Perspectives on the retirement village sector in New Zealand

JLL has just passed the 10-year mark by analyzing The Retirement Village and New Zealand’s Aged Care Industry. The key insights from our latest data are:

  1. Retirement villages across New Zealand continue to deliver new units to meet growing demand, however, demand is outstripping the existing development pipeline.
  2. New Zealand’s population is aging which will continue to support current and future demand for retirement villages.
  3. Greater ethnic diversity of occupants in retirement villages will create an additional need for more units in the future.
  4. The market share of the “big six” operators will remain high, as evidenced by their supply pipelines.
  5. The elderly care market is a key part of the continuum of care.

Currently, approximately 48,736 residents are in retirement villages (based on the calculation of 1.3 residents per unit). The data suggests an increase of 24,544 new units needed by 2033 to meet future demand from the current 37,489 units.

The retirement village industry is well supported by many suppliers and backed by the ‘big six’ operators in New Zealand who currently supply 65.1% of total units. Additionally, Fletcher Living (the nation’s largest residential provider) launched its first two retirement villages this year under the “Vivid Living” brand.

Figure 1: Demand forecast against the entire development pipeline to 2033

Source: JLL New Zealand 3Q22

As New Zealand ages, the number of people aged 75 and over is also increasing, creating a continued demand for housing, which will be of great interest to investment in retirement villages and aged care.

In 2021, there were an estimated 345,960 people aged 75 and over, an increase of 13,960 from 2020. This key demographic group is expected to increase by 221,490 by 2033 to 567,450 and by 265 360 by 2048 to reach 832,810.

Figure 2: Population aged 75 and over 201 and forecasts until 2033 and 2048

Source: JLL New Zealand 3Q22

Other factors influencing supply and demand for retirement villages, in addition to the country’s growing aging population, include:

  • Construction costs – rising inflation and supply chain constraints may lead to longer lead times for new units to be released through 2022 and 2023.
  • Cooling residential market – median home price is falling in many areas and days to sale are widening – both of which may impact new occupancy settling.
  • Pandemic – during the closures retirement villages have seen an increase in inquiries as many retirees (and their families) have realized they don’t want to be alone in case such situations arise again

Traditionally, several operators have pointed out that Maori, Polynesian and Asian communities make up a very small percentage of retirement village occupancy. It has been reported that tailored services, such as food and companionship offered at facilities, and tailored intervention, are needed to increase the number of Maori, Polynesian and Asian residents in retirement villages. Any increase in the occupation of these ethnic groups will increase the number of units the industry will have to deliver.

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