Jones Lang LaSalle (“JLL”) is a leading professional services firm, specialising in real estate. Among the key take-outs from their 11th annual report on the New Zealand retirement village and aged care sector, is that retirement village developers will need to significantly step up the pace to meet future demand from an ageing population. According to their 11th annual report on the New Zealand retirement village and aged care sector, retirement village developers will need to significantly step up the pace to meet future demand from an ageing population.
JLL estimates the country will need an additional 22,051 retirement units by 2033 to meet the needs of the 14% of New Zealanders aged 75 or over who favour retirement village living.
JLL New Zealand’s head of research Gavin Read said there is no precedent for retirement village developers to deliver additional units at this pace or scale.
In 2022, JLL's NZRVD identified 452 villages, with 39,070 units, which is based on an estimated 1.3 residents per unit, resulting in an estimated 50,791 residents currently in retirement villages.
By comparison, JLL’s 2021 NZRVD identified 425 villages, with 37,489 units, which resulted in an estimated 48,736 residents in retirement villages.
The sector continues to see expansion with several existing villages being extended and refurbished as new villages come online. The development pipeline we have identified suggests this trend is continuing. Therefore, the challenge for the sector is to ensure the units are delivered in the right locations to meet future residents’ demands and requirements.
Gavin Read says over the last five years, the industry has developed an average 1854 new units per year. Developers would have to increase their build rate 33% each year for the next decade to meet demand.
“This would seem ambitious, even with generous economic tailwinds, but when we consider the current economic climate of high interest rates, high construction costs and low confidence, alongside softening residential valuations, there’s significant pressure being placed on delivering units that are already under construction, let alone those planned for further down the line,” he said.
“Village operators will therefore need to look beyond the current economic conditions to keep pace with demand.”
JLL’s survey indicates 10,443 retirement village units are currently under construction while an additional 14,327 units are in the planning stage. Should all the 24,770 units be completed within the next 10 years, it would increase the total units in the market to 63,840 – which is 2719 more than the 61,121 JLL estimates would be required.
said reaching that level would require the big developers to step up the pace. JLL expects the number of people moving into this age group to peak in 2038.
As reported on The Post, Wednesday, 23 August 2023