With over 65s likely to represent 22 per cent of Western Australia’s population by the year 2031, retirement village development is a rapidly expanding industry, as Tracey Cook reports.
BORN in 1946, our first baby boomers are now aged 57. Taking into account that the median age of retirement village residents is 70, developers of retirement villages are expecting a rapid growth in the demand for retirement accommodation in the near future.
Currently only 3 per cent of Australia’s over-55 population lives in retirement villages. In the US the figure is about 9 per cent.
John Pedler believes that Australian figure is poised to grow as Australians age and more make the choice to downsize from their homes into lifestyle-focused retirement villages.
Mr Pedler, the managing director of Kindale Consulting Group, said retirement was not a pre-requisite for many who chose to live in the style of retirement accommodation being developed today.
And with a well-identified market that is certain to grow, and strong potential to make good returns from ongoing fees, it is no wonder that developers are pouring big money into retirement, or lifestyle, villages.
To date, strict legislation and difficulty securing finance has restricted the number of players in the industry.
In Western Australia the heavyweights in the retirement village industry are Mirvac Fini’s Fini Villages and the St Ives Group. A newcomer to the WA market is national retirement village group Prime Life, which recently acquired The Beaumont in Swanbourne.
Secondary players are church groups such as Anglicare and Baptistcare and other not-for-profit organisations such as RAAF Association, plus a number of smaller developers including Homestay Village Group, Craigcare, Meath Care and Cameo Estates Lifestyle Villages.
Mr Pedler said financing retirement village developments was not easy and selling accommodation off the plan was not possible.
“Lots of banks tend not to understand how retirement villages work and don’t want to finance them,” he said.
“Very few take a stand-alone view of the retirement village; more tend to be looking for the underlying strength of the developer.”
Covered by strict legislation, all retirement village schemes have to be approved by the Department of Employment and Consumer Protection.
RAAF Association chief executive Bob Bunney said the main concern was housing adapt-ability, ensuring dwellings could be reformatted to accommodate people with decreased mobility or disability.
He said after taking into account those requirements, developing a retirement village was basically the same as constructing domestic housing.
The key ingredients to a successful retirement village are its location – near public transport facilities and shopping centres – pricing in line with the median house price, and the provision of appropriate facilities, including medical services and recreation activities.
Fini Villages manager of community planning and development, Mary Fraser, said the Fini villages were geared towards the top 25 per cent of the market and had a strong focus on lifestyle.
Wired for Internet and cable TV, and with generous floor space and designed for functionality, the Fini product was marketed as an option for active over 55s wanting to downsize, Ms Fraser said.
“We have a policy of no gates so that the village community is integrated into the broader community,” she said.
Ms Fraser said either strata title or purple title covered dwellings in Fini’s villages.
The lease for life appears to be becoming a standard in the industry.
A long-term (99-year/199-year) lease of the unit/apartment/villa can be obtained with an initial payment, which is refundable from the proceeds of the resale, less any deferred fees.
Many developers recoup development cost plus profit on the initial lease and harvest ongoing profit through re-leasing and deferred management fees.
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