The rise and rise of retirement villages
Retirement villages can play a role in easing the Auckland housing crisis, Metlifecare boss Glen Sowry believes.
The NZX-listed company has been granted approval from the Overseas Investment Office (OIO) to buy a 5.3-hectare waterfront site at Orion Point in Hobsonville to the west of Auckland.
The company will invest more than $200 million building a retirement village of more than 264 units on the land, making it the 28th village the operation owns.
And when licences to occupy the units are sold, it will mean that 264 houses in Auckland have been vacated and sold to new owners, boosting supply in the desperately tight housing market.
Sowry said the vast majority of people moving into a retirement village sold their homes to get the money to buy their licences to occupy units. But then, as residents moved on, the units come onto the market again, resulting in a number of homes in the city being vacated for sale.
‘‘On average a Metlifecare resident in independent living stays for around eight years, so if you have a mature village you will have around 10 [per cent to] 12 per cent of units in the village turn over each year,’’ Sowry said.
That meant a 264-unit village would have the equivalent effect of building somewhere between 20 and 30 new homes in the city each year once it had matured.
That’s some years away though. It’s a lengthy process to build a retirement village of this scale on land that lacks ‘‘horizontal infrastructure’’ such as roads and power cables, in addition to underground car parking.
The first units were expected to be marketed in 2020, said Sowry, though it would be a rolling process with the village being constructed in stages.
Retirement villages had changed since the days when they were little more than a set of units, with a community centre and a fence around them, said Sowry.
The lifestyle expectations of people had risen, and building a retirement village was all about ‘‘place-making’’, and creating villages that were well connected with their local communities.
‘‘Orion Point will be designed to reflect the local neighbourhood, combining the security and convenience of a fit-for-purpose retirement village with the benefits of integrating with the wider local community,’’ he said.
There’s a retirement village boom under way within New Zealand’s ‘‘golden triangle’’ of Auckland, Hamilton and Tauranga.
By 2033, it’s projected there will be more than 1.17 million people aged 65 or over, of which 589,000 or so will be aged 75 or over, with the majority in the golden triangle.
Sowry said supply was keeping up with demand, but there was a lot of demand to meet.
Just to maintain the roughly 12 per cent ‘‘penetration rate’’ for over-75s would require the building of another 25,000 or so units by 2033.
But a rising proportion of over70s are choosing retirement villages, and the Retirement Village Association expected that to continue.
If the rate went up to 16 per cent, the demand for new units would be about 42,000, real estate company JLL has forecast.
‘‘Our research and analysis indicates that we can expect strong demand for this offering in Auckland’s northwest, where the 75-plus age demographic is projected to treble in size over the next 20 years,’’ Sowry said.
In January, Metlifecare made a submission to Parliament asking that retirement village operators not be caught by the Government’s plans to amend the Overseas Investment Office Act in a bid to prevent overseas people and companies from buying land needed for residential use.
Metlifecare was caught by the OIO because more than 25 per cent of its shareholders were based overseas, Sowry said.
There was a clear case for an exemption from the OIO for the acquisition of land for New Zealand-controlled retirement operators that provided homes, and were also significant employers, Sowry said.