Productivity disaster for retirement village development
The retirement living sector should be going gangbusters. The population is ageing rapidly and the need for housing is acute. But new village construction is broken, along with the rest of the building industry.
It is now 100 days since Jim Chalmers’ three-day economic roundtable at Parliament House.
The Treasurer declared: “The best way to sustain and grow living standards over time is to make our economy more productive, to make it more resilient.” He is failing.
The retirement living sector should be going gangbusters. The population is ageing rapidly and the need for housing is acute. But new village construction is broken, along with the rest of the building industry.
Chalmers’ words are a pipe-dream. Dexus CEO (responsible for $50 billion in property assets) Ross Du Vernet (pictured below) said major Queensland construction sites are being obstructed by union-backed rostering that means they are productive for only half the week.
“It’s not unusual in Queensland, on these big sites, to have two and a half days a week of productivity,” he said. “You’re paying premium wages for part-time productivity.”
He warned major developments in Queensland would get worse before they get better. With the Olympic Games in 2032, the effect is likely to be much worse.
Last night, we had dinner in Brisbane with Matt Guillaumier, Operations Manager for Laidre, who are the leaders in retirement village refurbs.
He tells us in Queensland you can’t get a painter because they are all at home, on hold for the Olympics, being paid to not work. He flies painters in from NSW.
Is this productivity, Mr Chalmers?
Quantity surveyor WT Australia’s latest Australian Construction Market Conditions Report, released on 18 November, is also grim news for village developers. It states the next cycle of rising costs is already taking form.
Building cost will escalate by 5.2% in 2026, the lowest in six years, before rising to 6.4% by 2028. Brisbane is anticipated to lead with building costs projected to rise by as much as 10% annually by 2028. This is all cumulative growth in costs.
Will retirement living operators simply increase new apartment prices, creating “the haves”, ignoring the “have nots”?
In June, The Weekly SOURCE reported Retirement Living Council members will build 7,200 new village units in the next three years. In addition, the inaugural Stewart Brown Retirement Living Performance Report Survey had 2,782 new units being delivered (with some cross-over). But will they be built?
Retirement Living Council President and Aveo CEO Tony Randello told the Property Council’s Retirement Living Forum in Sydney earlier this month that to build retirement living in Sydney from scratch would put an apartment price at $1 million and there is a market – every Baby Boomer household is worth about $2.3 million… but they are “the haves”.
Are we going to accept the failure of the Government on productivity, and a country with “haves” and “have nots”?
Is it OK for construction labour to be only 50% productive?
Will young families accept eye-wateringly expensive housing and Mum and Dad living with them because they are in the have nots?
The answer should be “No, Mr Chalmers. Do better”.
