Research by JLL shows 12 new retirement villages were built in New Zealand last year, and an average 13.6/year would be needed to meet demand over the next 30 years.
A simple demand model, based on Statistics NZ’s February 2015 median population projections, showed a penetration rate of 12% and an average new village size of 150 units, indicating a demand for 13.6 villages/year, economist & research consultant Angela Webster and health & aged care valuer Matt Straka said in JLL’s third annual paper on the sector.
They identified 363 villages operating at the end of 2014, containing 25,272 units. That was up 1124 units (4.7% in a year). Total resident numbers rose by 5567 (20.4%) to 32,854, and the occupancy rate rose from 1.13 to 1.30 residents/unit. The 10,236 retirement village occupants in Auckland made up 31.2% of the total.
An important factor for development of villages is the penetration rate in the age groups 65+ & 75+ – the number of people in those age groups living in a retirement village.
The Bay of Plenty remains the leader – a penetration rate of 5.6% for the younger group and 17.5% for the older. Auckland’s penetration rates at the end of last were 5.8% for the younger group, 14.1% for the older. Nationally, the 2 rates were 5.1% & 12%.
The research showed a 1.5% increase nationally last year in the older age group living in villages, driving up demand forecasts & development potential.
At an overall 12% rate, the researchers estimated from Statistics NZ’s population figures that demand in the older age group would rise by 120% over 20 years, from 38,000 residents in 2018 to 83,750 in 2038. But a 14% penetration rate would add 7600 potential customers in the 75+ group.
The researchers said there was a development pipeline of 11,936 units at the end of last year, 43% to be added to existing village, 57% in new developments, and the equivalent of 80 villages of 150 occupants each.
The Auckland pipeline rose by 1% to 38% of the total – 4560 units.
The sector is dominated by listed companies, with another one, Arvida Group Ltd, joining the NZX in November. It has 800 retirement village units, mostly around Christchurch, and 17 retirement villages & aged-care based facilities.
Ryman Healthcare Ltd was the biggest operator with 4305 units in 27 villages & 17% market share, followed by Metlifecare Ltd (3928 units, 24 villages, 16% market share) and Summerset Group Holdings Ltd (1926 units, 19 villages, 8% market share).
Attribution: JLL paper.