Most village operators take comfort from the fact that retirement villages are by legal definition limited to deliver ‘independent living’.
This means you can limit the staff numbers to oversee both the operator’s asset and the general welfare of the residents. Provision of care is limited to support in locating home care.
Risk and expense is limited.
There are however a number of factors that are increasingly challenging this comfortable market positioning, and it is led by the fact that 65% of Australian villages are 25 years or older.
These physical villages are increasingly being assessed as not matching the expectations of the new customer. Smaller homes, old design, perceived to be expensive and no clear value proposition.
Witness the increasing time to sell and settle a village home and little price increase compared to the surrounding residential market.
In fact, village penetration is declining, now down from 7.5% to 6.6% of all people 75+ in 10 years.
Now compare this with New Zealand. In 2008, their penetration was 8%. Now it is 13.5%.
Three of the Top 5 residential developers in NZ are retirement village operators. They will build 1,500 new homes this year with one-sixth of our population; we will build 3,500.
New Zealand has three advantages over Australia:
- They have one Government that is onside with the role villages deliver
- They have an appealing consumer proposition – “We will keep you in your village home as long as we can and you don’t have to ever move out, as we provide assisted living apartments and high care on site.”
- The community understands and supports the village concept
The Royal Commission presents the NZ opportunity
The Commissioners have stated publicly that they will recommend a major reengineering of ‘ageing’, not concentrating on the last 2-5 years of life, but the last 10 to 15 years of life.
They want a new Government system that supports people to stay healthier and safe longer.
And they want all Governments to pull together to achieve it.
This offers the opportunity to work with Government to design a new product that customers want.
It also offers to have the Government at Federal and State and local levels support it.
And they want it to happen fast.
And they want it to be a transition from independent living through to care, supported by housing.
This is the opportunity for village operators to match the Government / operator / consumer relationship that exists in New Zealand.
The final report by the Commissioners is being handed to the Government on 26 February, and demanding a fast timetable to implement.
Village owners and operators need to understand the content of this report and the potential for the village sector.
Report unpacked at the LEADERS SUMMIT
40 leading CEOs will be unpacking the Royal Commission report and delivering their strategic thinking to take advantage of its recommendations at our LEADERS SUMMIT, 18 and 19 March, now in every capital city.
Many of the speakers have already commenced reengineering their businesses to deliver to tomorrow’s customer and the Government’s needs to secure a brighter future for ageing Australians – and the village sector.
For village operators, here is the challenge: if you have not reengineered your village asset within five years, you may experience the market bypassing your product.
You can learn more about the LEADERS SUMMIT here.