The good news - the market, the sales drivers and finance

• A tired argument, but the population continues to age. Given health is the major driver of village sales consider these stats for Australian market potential:
Age 76-80 533,000 people
Age 81-85 416,000 people
Age 86+ 316,000 people
Total 1,265,000 people
• If 40% are single/widowed, then 1,265,000 represent 886,000 households. With 130,000 retirement village ILUs and 200,000 aged care residents, this leaves the potential village market of 556,000 households
• The industry supply of ILUs just needs to capture 2.5% of this potential market, calculated as follows:
• with an average of 9%pa turnover of existing ILU [11,700 ILUs a year] plus current construction of very approximately 2,000 ILUs a year, the total potential supply is 13,700 ILUs
• if the potential market is 556,000 homes owned by people 76 or older, the new need to capture 2.5% of this potential market
• With a product satisfaction rate of 97% by residents, this should be easily achievable
• Given our potential market is ‘needs’ driven – i.e. health which requires an accommodation change – and our product is affordable, then demand should exceed supply and sales should be rapid
• The news is positive with finance as well. Homes are becoming cheaper to buy because prices are stagnant to decreasing while inflation continues at 2.5%. And mortgage finance is becoming cheaper. Households have been increasing their savings and wages have been increasing for those employed
• Finally, with superannuation funds averaging just 0.61% return in 2012 the experts are predicting super funds and other investors will start moving into the village sector in 2013/2014, because villages are delivering 15%pa returns backed by the ageing population demand and property