An Alternative Approach
Traditional retirement villages are expensive and limited in supply in metropolitan areas. Due to entry costs and high exit costs of retirement villages and Over 55 Housing a significant proportion of older Australians struggle financially to access an appropriate level of care and appropriate.
An alternative to the traditional model of retirement villages are active-lifestyle manufactured estates for senior living located within a few hours of capital cities in attractive coastal or rural regions. These provide living for people over 50 who are not requiring frail care. Manufactured homes benefit from quality finishes at higher affordability levels, beautiful locations and a wide range of community and sporting facilities. Health and medical services may be provided.
The ASX listed Ingenia Communities Group is a good example for a successful strategy in this sector. By strategic acquisitions of development sites in coastal markets and a focus on occupancy, rental growth and leveraging scale efficiencies, the company could deliver a profit of $26.4 million in 2017, up 8.8% on prior year. The rental portfolio grew 58% on prior year.
Even though this model may provide investors with good returns, challenges lie in the availability of suitable development sites, debt finance and ongoing land rent and other costs.
The lack of affordable over 55s accommodation within desirable areas, combined with an ageing population and rising demand for active lifestyle housing solutions demonstrates the opportunities for aspirant property developers and investors in this market.