The retirement village industry is a people business, not a property business.
That was the key take away from the ANZ’s 2018 annual survey of retirement village operators.
According to the survey results, the top issues facing the sector were related to employees: meeting higher wage demands and finding good people. Escalating construction costs – last year’s overriding concern – had dropped down the list to third. The fourth most pressing issue was increased competition due to new villages being established in the local area.
The top two priorities for operators were developing more apartments and villas and developing a care proposition under an ORA structure.
The third priority was ‘How to bring the community into my retirement village‘, perhaps a signal that operators are recognising the changing needs of baby boomers and the need to differentiate their offering to prospective residents.
In fact 63% of respondents identified the need to develop a new proposition to appeal to new retirees.
Survey respondents gave some examples of how they bring the community closer to the retirement village, including establishing a childcare centre on-site, developing outwardly facing activities, engaging with local schools and sport clubs, and supporting environmental projects.
Looking ahead it appears village operators will need to think about how the building, proposition and marketing will appeal to Aucklanders, given that 37% of non-Auckland villages had witnessed the impact of Aucklanders retiring outside of Auckland. This is in line with KiwiSaver research in 2016 that showed that 20% of Aucklanders plan to retire outside of Auckland.
Technology and digital advancements are also becoming important to the industry as operators seek to evolve and differentiate their product.
There was also some suggestion that a rental model for retirees might emerge, a reflection perhaps of the fact that home ownership is falling in New Zealand.
The survey also asked operators for their opinion on the fairly contentious issues of sharing capital gains with residents and capital repayments on exit. While last year’s survey showed an increased expectation amongst respondents over the willingness of companies to share capital gains with residents, it looks less likely to happen based on this year’s results. And only 12% expected to see most operators making capital repayments on exit within the next few years.
The full survey commentary can be accessed here.