Planned boom in retirement units untested in market
THE volume of retirement village construction proposed in Otago and the required level of product absorption is untested in the local market, a report released to the Otago Daily Times says.
The CBRE report identified no fewer than 1422 proposed units across the region contained within seven proposed villages and three expanded villages.
CBRE Retirement Housing & Healthcare senior director Michael Gunn said while proposed developments were spread across the region, future supply density was most intense in the Central Otago and Queenstown catchments — both of which came from a lower existing supply scenario than, for example, Dunedin.
Existing supply was concentrated heavily in Dunedin, where 703 retirement village units accounted for 76% of existing stock. That would reduce to 44% if all known stock was complete, suggesting a shift away from the traditional major metropolitan centres for development in the region, he said.
The ratio of proposed units to existing units in the Otago region was high in comparison with other regions but there was a market perception the region had for many years been undersupplied with accommodation catering to retirees. Many had been forced to leave the region when independence failed. That related in particular to the Queenstown market.
Queenstown and Central Otago had been neglected by the corporates. However, the pri vate and notforprofit operators had seized on the opportunity, with major projects either proposed or in the early stages of construction, Mr Gunn said.
They included villages in Cromwell, Clyde, Alexandra, Wanaka, Arrowtown and Queenstown.
Those were in addition to the Aspiring Lifestyle Retirement Village, in Wanaka, which had proved popular, alongside projects such as Observatory Hill Retirement Village, in Oamaru, and proposals CBRE was aware of in Mosgiel and Balclutha.
Key demographics for QueenstownLakes and Central Otago districts were favourable, as both benefited from a high percentage of European ethnicity and home ownership rates respectively, he said.
‘‘These metrics are an important relationship dynamic in favour of retirement village development.’’
An emerging trend had been the ‘‘astute’’ retiree’s willingness to travel much greater distances to benefit from retirement opportunities, Mr Gunn said.
The wider Queenstown and Central Otago districts had gained favour with wealthy babyboomers, one of the drivers behind a flourishing local property market.
The exponential growth in house prices observed locally had been, in part, a catalyst for attracting the eye of new development.
Development was not without its risks, he said. It was likely not all proposed developments CBRE was aware of would proceed.
Examples of proposed retirement village developments in Queenstown that had been withdrawn from the market included Shotover Lifestyle Village, withdrawn during 2016, and Sanctuary at Remarkables Park.