fee income alone.
Market feedback indicates that approximately 75% of operators suffered, and are still suffering, significantly slower sales. $200 million in stalled DMF income as a result of a program is an easy conclusion to reach. This is significant for a predominantly ‘small business’ sector.
A number of transactions, acquisitions, new entrants and new funding partnerships either failed or were renegotiated down in value.
A significant sales lesson to be learnt is that the other 25% of operators – aggressive, proactive marketers – quickly recovered – demonstrating that the consumer still wants the retirement village product but is seeking reassurance and confidence building.
Progressive operators like Oak Tree have hardly skipped a beat in sales and expansion in metro and regional areas, with 11 villages in development and new sales on the East Coast.
The Village Glen on the Mornington Peninsula has maximum occupancy despite its size of over 620 homes dating back up to 40 years in age.
Paul Singer’s Mt Gilead Estate on the outskirts of Sydney built and sold 123 homes in the past 12 months.
Anglicare, Sydney’s largest village operator, report that their waiting list is just as strong and longer.
Even Aveo, the central focus of the Fairfax/Four Corners program, has been able to claw back enquiry and deliver equal or better sales than the other majors across the financial year – but they invested $10+ million in additional marketing.
The WA market is a separate subject. Already down because of the collapse of housing prices, the attack on confidence in villages simply made a difficult market significantly worse. They are still recovering.
Positive sales requires consumer confidence in the retirement village product offering.
It is a race between the regulators and the sector who is getting to deliver first. See the following story.