The ANZ’s annual Retirement Village Association (RVA) survey has found that village operators are more optimistic about the industry’s future than ever. INsite asks ANZ’s Richard Hinchliffe and RVA’s John Collyns if this optimism is justified, given the slowing down of the housing market.
The survey, carried out prior to the RVA conference in Sydney, showed not much had changed since last year’s survey, which found that operators were optimistic about the economy, their company’s growth, and the strength of the ORA model.
ANZ’s Head of Professionals and Healthcare Banking Richard Hinchliffe says it is interesting to see such a high level of optimism, especially given this year’s survey was carried out against a backdrop of falling house sales.
“Interestingly, this year, when asked about the level of optimism for the sector over the next 3 years, 88 per cent of companies are optimistic or very optimistic. In 2016 this was 79 per cent. It will be interesting to watch how this plays out,” he says.
RVA Executive Director John Collyns thinks operators’ high level of optimism is warranted, given the increasing demand for retirement villages.
“As long as operators are open to varying their construction rates, looking at the way they market it, and looking at the incentives they’re offering residents – and as long as the demand is there, their optimism is justified.”
Collyns says the public understanding of how retirement villages operate, and the ORA model in particular, has improved significantly over the years. This is in part thanks to the work of the Commission for Financial Capability, he says.
Hinchliffe says the sector’s record growth is accompanied by risk.
“The survey provides good insights into how companies will help mitigate the risk of supply getting ahead of demand.”
For now, village operators’ main priority is building more units. Unsurprisingly, the survey found their main concerns were around escalating construction costs, higher wage demands and higher levels of compliance.
Following an emphasis on building more units, operators have also indicated a focus on providing more care services and engaging with the community more. Eighty per cent of respondents said they were already actively engaged with their local community.
This increasing focus on care provision and better community engagement indicates a shift in direction for operators. Survey respondents indicated their focus over the course of the next decade will likely turn to developing a new proposition to meet changing consumer demands.
“I think this is showing some subtle sector changes to how village companies will approach the market in the future,” says Hinchliffe. “The sector is changing to meet the expected growth in care demand and as a result, companies will generate new income streams from care fees but also from care suites sold under an occupational rights agreement. The second change is the engagement with communities because future retirees will demand something different to earlier retirees.”
In terms of new directions for the sector, Collyns was pleased to see a focus on social housing included for the first time in this year’s survey.
“We know there is an issue. At least 20 per cent of people aged 65 and over don’t own property, and this is set to increase. We have a strong interest in making sure we don’t lose sight of these people,” he says.
Hinchliffe also drew attention to the survey finding that showed that village operators in smaller centres are recognising that Aucklanders have high net worth, but are keen to maximise their spending power and consider moving outside of Auckland.
“Opportunities exist to tap this market by providing quality retirement outside of Auckland,” he says.
The ANZ RVA Survey is now in its seventh year, and the RVA says it has become “a reliable sound check for the sector and a guide to activity in the future”.
To access a copy of the 2017 ANZ RVA Survey Report, please click here.