Listed building products and construction company Fletcher Building has launched its first retirement village development titled Vivid Living. Bucking the established DMF market of 25 to 30%, it is offering 15% with 50% capital gain share, fixed service fees and concierge services on a fee-for-service basis.
The village will be part of a larger Fletcher Living Community at Red Beach in Auckland.
Instead of privately complaining about perhaps damaging the higher 25 to 30% DMF, an NZ Retirement Village Association spokesperson told us they welcome this demonstration of diversity of choice in the New Zealand retirement village market.
Interestingly, the largest New Zealand village operator, Ryman, charges a 20% DMF as they do in Australia.
Of course there are operators in Australia that provide negotiable DMF’s but they do not actively promote the option.
The operative word out of the Fletcher offering is that the 15% DMF delivers a ‘retirement village light’ product, meaning the resident doesn’t receive the full services of a normal retirement village.
We believe that having a range of DMF structures openly presented is beneficial because it requires both the operator and the customer to focus on understanding what they are receiving for the variable DMF. Understanding and choice can only be good for the sector.
But who will come out with a flat 15% DMF here in Australia? Maybe, like New Zealand, it will require a new entrant to break the traditional model.
Fletcher is also promoting a four month buyback, which was a recommendation in their government’s CFFC White Paper. Other operators are not so keen on this move.
