Retirement villages providing boost for economy

The Queenstown Country Club yesterday, one of eight retirement villages in development or...
The Queenstown Country Club yesterday, one of eight retirement villages in development or proposed around Otago. Photo: Tracey Roxburgh
Eight new or proposed retirement villages around Otago are set to boost the economy with more than 1200 full-time equivalent jobs and more than $85million in design, construction and fitting costs.

There appears to be little let-up in private or listed company developments around the country, with large landbank areas representing thousands more units in the near future, adding to the more than 31,000 units already available around the country.

At present, the  number of people aged over 75 is growing more than 2% annually, and retirement village construction has been in a 3% to 6% annual growth band, according to Retirement Villages Association (RVA) executive director John Collyns.

"Development of villages across the country is growing faster than the demand ... the number of over-75s going into villages is growing steadily."

Of the country’s 405 village operators,  360  are RVA members, including all but two of those in Otago.

Nationally, 9% of over-75s were in villages in 2002 but in 2017 that had risen to 12.6%.

The number of Otago over-75s in villages is 6.5% of their demographic. Tauranga leads the country at 17% in villages, and attracts large numbers of cashed-up Aucklanders.

Mr Collyns said Otago  had a similar appeal for some retirees, in that Queenstown, Wanaka and Arrowtown attracted retirees from across the lower South Island.

Dunedin  villages attract  people largely from within a 20km radius around the city and environs.

Mr Collyns acknowledged the South District Health Board was strong on assisting with home-based support, but believed Otago-wide developments were keeping pace with demand.

"Development projections are for another 15,000 to 16,000 units [nationally]; the demand continues unabated," he said.

While the demand was partly fuelled by "cashed-up" retirees receiving windfall sums for their homes, Mr Collyns was acutely aware of the growing number of people with less financial means at retirement.

There was mounting concern from the Government, Age Care and Grey Power that more than 20% of people aged over 65 had been renting all their lives.

"They’re all asking what is being done about people without much capital," Mr Collyns said.

While many villages would be beyond their financial means, Mr Collyns said the one-third of non-listed company providers, private companies and not for profit organisations, had a strong mandate to assist those people.

"We’re very aware of the need for social housing," Mr Collyns said.

Lower socio-economic areas with cheaper housing would be expected to have comparatively lower retirement village charges, he said.

He believed the future business model for New Zealand developments would not change much, except the Australian "lend-lease" system could be considered here.Lend-lease generally charges higher deferred management fees, or rents, but alternatively offers a higher share in any capital gains.

At present about 5% of unit stocks in New Zealand are under "unit title", whereby owners are responsible for their unit’s upkeep and likely pay a body corporate for other grounds/shared facilities maintenance.

Mr Collyns believed this "older model" would disappear over time, given operators of the new-build villages look after unit maintenance, rates, insurance and shared facilities, but usually have a high claim on the unit capital returns.

simon.hartley@odt.co.nz

 

At a glance

Retirement around Otago

Eight new villages planned or under development, with a total of 1029 units.

•   Villages —  Observatory Hill, Oamaru; Arrowtown Lifestyle, Arrowtown; Golden View Lifestyle, Cromwell; Leaning Rock Village, Alexandra; Queenstown Country Club, Lake Hayes; Former Shiel Hill, Dunedin; The Grange, Mosgiel and Roys Bay Estate, Wanaka.

• These villages add to the 13 existing villages in Otago, with 822 units home to around 1100 residents.

• Retirement village industry contributed about $1.1billion to gross domestic product in 2017, about 0.4% of the total GDP.

• Retirement villages are generally new-builds, for independent living, but usually with later-care options.

• Rest homes - entirely assisted care facilities with differing levels of dependency.

— Source: Industry Valuers, Jones Lang Lasalle/ RVA

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