The fallout from the aged care stock crash could have big implications for the retirement village sector unless carefully managed.
It has taken eight years to get professional investors to look at the village sector following the burning incurred in the GFC. They have slowly come back thanks largely to the hard work by Aveo educating them that villages were the last undervalued property asset class available and with villages now ramping up their care services offering, they are another way to invest in, well, aged care.
So by extension, will these professional investors now label villages as risky as aged care?
The answer should be no. They should be smart enough to identify that residential aged care is largely government funded and regulated. Villages are the reverse: 100% consumer funded, backed by property.
But the professional investors have to get their money from somewhere and they may not want to have to work hard explaining the differences to their small investors when easier to explain investments are available.
Again, strong peak bodies are required to constantly shore up confidence for the business model.
(Can we also remind readers of our article last week on the commentary by Nick Loudon on the Seasons and Freedom model of aged care in villages? He is proving that private aged care not only works but can be responsibly profitable).