19 July 2022
Media Release: JLL NZ Retirement Villages & Aged Care Report highlights decade of remarkable growth
JLL NZ’s 10th
July, 2022 – Despite a decade of significant growth, New Zealand’s thriving retirement sector is still struggling to keep pace with demand from an ageing population. This is among the key take-outs from JLL NZ’s 10th annual Retirement Villages and Aged Care Report, released today.
In the 10 years that JLL NZ has been tracking the sector’s performance through its New Zealand Retirement Village and Aged Care Database, the number of retirement units in New Zealand has increased by 71 per cent, with 37,489 units now spread across 425 villages nationwide, accommodating an estimated 48,736 residents. But with drivers for demand set to become even stronger, JLL NZ’s Head of Research, Gavin Read, says the pressure is on for providers to deliver their development pipeline – and then some.
“Our conservative estimate of future demand sees the need for an additional 24,507 units by 2033. The current pipeline for development, which includes everything from villages under construction to those in the early planning stages, forecasts the delivery of 20,746 units over this timeframe, which leaves a shortfall of 3,795 – or almost 5000 wannabe residents.”
Read says the sector’s ability to make good on this shortfall will depend on it overcoming some notable headwinds to up the pace of delivery.
“Over the last five years, the industry has delivered on average 1,864 new units a year. Not only does the pace of construction need to increase, operators will have to overcome some significant constraints in the form of site availability, rising construction costs, a shortage of labour and materials and gaining consent approvals.”
“Furthermore, it’s worth remembering that this challenge is just to make up a shortfall based on current, conservative demand estimates. We reasonably expect the retirement village market to mature over the coming years to become more appealing to a broader mix of ethnicities; an evolution we believe could increase demand by a further 3,200 units.”
Read says that with demand growing for intensified residential development in our main cities, retirement village operators may increasingly seek to take advantage of improved transport infrastructure to build new villages in surrounding regions.
“We’re already seeing operators build or landbank in areas served by the Waikato Expressway and Transmission Gully. As drive times decrease, or these areas become better served by public transport, they may become more desirable for elderly residents who want to enjoy life outside of the city but remain close enough to family.”
The JLL NZ report also covers New Zealand’s aged care sector, which Read says is facing its own considerable headwinds.
“The health care worker shortage we’re currently experiencing has been well-documented, with fierce competition between public and private facilities for staff. But beyond this worker shortage, we’re also seeing a growing shortfall in dementia-care facilities which needs to be addressed.”
Key activity in the sector in 2021:
- Fletcher Building launched its Vivid Living brand, to be managed under a different occupational right agreement model to traditional villages and offering a capital gains share upon sale.
- Centuria purchased 38 aged care properties for $291M, operated by Heritage Lifecare
- Arvida purchased Arena Living for $345M (six villages accommodating 1400 residents)
- 53 new villages were added to development pipeline
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About JLL
JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion, operations in over 80 countries and a global workforce of more than 91,000 as of 31 December 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.