Village operators chasing sales and aged care operators chasing RADs need to take note: the residential market has dramatically changed and will impact your business models and cash flow.
This week Stuart Penklis, residential head at the leading residential apartment development Mirvac, told The Australian 5,000 units will be built this year compared with a peak of around 40,000 a year in 2017 and 2018.
“The days of selling a project over a weekend and then delivering in three years’ time have gone and we will move back to a normalised market where you will sell some product prior to construction, some during construction and a proportion post completion”.
This means that the heat – which means confidence – has evaporated from the buyers’ market.
This comment directly translates into slower, cautious buyers/sales. This caution will impact buyers of the family home which will allow village customers to settle on a village home purchase. Settlements will slow or fall over.
What’s more, Penklis sees a market trend that will indirectly challenge retirement villages.
He says the demand is from owner occupiers who were upgrading, downsizing and moving to areas with high amenities.
“COVID-19 has redefined the way in which people think about community and the whole shop local, hyper local approach, with people really gravitating to the local cafe and the local grocer. The whole concept of the high street, the town centre, is becoming more and more important”.
Is the leading edge of the Baby Boomer seeking community and prepared to pay for it? Does this challenge the retirement village model?
Our research says yes.