AUSTRALIA: Retirees Fuel Village Boom

CROYDON, Queensland (The Age, Australia), October 20, 2007: It is 10.30 on a cool Thursday morning in Croydon, and in a humble clubhouse on a hill, overlooking a sharp-edged bowling green, dozens of retirees are gathering. In the distance, beyond the row of heritage pines, a smudge of cloud obscures the view of the Dandenongs but no one seems to mind. The chatter is bright enough to lift any mood and all eyes are on the plates piled high with a confetti array of mint slices, miniature pink-iced cupcakes, jam drops and jelly slice. This is morning tea at Aveo Mingarra, one of the 1721 retirement villages dotted across the country. "Aveo", the managers explain, is Latin for "live well". And that is what these cardigan-clad retirees seem to be doing. In a room off to the left, the dozen or so members of the Residents Association Committee congregate, armed with the minutes of former meetings and new ideas including shopping expeditions, trips to the theatre and services for the residents. And chatting amid the clatter of crockery in the main room are scores of other Mingarra residents — "those who don't really want to do a lot", explains committee president Bill Mosely, "and you can understand that with some people. You can certainly understand that." For the residents, mornings like these represent all that is good about retirement village life: comfort, companionship and community. Not to mention access to the bowling green, the gym, the spa, and help on-call, 24 hours-a-day should anything go awry. For it is here they have found the answer to that great unnerving dilemma of ageing: the conflicting desire for independence and the need for a little support — a place between the family home and the nursing home. Moseley, now 77, and his wife Patricia, 67, moved into their neat little two-bedroom unit as relative youngsters 10 years ago, with their failed guide dog, Wilks. "We'd looked after our own families and we didn't want our own children looking after us, and we thought that moving into a retirement village would be a big help," Moseley says. And, now settled into the convivial school-camp life, they couldn't be happier. "We should have moved in even earlier." That balance between independence and support requires a precise and somewhat delicate formula — but for the major property developers moving into the sector, its correct calculation promises unfathomable riches. Retirement villages, it seems, have become the new frontier in property development. After years of haphazard growth, the industry is finally on the verge of maturity, with its first databases and accredited training programs now in development. In response to the booming interest, the Property Council of Australia will host a two-day conference this week on "The Ageing of Aquarius". As the council's Victorian executive director, Jennifer Cunich, says, it is the fastest-growing property investment and development sector. Where once there was a smattering of disparate, charity-run homes for the frail, a vast array of slick modern villages for the young at heart is now mushrooming. From modest clusters of "independent living units" to million-dollar high-rises complete with pools, bars and marble foyers, Australian retirees now have a boggling array of options for their sunset years. And more are making the move. In 1996, crude industry estimates show just 2.7 per cent of Australians aged over 65 years — or 56,500 people — resided in the country's 520 retirement villages. By last year the proportion of villagers had increased to between 4 and 5 per cent of those aged 65 or more — about 140,000 people — and the number of villages had more than tripled, pushing the value of the industry to $38 billion. And property developers and investors, with one hand on demographic charts and the other on the ledger, are banking on a lot more growth. IBISWorld predicts that by 2016 the industry will have grown to 2900 villages and be worth $74 billion in today's dollars. By 2026 that will jump to 4300 villages, attracting 10 per cent of the over-65s and accounting for 3.4 per cent of all homes. By then the industry will be worth $120 billion. A handful of developers and investors, including big boys like Babcock & Brown, Macquarie Bank, Becton and Stocklands, are already jostling for control, while others are watching with interest. Despite some consolidation in recent years, the top five operators control only about a third of the sector. Jones Lang LaSalle's figures show the industry still comprises about 600 companies, most of which run one village. Leading the way is Queensland diversified developer FKP, which counts 62 villages, as well as three nursing homes and hostels, among its booty. Just under half of FKP's earnings come from the retirement sector and a year ago it established its Aveo brand in anticipation of more growth. "There's a couple of large transactions that we are looking at at the moment," FKP executive general manager of retirement, Justin Laboo, says. But with a cohort of footloose and fancy free baby boomers coming through, and in a culture of fierce independence and pride in the picket fence, just how are developers making the business of cloistered ageing work? "You've got to provide something over and above what they can otherwise get in prevailing residential," says Laboo. A strong sense of community and security are the most important factors, he says, and basic services like doctors, cleaners, gardeners and handymen. But it's not all as basic as bingo. Think Florida. While fewer than 5 per cent of Australians aged over 65 years live in retirement homes, in the US it's already close to 12 per cent. There, slick marketing has freed the industry from the stigma of being "God's waiting room", and retirement villages are seen as a sign of affluence. That attitude is starting to resonate here. While at one end of town retirees can snap up a humble abode for $45,000, at the other end units can cost up to $2 million, and here residents will be lured from their homes by five-star luxuries including spas, in-house theatres, hairdressing salons, cocktail lounges and licensed restaurants. The Aveo Concierge in Balwyn, for example, is more like a luxury hotel than a traditional retirement village. All plush carpet, marbled floors and gilt-edged lifts, the "village" is a hotel-style building with a handful of private units centred on a bistro and restaurant. But the school-camp congeniality pervades, with bingo afternoons every Tuesday (followed by a tipple of sherry), shared cream sponge and strawberries for morning tea in the ladies' rooms and regular outings. Diane Daniels, 65, an impeccably dressed single woman — or unclaimed treasure, as she puts it — moved in just over four years ago to find a "family" of peers. And so she has, becoming the social secretary, hairdresser and make-up artist for all. Aveo Concierge gives her a very full, secure and social life, something she could not find in a big old house on her own, she says. This sentiment is increasingly common, even among those with the deepest pockets and strongest social connections. Among the residents in FKP's most prestigious villages, for example, are a retired chief justice of the NSW High Court, a retired chief executive of Westpac and a former Mobil director. And it is in this upper end that most developers are hoping to make their money, particularly as cashed-up boomers reach retirement. As Stockland's development division chief executive Denis Hickey explains, while the 70-plus age group focuses on thrift and leaving money to their children, the next wave of retirees will be more focused on themselves — and therefore better for business. They will be more astute in their investment decisions and have bigger superannuation balances, he says, and be "more willing to eat into their equity rather than leave it to their children". Jones Lang LaSalle's national head of health and aged-care services, Peter McMullen, says the industry should also be preparing to meet the demands of even later generations. "What our grandparents wanted in the '70s and '80s isn't what my parents wanted or what I will want, but we are all focusing on baby boomers," he says. "What about the next generation? Generation X will begin turning 65 in 2026." But regardless of which end of the market a developer is exploring, money is there. However rich or poor, all residents stand to lose a good chunk of money to the retirement business in the transaction, but if the offerings are right, the retirees will come. While residents in each village, and even within villages, have a variety of contracts due to changing ownership and management — a frustration the industry is trying to overcome — most agree to some form of departure fee, or "deferred management fee". This translates loosely as a cut for the developer, based on a set percentage per year or a percentage of capital growth when the resident leaves, and comes on top of the margin the developer makes each time the property changes hands. It is something of a dark art, but in the past financial year it made FKP alone $103.3 million in earnings. "Funnily enough, death isn't the reason why people leave, it's usually the need to move on to a higher level of care," says Laboo. " That's the primary need, but you do a lot of actuarial analysis to determine when these roll-over events, as we call them, will happen . "But that happens in the background and when you are out in the front line with residents you are talking about lifestyle and what's happening today and what makes them happy — that drives the customer satisfaction. "The language we use to talk to investment bankers is very different to the language we use with residents." But IBISWorld chairman Phil Ruthven has no doubt the industry is smartening up to the semantics and getting it right for the investment bankers, increasingly interested in backing the deals, and importantly, for retirees who might once have scoffed at the idea of village life. "It's almost as if you were admitting defeat by going into a retirement village 30 years ago," he says. "It scared people off from wanting to go there. But importantly for Australia, that stigma is going so fast it doesn't matter. "We are going to see this industry grow. Oh God, yes." By Chantal Rumble Source: www.theage.com.au Copyright © 2007. The Age Company Ltd.