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News Release

Growth in ageing population spurs retirement village development boom

JLL release Retirement Village Whitepaper for 2018


 

 

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The 75+ age bracket continues to grow in size as New Zealand's population ages.

JLL has released their Retirement Village Whitepaper, which provides the industry with detailed data and commentary on the retirement village and aged care sector in New Zealand.

Village sizes vary across the country, with Auckland retirement villages being the largest, averaging 117 units, compared to the rest of New Zealand where the average size is only 78 units.

The 'big six' retirement village operators including Ryman, Metlifecare, Summerset, Bupa, Oceania and Arvida hold approximately 57 percent market share, with 162 villages, of which 36 percent are located in the 'golden triangle' of Auckland, Hamilton and Tauranga.

JLL Research Analyst Angela Ye says, "The number of retirement villages is growing at a steady pace, as the baby boomer generation reach retirement age. Another factor which is particularly prevalent in Auckland, is the price of housing. Situations arise where elderly people find themselves owning a family home which has increased substantially in value over the past five to six years. Higher house values tend make it easier for the elderly to downsize to a retirement village unit, which can then provide security, healthcare options, companionship and in many cases, additional capital from their home to live on."

As of November 2017, there were 81 proposed villages in the development pipeline, which would see 12,163 units constructed. However, most of these villages are still in the planning stage.

In terms of the geographic dispersion of our elders, 74 percent of those in the 75+ age bracket live in the North Island and 26 percent in the South Island. Statistics demonstrate that those in the 75+ age bracket are more likely to live in the larger cities or desirable coastal locations.

The most popular regions for those over the age of 75 are Auckland, Christchurch, Wellington, Waikato and Bay of Plenty. These locations are already major urban hubs but also have the lifestyle that many retirees are seeking, particularly in places like the Bay of Plenty. Over the next 25 years it is projected that in this age bracket alone, the population in Auckland will increase by 195 percent from 81,530 in 2017 to 240,120 in 2043. The predicted increase for New Zealand is also significant, moving from 306,730 in 2017 to 783,600 in 2043, an increase of 155 percent.

"Projections such as this are what drives planning for many retirement village operators. Based on the Statistics New Zealand population forecasts and current penetration rates, an additional 1,834 retirement village units will be required in New Zealand annually to meet the number necessary by 2043. 752 of these units will be required in Auckland per year to keep up with the growing demand.

"We must also consider the fact that retirement village living isn't taken up by everyone over 75. As at November 2017, on average 13 percent of New Zealand residents over the age of 75 selected the retirement village accommodation option, this is referred to as the penetration rate," explains Ye. "We expect penetration rates will increase over time as a higher proportion of the 75+ age bracket take up retirement village living. This increase we believe, will be due to a number of factors such as less social stigma about living in a retirement village, a better understanding of occupation right agreements, an improvement in the of facilities and amenities provided and the fact that less families have the ability to house grandparents as they get older."

The November 2017 development pipeline shows 64 percent of development is taking place in New Zealand's golden triangle. However, a disparity has been identified, with more development taking place in the Auckland and Waikato regions.

"The disparity could be put down to where the retirement village operators are investing. If we look at the six largest operators, they have focused on the golden triangle and land banking in this area over a number of years," says Ye.

Along with the growth of retirement villages, aged care facilities, which cover rest home, hospital and dementia care beds in New Zealand have also experienced growth. As of November 2017, there were 676 aged care facilities with records showing a rise in total bed count of 3 percent, from 38,240 in November 2016 to 39,425 in November 2017.

The number of people in aged care facilities currently sits at approximately 85,220 with 40 percent of those in the 85+ age bracket residing in Auckland and Canterbury.

At present, the number of beds available to the aged care sector is for the most part, keeping pace with the population in the 85+ age bracket across the country. However, a majority of the new aged care beds are situated at retirement villages.

"Retirement village operators have recognised the benefits of being able to provide a continuation of care, allowing residents to easily transition to an aged care facility without moving offsite," says Ye.

Download a copy of the Retirement Village Whitepaper here