Developers explore scope for property development opportunities at village sites.
A new level of competition is looming for Perth’s retirement villages with developers from outside the sector casting an eye over growth prospects for the industry that is helping to accommodate older Australians.
Speaking at a Property Council Retirement Living Outlook, Colliers International Executive Health Care and Retirement Living Henry Vu said the increasing interest of non-traditional developers was likely to trigger a broader investment approach which looks at the village’s business model as well as its development outcomes.
“Traditional developers have always indirectly competed with retirement village operators within the apartment and small unit market which are sometimes cross shopped by consumers but in recent times, where downsizers are a significant buying force, developers are specifically targeting older buyers and going after retirees,” Mr Vu said.
“The attraction to the sector is driven by development profits in a protected market and the guarantee of ongoing annuities that retirement villages promise.
“However, while these developers are quick to identify good development opportunities they don’t necessarily understand the business of retirement yet.”
Although many retirement operators are already considering ways to maximise the value of their holdings, Mr Vu said village operators, who were typically slow to react to market changes, would need to be even more proactive.
“They will need to be more like-minded with developers and adopt a bigger focus on the development possibilities of their sites,” he said.
“Retirement living operators that can bridge this gap will be better-placed to maximise the value of their current assets and their future developments and acquisitions.
“There may also be opportunities for new partnerships between retirement living operators and developers with the management being overseen by operators and developers taking the lead on the development aspects.”