- Australia's population continues to age, increasing demand for retirement villages
- Formats of retirement villages fluctuates nationally
- Multi-billion dollar transactions have occurred in the sector in recent years
Seniors housing in developed markets across the Asia Pacific region is set for even stronger demand, thanks to rapidly ageing populations and the growing wealth of retirees, according to a report released by CBRE.
More specifically, the annual Asia Pacific Investor Intentions Survey suggests investors are actively seeking higher yields than those found within core property sectors.
While seniors housing scale, format and development vary considerably across the region, Australia is home to the region’s largest senior housing market, the report says.
The proportion of Australians’ 65 and over has increased from 12.3% in 1999 to 15.9% in 2019. Though not as high as Japan – approximately a quarter of Tokyo’s population is 65 or over – this proportion is higher than the majority of other Asia Pacific nations.
Many retirees are seeking to downsize from large, maintenance-intensive homes to smaller and simpler accommodation providing services and amenities, often luxurious. In addition, health issues are a common catalyst for downsizing.
All of these factors have driven demand for retirement living, says CBRE’s Grant Gilbett, the National Head of Retirement and Health Care, Valuation and Advisory Services.
“This has spurred growth in demand for retirement living, which is broadly defined as a structured community for the elderly that provides safe homes, a reduced cost of living and neighbourly companionship,” said Mr Gilbett.
“The retirement living market is highly fractured, with operators ranging from traditional developers with large portfolios such as Stockland and Lendlease and other for-profit owner-operators, as well as smaller not for profits.”
Grant Gilbett, CBRE
In recent times, more investors and funds have entered the retirement village space, such as Brookfield who purchased Aveo Group – Australia’s largest village operator – in 2019 for $1.3 billion. Internationally, APG – a Dutch pension investment company – acquired Lendlease’s retirement living business back in 2017.
Formats seen in retirement villages varies across the nation, with Queensland properties focusing on water sports and outdoor activities – hence the relative popularity of the Gold Coast for retirees – while for cooler southern states such as Victoria, retirees seek more indoor-orientated environments.
“Following the onset of the COVID-19 pandemic, many operators were commended for their quick and effective response in locking down villages to ensuring residents’ safety, which has strengthened sentiment towards the sector,” said Mr Gilbett.
“Other key trends at present include growing competition from manufactured housing estates, which involves operators renting sites for relocatable homes to residents.”
“Ageing populations and a heightened appetite to invest in alternative sectors and operating assets will continue to provide opportunities for investors in Asia Pacific to partner with experienced operators to enter or expand into this growing and undersupplied sector.”