As ageing populations and retiree wealth drive senior living demand, institutional investment and federal government funding are two positive signs that Australia is moving towards age-friendly communities.
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Three key takeaways:
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In response to the final report of the Royal Commission into Aged Care Quality and Safety, the Australian Government has allocated $17.7 billion to aged care reform, which includes $6.5 billion to fund 80,000 additional home care packages.
“This will see the federal government funding 275,598 home care packages by June 2023, which is expected to eliminate the current home care waiting list,” says the Retirement Living Council’s executive director Ben Myers.
Plans to lower the minimum age for the downsizer contribution from 65 to 60 and $21.2 million over four years to bolster the Pension Loan Scheme “are signs that the government recognises the importance of encouraging older Australians to unlock the equity they have in family homes,” Myers explains.
Funding has also been committed to develop a new Aged Care Act by mid-2023. “We will be watching this development closely to ensure the Act acknowledges the increasing interaction between retirement living and aged care,” Myers says.
“While governments are increasingly focused on supporting the health needs of older Australians, healthy ageing is about more than just health and aged care. Affordable, well-located, purpose-built, age-friendly communities are central to healthy ageing,” Myers adds.
Investors are eyeing off the retirement living sector as rapidly ageing populations and retirees’ growing wealth drives strong demand for senior housing, says Grant Gilbett, CBRE’s national head of retirement and health care.
“Recent years have seen more investors and funds entering the space in search of higher yields,” Gilbett says, pointing to Brookfield’s $1.3 billion purchase of Aveo Group, Australia largest retirement village operator, in 2019 as a “transaction of note”.
“Other major deals include Dutch pension fund APG’s acquisition of a percentage of Lendlease’s retirement living business in 2017,” Gilbett says.
Nevertheless, the retirement living market remains “highly fractured”, with operators ranging from traditional developers with large portfolios to smaller not-for-profits, Gilbett says.
“New entrants often struggle to access the market due to a lack of opportunities to acquire assets at scale and the time and upfront capital required to build out facilities.”
But the sector is rapidly professionalising. “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. This has strengthened sentiment towards the sector,” Gilbett adds.
“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.”
The Retirement Living Council led the support of operators through COVID-19, assisting the sector to respond effectively. “We are very encouraged that a growing number of operators have continued to sign up to the Retirement Living Code of Conduct, with an estimated 54 per cent of residents now living in a Code Compliant village,” Myers adds.
“Our members are committed to providing purpose-built, age-friendly communities for Australians – and have done so without government support, and despite significant regulatory and planning hurdles that discourage investment and limit supply.
“Retirement Living Council members are continuing to focus on high standards and meeting the ever-evolving needs of customers, and are well placed to respond to the opportunities arising from recent government commitments. Yet more can be done for Australia to support age-friendly communities,” Myers concludes.
Save the date! The National Retirement Living Summit is back after a year’s hiatus, as the industry heads to the Gold Coast in November. Early bird registration opens next week.