Catering to the increasing demand of inner city, urban baby boomers approaching retirement will become a more common theme in the retirement living sector in 2016, according to Colliers International’s Brendan Wenke.
Mr Wenke, Colliers International Director of Healthcare & Retirement Living, said retirement villages had historically been concentrated in suburban and lifestyle locations, with a village atmosphere.
“However, amidst the increasing urbanisation of our cities, increasingly tech savvy retirees are looking for facilities that enable them to remain in their existing communities,” he said. “Close proximity to transport, medical support, exercise and entertainment facilities are key demand drivers and are typically located near cities and large towns.
“Meeting this demand – and expected to become increasingly considered as we look ahead – are what we call ‘vertical villages’."
Despite the opportunities offered by vertical villages, there are still some challenges in making them stack up when compared to more traditional retirement village developments.
“Current legislation restricts the ability to pre-sell units and therefore developers are required to absorb a high level of construction and holding costs, work with lower profit margins and require a high level of capital and a burgeoning cost of land in the current market, particularly in metropolitan locations,” Mr Wenke said.
The development pipeline of vertical villages is projected to increase in 2016. Australian retirement developers such as Stockland, Australian Unity and Aveo are currently building vertical retirement villages in Melbourne and Sydney.
“Development margins on these projects are lower, however given the rising volume of baby boomer retirees who are used to urban settings we expect that developers will increase the number of vertical sites to meet this market segment and provide a more diverse product offering to potential residents,” Mr Wenke said.
“The not-for-profit sector is also anticipated to participate in vertical villages, with many church-associated groups holding prized inner city development sites.”