The retirement village effect
Retirement village business is booming but what will it mean for you if one appears in your neighbourhood? Susan Edmunds reports.
If you wander the streets of Orewa any weekday, you will see cafes full to bursting and shoppers browsing racks of expensive clothing.
One thing they might all have in common? Grey hair.
Orewa is one of Auckland’s major retirement village hubs, with half-a-dozen of the developments within its borders. Units, townhouses and villas sit on the hills overlooking the suburb, looking down on their own bowling greens, swimming pools and gardens.
Local business association manager Helen Wilkins says the local businesspeople do well from them.
While the younger residents are at work, cafes do a brisk trade with retirees. The residents in these villages are active, eating out often and not afraid to drop $300 on a shirt, she says. Some have paid more than a million dollars for the rights to their homes.
That’s reflected in the make-up of the shops. If you wanted cheap clothes for a trendy teenager, you’d be out of luck.
‘‘It used to be that people said you went to Orewa to die but that’s not so.’’
Spending by those aged 65 to 69 increased 11.2 per cent year-onyear last year, and those aged 70 to 74 spent more than 10 per cent more. About 30 per cent of Orewa could be classed as ‘‘super troopers’’, Wilkins said, financially independent retirees.
Michael Gunn, senior director for retirement housing and healthcare at property firm CBRE, says Auckland can expect to see more of the retirement village effect.
He estimates, conservatively, there are 18,000 units in developers’ pipelines, the highest number ever recorded and equivalent to 51 per cent of existing stock.
Metlifecare last month revealed its 29th site would be on three adjoining properties in Beachlands, offering more than 200 units and care beds. The company is reported to have a goal of adding 300 beds a year by 2020.
The Retirement Village Association predicts the number of people aged 75 and over will double by 2043, increasing from 306,730 today to an estimated 783,600.
About 13.5 per cent of over 75-year-olds lived in retirement villages in 2017, compared with 9.8 per cent in 2008. Most have bought the rights to occupy their homes, rather than owning them outright.
They pay weekly fees and the village makes most of its money when they sell, paying a proportion of their originally invested capital to the village operator, which sells the rights on to another inhabitant, often for a higher price.
While the villages of the 1990s might have been villas and townhouses spread out around gardens, these developments are increasingly likely to be highdensity, often high-rises.
So what does it mean for the areas these villages move into?
Developer Graham Wilkinson, who is also the president of the Retirement Villages Association, said Auckland and Christchurch councils had made it marginally easier for retirement villages.
‘‘Before, you had to build a certain number of units or a type of unit in a space and you could have been non-compliant because the number of units on the site was too many.
‘‘Now it’s discretionary based on the effect on the environment. That’s allowed people to put forward developments on a large scale.’’
He said it recognised that retirement villages did not put as much strain on council services, such as water or wastewater, as a traditional housing estate.
‘‘A traditional housing estate would have 2.4 person average occupancy. The occupancy of a retirement village is half that. It’s all about the effect on the surrounding areas of the village.’’
Auckland Council said in a statement that it assessed villages in the same way it would any resource consent application, including an apartment development. But it recognized that the villages could generate less traffic - although this was assessed on a case-by-case basis.
The council's regulatory team "typically obtains assessments from traffic, noise, landscape, urban design and engineering specialists" to determine the effects of the proposed retirement village on the area.
Council engineers also consulted Watercare and Healthy Waters over whet her there was sufficient infrastructure to support a village.
Research commissioned by the Retirement Village Association showed each new 250-unit village would support 303 full-time equivalent staff and contribute $21.4m in design, construction and fittings.
"Day-to-day operations in the retirement village industry contributed around $1.1 billion to the country's GDP in 2017, accounting for roughly 0.4 per cent of the total GDP," chief executive John Collyns said.
This was similar to the value added from department stores or the motor vehicle retailing industry in 2016.
Collyns said there was a clear demand from older people for retirement villages because they met a number of important needs.
"Selling the family home not only releases tens: of thousands of
dollars in pent-up equity, it also releases a family home back to the market.
‘‘The extra cash added to retirement savings often means a significant improvement in the older person’s quality of life, as they have the resources to do things they couldn’t do before.’’
But ANZ commercial and agri general manager Penny Ford said it was noticeable that baby boomer retirees were looking for something different from a village.
The same-old same-old just wouldn’t cut it anymore. They were the forever young generation, and wanted facilities that met their personal needs in terms of security and comfort, but were also in line with the lifestyle they were used to.
‘‘Just because they have retired doesn’t mean they want to slow down. Instead of a bowling green and library, they are looking for cinemas, restaurants and a place to park the Harley – they want to stay active and social.
‘‘They also want a facility that’s integrated into a community, where everything is close and handy.’’
Associate professor Caroline Miller, from Massey University’s School of People, Environment and Planning, said people didn’t go into villages ‘‘and disappear’’.
Most wanted the same facilities they had before they shifted, the same library, the same church.
If they were moving to a village in a newly established part of town, they would put pressure on for the same facilities other residents wanted, she said.
‘‘If they are going into a city fringe area, that whole community probably doesn’t have a huge range of community facilities and amenities – they may not have libraries and the things that retirement village residents want. It’s actually what the surrounding population wants, too.’’
Wilkinson said most villages had close ties with their communities. ‘‘Our bowling club in Tauranga acts as a full bowling club for the community in the area. It’s an add-on benefit for neighbours.’’
Another developer, Arvida chief executive Bill McDonald, said his firm was moving towards creating some of the facilities residents wanted within the village itself, rather than relying on external suppliers.
Those ‘‘outwardly facing community facilities’’ would include features such as healthcare providers and chemists, he said.
If you were hoping a village next door might bring prices down in your area, though, you’re out of luck.
Wilkinson said even a large village would not have sufficient scale to affect local prices.
‘‘I don’t think an individual apartment block would make a difference. You’d need 2000 units, not 200.’’
He said villages had to be in sync with the prices of the surrounding area.
‘‘At the end of the day, that’s where people are going to come from, that’s what they can get from their property. They want to move in and have cash left over.’’
One he was involved in, in Tauranga, had 40 per cent of its residents come from outside Tauranga, mostly from Auckland. They were able to sell their houses and put $1m in the bank.
Collyns estimated about 4500 houses a year were freed up by retirees moving to villages.
Wilkinson said finding sites for new villages was the hardest part. ‘‘That’s why we have seen more high-rises and we will see more.’’
A sign in Stoke, Nelson, near the Ernest Rutherford Retirement Village, epitomises the rapid growth of retirement villages. Companionship is one of the leading attractions of retirement t villages
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