Summerset by the Park Rest Home in Flatbush. Photo: Google
A report on the state of retirement villages highlights regional inequities and a critical shortage in the number of aged care units, despite a recent ramp-up in development.
Property management firm JLL's latest Retirement Villages Market Review to the year ended December 2023, indicates there needed to be a significant increase in the rate of development to meet future demand.
"New Zealand's retirement village sector has shown remarkable growth over the past decade, reflecting the increasing demand from our ageing population," JLL head of research Gavin Read said.
"However, the findings of our review underscore the importance of strategic planning and development to ensure that future demand can be met."
Development falls behind demand
The report indicates there were 470 retirement villages, encompassing 41,111 units and housing about 53,444 residents, but it was still not enough to meet demands of an ageing population.
The industry was responding to demand, with an increase in the number of completed new units over the past year to 2298, compared with a five-year average growth of 1913 units and a 10-year average of 1696 units.
Still, the report finds the current rate of development was falling short, with an additional 932 units needed to be built each year, for the next 25 years, for the industry to meet demand by 2048.
According to Stats NZ, the rate of growth in the 75+ age bracket population was slowing, but increasing in absolute terms, with 112,624 people expected to want retirement accommodation by 2048, from the current number of 53,444 residents.
Shortage of beds
Aged Care Association chief executive Tracey Martin said there would continue to be a shortage of aged care beds in the short-, medium- and long-terms, without change to the current development model.
"This is particularly true for non-Big 6 operators, as they have little incentives to invest in their aged care beds, whether it is an upgrade, an extension to existing facilities, or a new build."
The non-Big 6 operators accounted for 54.3 percent of retirement villages, followed by the Big-6 operators led by Ryman (8.5 percent), Metlifecare (7.9 percent), Bupa (7.7 percent), Oceania (7.4 percent), Summerset (7.4 percent) and Arvida (6.8 percent).
On average, the Big-6's villages were 2.35 times larger (by units), though accounted for 46 percent of the total number of villages.
Regional variations
Read said the analysis suggested a strategic opportunity existed for retirement village operators to scale-up, either by growing their existing villages or developing newer locations.
There was a big difference in the number of facilities available throughout the country, with Bay of Plenty having the highest penetration rate at 18.4 percent and Southland the lowest at 6.6 percent.
While the national average penetration rate was steady at 14 percent over the past three years, rates had declined in 8 out of 13 regions, including Auckland, Waikato, Bay of Plenty, Wellington, Tasman/Nelson/Marlborough, Otago, Southland and Gisborne.