For Sale signs up, but buyers scarce
MORE than 150 retirement villages across Australia are on the market at the moment, with groups wanting to develop villages unwilling to commit to the less profitable ongoing management of the properties.
ING Real Estate community living group chief executive Simon Owen confirmed the number of villages for sale had risen considerably over the past two years, with “very few” sales occurring.
However, while he said the trend was a concern and pointed to the need for policy change, village residents were still protected by state retirement village legislation.
About $1.5 billion in Australian villages are currently for sale, with buyers inspecting multiple properties and ultimately purchasing at prices well below what had been expected.
One NSW North Coast village last year sold for $4 million after a buyer offered $25 million for the property in 2007.
“Access to debt and equity capital is extremely challenging at the moment, and sometimes existing operators are unable to refinance, hence requiring them to sell up,” Mr Owen said.
“It is also fair to say that in the years leading up to the global financial crisis, some villages were developed which should never have been developed.”
Mr Owen said well-run villages were profitable, however current policies at all levels of government did not provide sufficient recognition of the benefits derived from the continuing development of villages.
Retirement Villages Association chief executive Andrew Giles said despite the figures, research commissioned by the association showed the sector was growing and the number of village units nationwide was expected to expand by 16.2 per cent in the short to medium term.
He cited Lend Lease’s recent purchase of almost 4.5 hectares near Canberra for development as a village site, but admitted construction of new villages was slowing.
The estimated number of new villages under construction has declined from 109 in April 2008 to 46 in October 2010.
“Consumer interest and demand is why Retirement Village Association members continue to invest in new retirement villages,” Mr Giles said.
“Despite this, it is a hard market and often retirement villages do not always provide the same return or as quick a return as the residential market.”
Issues challenging developers include a lack of access to prime land in city locations near amenities, a lack of incentives for seniors to downsize, a lack of access to capital, and regulatory barriers.
Mr Giles said his association was pushing for planning reforms with a requirement that land purchases include a percentage of land development targeted to seniors’ housing, and for nationally consistent laws governing retirement village operators.