New Zealand Retirement
Village Database
Whitepaper May 2014
JLL is pleased to announce that its Subscriber New
Zealand Retirement Village Database (NZRVD)
2013 is available for purchase. The Subscribers
NZRVD contains a selection of data fields from
the JLL’s Master NZRVD 2013 which is used for
consultancy and valuation purposes.
With New Zealand’s growing demand for retirement
accommodation the Subscribers NZRVD will assist
subscribers to make more effective retirement
village related investment, development, marketing
and service provision decisions. Which in turn
provide positive impacts for the industry as a whole
through increased demand generation and general
efficiencies.
JLL have a dedicated team of well-known;
respected and experienced property professionals
who offer a wide range of valuation and advisory
services and which are complimented by our
research; plant and machinery and other divisions.
Please contact Michael Nimot for an obligation
free quote for your mortgage; asset and insurance
needs.
For more information contact:
Angela Webster
Economist and Research Consultant
angela.webster@ap.jll.com
+64 9 914 9744
Michael Nimot
Director Health and Aged Care
Mobile +64 275 855 928
michael.nimot@ap.jll.com
Contents Page
Executive Summary
4
Introduction
6
NZ’s Ageing Population
6
NZRVD 2012 vs. 2013
7
Summary Results Table
8
Village Ownership
8
Village and Unit Numbers by Region
8
Unit Type Break-Down
9
Age Profile
9
Availability of Higher Care Facilities
9
Penetration Rates
10
Demand Drivers; Macro and Micro
11
Increasing Penetration Rates – Demand Generation Potential
11
Demand Sensitivity
12
Development Pipeline – Supply Side
12
Development Pipeline – Five Largest Operators
13
Summary
15
3
Executive Summary
NZ’s Aging Population
There is no doubt that NZ’s population is aging like it has never aged
before. The 2006 to 2013 census years provide an insight into this
impressive growth with an additional 111,429 entering the 65+ year’s
age group, a growth of 22.5% 2006 to 2013, compared to a total
population growth of 214,101 and 5.3% over the same time period.
The growth within the 65+ years age group is not expected to slow
anytime soon, with an increase of circa 160% forecasted from 2012
to 2061, a growth from approximately 600,000 to 1.55 million. The
percentage of the NZ population within this age group is projected to
increase from 14% in 2012 to 26% by 2061.
The majority of retirement village residents are aged 75+ years,
this age group is projected to experience a growth of circa 16,000
residents per annum from 2014 to 2034. If we assume that
this growth within the 75+ age group is translated into potential
retirement village demand (using a 12% penetration rate and
average village occupancy of 200 residents), this equates to a
demand for 10 villages per annum for the next twenty years.
NZRVD Statistics: 2012 to 2013
The NZRVD 2012 identified 343 retirement villages within the New
Zealand market, with the NZRVD 2013 identifying 351, a change of
8 villages. Total estimated units increased from 21,815 in 2012 to
24,148 in 2013, a growth of 2,333 units and 2,636 residents.
The growth in unit numbers has occurred not only through the eight
new villages but also a notable amount of villages adding value
through expansions, thus increasing the average village size from 64
units in 2012 to 69 in 2013.
The JLL Research and Consulting team have estimated a growth of
0.3% in the 65+ year’s penetration rate, and 0.7% in the 75+ year’s
penetration rate, once population forecasts vs. actual counts are
taken into account, between the 2012 and 2013 databases.
Another interesting dynamic change between the databases is the
fact that Ryman overtook Metlifecare as the largest operator in terms
of unit numbers, with the addition of 603 units, and a growth of 18%
2012 to 2013. Whilst Bupa remains the smallest of the five largest
operators they experienced robust unit growth of 252 and 31% over
the same time period.
Penetration Rates
The NZRVD 2013 estimates a national penetration rate amongst the
65+ demographic cohort of 4.5%, and a penetration rate amongst
the 75+ demographic cohort of 10.5%. These rates are heavily
4
differentiated across the regions, with the uppermost 75+ year’s
penetration rate experienced in the Bay of Plenty with 16.4%,
compared to 0% in the West Coast. Auckland is estimated to have a
65+ year’s rate of 5.3% and a 75+ year’s rate of 12.8%.
There is also notable polarisation between the penetration rates
experienced in the North Island vs. the South Island, for example
the 75+ years rate is 11.7% in the North Island compared to 7.3% in
the South Island. This reiterates the preference of retirement village
residents for warmer climates.
Demand
Whilst NZ’s aging population is clearly a major demand driver within
the retirement village industry another is the potential to increase
the penetration rates. Whilst we have seen a 0.7% increase in the
75+ penetration rate between 2012 and 2013, to continue driving
this rate upward the industry will need to focus on a number of areas
which include the availability of suitable product, as well as matching
affordability and local socio-economic considerations to village
development.
Within this white paper is a demand sensitivity analysis which
concludes that with an aging population, as forecasted by Statistics
NZ, along with a 75+ year’s penetration rate of 10% would generate
a demand for circa 30,000 units, which equates to 170 villages with
an average size of 200 residents from 2016 to 2036. While under
a scenario of an aging population combined with a 3% rise in the
75+ penetration rate a potential demand of 47,000 units and 265
villages, with an average of 200 residents per village, is generated.
This equates to 1,500 units per annum under the base scenario and
2,350 units per annum under the 3% penetration rate rise scenario.
Supply
The 2013 NZRVD development pipeline data indicates a total
pipeline of 10,646 units, 6,017 at 88 currently operating villages
and 4,629 at 40 new villages, yet to be registered with the NZ
Companies Office. In addition to these units, which are within the
early planning stage through to under construction, there is also
a notable amount of land banking occurring within the industry,
particularly within the Auckland region.
In theory the development pipeline within the early planning to
under construction stages (no land banking) will take between five
to seven years to be absorbed by the market. A fully developed
large format retirement village is around a six to eight year project, if
time frames and the resource consent process goes smoothly, thus
providing a time frame for demand to be generating to take up the
supply.
Summary
The results of the NZRVD 2013 provide little indication of a potential
wide-spread oversupply within the NZ retirement village industry, there
is however some indication of potential short-term oversupply within
the Auckland region if the significant land banking of the five largest
operators comes online within a similar time frame.
To avoid any overhang of supply, and the costs associated with a
less than ideal absorption rate, a comprehensive understanding of
the market, local demographics and competition is therefore critical in
ensuring successful product take-up time frames.
5
Introduction
JLL is pleased to announce that its Subscriber New Zealand
Retirement Village Database 2013 update (NZRVD) is available for
purchase. The Subscribers NZRVD contains a selection of data fields
from the JLL’s Master NZRVD which is used for consultancy and
valuation purposes.
The Master NZRVD 2013 is a comprehensive one stop location
for data on the retirement village industry in New Zealand with 351
records of villages registered with the New Zealand Companies Office
(NZCO). There is also a further 57 records of currently un-registered
retirement village type accommodation and 40 records of retirement
villages within the development pipeline, but yet to be registered with
the companies office. This makes a total of 448 comprehensive data
records.
In order to qualify as a retirement village the property must have
multiple units, accommodation and service/facilities, mainly for people
in their retirement and the residents pay a capital sum in return for their
right to live in the place.
The Subscribers NZRVD includes:
• Village name and database ID, location and owner information
• Contact details, mapping coordinates, year established
• Facilities available at each village, tenure details and unit
configuration totals
• Provision of a care facility
While the Master NZRVD, used for consultancy and valuation services,
includes:
• The components of the Subscribers NZRVD as well as sales and
marketing contacts
• Building type data, ORA details, entry fee and capital gains returns
details
• Maintenance fees, DMF data by year, vacancy and turnover data
• Estimated resident counts, detailed development pipeline
information
• Care facility information (bed counts) and companies office
disclosure dates
This white paper provides a summary and insights into what the
Master NZRVD 2013 has revealed, particularly the changes which
have occurred between the 2012 and 2013 databases. We are all
aware of New Zealand’s aging population and the corresponding
opportunities available in the sector, but just how much demand is
there and when will it come online. The paper also describes the
supply side development pipeline and whether there is the potential
for a disparity between supply and demand levels in the coming years.
6
We also take a look at the five largest industry players and what has
occurred to unit numbers and development pipeline for them from
2012 to 2013.
In order to analyse and forecast the economic forces of supply and
demand reliable comprehensive nationwide data is paramount and
this is where the JLL NZRVD comes into play for the supply side of
the equation. JLL NZ also addresses the demand side of the equation
with its in-house research and consulting services, which provide
customised services for a wide range of clients.
NZ’s Aging Population
- What it means for the
Industry
Historical Growth and Population Counts
2001-2013
As New Zealand’s population continues to age we are seeing both
social and economic developments such as health care provision,
social support for the elderly and pressure on families. This
demographic development also presents considerable opportunities
to certain sectors of the economy. One of these opportunities is in the
provision of aged care accommodation, of which retirement villages
are playing an increasing notably role.
The 2013 Census of Population and Dwellings revealed that there
were 607,032 New Zealand residents who were aged 65 years
and over. This was an increase of 111,429 residents, and a growth
of 22.5%, from the 2006 count of 495,603. The 2013 Census also
revealed an increase in the proportion of the total population aged over
75 years. The total of 260,898 was an increase of 30,777 and a growth
of 13.4% from the 2006 count of 230,121.
Another statistic of note is the percentage of the total population within
the 65 plus age group, which increased from 12.3% in 2006 to 14.3%
in 2013, a change of 2.0%.
NZ Population Counts – Census Years 2001/2006/2013
Census Years
2001/2006
2006/2013
2001
2006
2013
Count Change
% Change
Count Change
% Change
3,737,280
4,027,947
4,242,048
290,667
7.8%
214,101
5.3%
65+ yrs
450,417
495,603
607,032
45,186
10.0%
111,429
22.5%
75+ yrs
204,249
230,121
260,898
25,872
12.7%
30,777
13.4%
Total
Population Forecasts – 75+ Years
As a majority of residents within NZ retirement villages are aged
75+ years the following section focuses on this age group and the
population projections within this sub-category of NZ’s residents. We
are basing our analysis in this paper on the Statistics NZ population
projections of the 75+ age group to 2034. Under median conditions
Statistics NZ have forecasted a growth of circa 315,800 residents from
2014 to 2034; this would take the percentage of the population within
this age group from 6% in 2014 to 11% in 2034.
Over this 20 year time frame we would be looking at the growth per
annum of circa 15,800 residents within the 75+ age group. To put this
into a simple but conservative retirement village demand framework,
if we took a penetration rate of 12% and an average new village size
of 200 residents, this would equate to a demand of circa 10 villages of
this size per annum for the next twenty years. This underlines the level
of interest being shown in this industry from developers and investors
alike.
Having established the potential for industry growth we next turn to
where in NZ this growth the 75+ age group is projected to take place.
There is a significant differentiation in potential throughout NZ, with
little potential in the Deep South and limited populated inland areas,
Population Distribution 75+ yrs Age Group 2031
and remarkable potential within the heavily populated coastal areas.
This distribution of potential is illustrated in the following section.
Population Distribution 2031
Where in New Zealand is the 75+ year’s population expected to be
concentrated in 2031?
While all local populations are ageing in NZ, there is a noticeable
geographic element that underlies the location of the ageing
population. Inter-regional differences in age structure are fairly marked,
and this is due largely to variations in fertility, life expectancy and
internal migration patterns.
The distribution of the population aged 75+ years in the NZ is expected
to be concentrated within the North Island, particularly in the coastal
regions. There are also hot spots within the South Island within city
locations and the Marlborough and Tasman Districts.
Auckland is expected to have circa 153,730 residents aged 75+ years
by 2031; therefore of NZ’s population within the 75+ age group 29%
will be living within the Auckland region by 2031.
NZRVD 2012 vs. 2013 –
What are the changes?
A comparison of the villages within the database between the 2012
and 2013 databases show an increase in village count of eight,
an increase in unit numbers of 2,333 and circa 2,636 in estimated
residents. These changes equate to a growth of 2.3% in village
numbers and 10.7% in unit and residents counts.
7
Summary Results Table*
NZRVD
Villages
Units
Estimated
Residents
Penetration Rate
65+ yrs
75+ yrs
2012
343
21,815
24,651
4.2%
9.4%
2013
351
24,148
27,287
4.5%
10.5%
8
2,333
2,636
0.3%
1.1%
Change
(Source: JLL NZRVD 2012 and 2013)
The penetration rate within the 65+ age group increased from 4.2% to
4.5%, while the 75+ age group penetration rate increased from 9.4%
to 10.5%.
*These penetration rates have been impacted by two factors, the
first being the increase in units and estimated residents, the second
being that the 2012 rates are based on estimated population counts
undertaken in 2010 based on the 2006 census counts, while the 2013
counts are actual counts from the 2013 Census of Population and
Dwellings undertaken in March 2013. The differentiation between the
estimated counts and the actual counts has impacted the resulting
penetration rates.
Village Ownership – Five Largest by Estimated Unit Numbers
Parent Companies
NZRVD 2013
NZRVD 2012
Estimated
Units
Villages
No.
Average No.
Units/Village
% of Total
Market
Estimated
Units
Villages
No.
Average No.
Units/Village
% of Total
Market
Ryman
3,951
26
152
16%
3,348
25
134
15%
Metlifecare
3,833
23
167
16%
3,907
24
163
18%
Summerset Villages Ltd
1,812
16
113
8%
1,561
15
104
7%
Oceania
1,216
26
47
5%
1,081
28
39
5%
Bupa Care Services NZ
Limited
1,067
26
41
4%
815
19
43
4%
Total
11,879
117
102
49%
10,712
111
97
49%
(Source: JLL NZRVD)
Removing this differentiation between estimated population counts
and actual population counts we find the adjusted penetration rate
growth for the 65+ rate to be 0.3%, while the actual change in the 75+
rate is 0.7% rather than 1.1%. However, despite the lower growth rate
in the 75+ penetration rate this is still a substantial change which will
generate notably higher demand for the industry in the years to come.
The estimated unit numbers at Ryman owned NZCO registered
villages, as at the end 2013, indicate 3,951 units over 26 villages,
resulting in an average sized village of 152 units. The second largest
operator is Metlifecare with an estimated unit count of 3,833 over 23
villages, resulting in an average sized village of 167 units. Summerset
Villages Ltd had an estimated count of 1,812 spread over 16 villages,
average sized village of 113 units. Oceania had a unit count of 1,216
over 26 villages, average sized village of 47 units. While Bupa Care
Services had a count of 1,067 units over 26 villages and an average
village size of 41 units.
The five largest parent companies continue to account for almost
50% of the NZCO registered retirement villages units on the market.
However, we would expect this percentage to increase over the next
8
ten years through acquisitions and the strong development pipeline of
these large investors in the sector.
The foremost change between the results of the 2012 and 2013
NZRVD was Ryman overtaking Metlifecare as the largest operator in
terms of unit numbers, with a growth in unit numbers of 603, a growth
of 18% between November 2012 and 2013. Also whilst Bupa is the
smallest of the five operators, in the area of retirement village units,
they experienced a growth in unit numbers of 252 and 31% 2012 to
2013. Overall the top five experienced a growth of 1,167 units and
11%.
Village and Unit Numbers by
Region
Of the 351 NZCO registered villages 73 are located within the
Auckland region, followed by 62 within the Canterbury region and 39 in
the Bay of Plenty.
Unit numbers by region indicate a count of 7,702 units in the Auckland
region which equates to 32% of the total market; this is followed by
a count of 2,967 in the Bay of Plenty which has circa 12% of units,
therefore these two regions alone account for circa 44% of the total
industry.
There is significant differentiation in village size, for example the
villages within the Canterbury region have an average size of only 40
units, compared to an average of circa 75 units in the Bay of Plenty
and circa 100 in the Auckland Region.
New villages within the development pipeline indicate that we will see
a prominent increase in average village size in the future with many
greenfield developments of the largest industry operators producing
village plans containing 250 units. The current average village size
within the NZRVD 2013 is 69, compared to 59 in Australia and circa
250 in the US.
Village Numbers NZRVD 2013
Taranaki, 9
Southland, 7
Wellington, 35
Waikato, 34
Bay of Plenty, 39
Otago, 13
Nelson - Tasman Marlborough, 16
Northland, 17
Auckland, 73
Canterbury, 62
Manawatu Wanganui, 25
Hawkes Bay, 16
Gisborne, 5
(Source: JLL NZRVD)
Unit Type Break-Down
The 2013 NZRVD estimates the following unit type break-down within
NZCO registered retirement villages:
• Villas/units 55%, serviced apartments 21%, independent apartments
14%, townhouses 9%
• Assisted Living Units 23% and Independent Living Units 77%
• There has been little change in overall unit type composition
between 2012 and 2013
• There is differentiation in village configuration between the regions,
with villages in Auckland having more intensive configurations
compared to lower density areas such as Manawatu-Wanganui.
Unit Numbers NZRVD 2013
Waikato, 2,098, 9%
Wellington, 2,683, 11%
Taranaki,
539, 2%
Southland,
315, 1% Otago, 785, 3%
Northland,
799, 3%
Auckland, 7,702, 32%
Nelson - Tasman Marlborough, 938, 4%
Bay of Plenty, 2,967,
12%
Canterbury, 2,517, 11%
Manawatu Wanganui, 1,442,
6%
Hawkes Bay, 1,071, 5%
Gisborne, 292, 1%
(Source: JLL NZRVD)
Age Profile
The age profile indicates 35% of villages have been established
since 2001, while we still have 35% pre 1990’s, with 11% of these pre
1980’s. It is JLL’s view that 35% of villages established pre 1990’s
presents a challenge for the industry in the fact that such stock may
not provide the appropriate type of dwelling, village structure and
facilities that meet the expectations of today’s and future residents.
Analysis of newer developments indicates there is a trend towards
more spacious accommodation, a greater range of facilities and
continuation of care in the form of a care facility.
Availability of Higher Care
Facilities
The demand generation potential of providing higher care services,
such as rest home and/or hospital facilities, within retirement villages
is increasingly being acknowledged and acted upon by industry
players. The percentage of villages providing higher care facilities
has increased from 63% in 2012 to 65% in 2013. Of the 35% which
currently do not contain any higher care facilities, 8% have such
facilities within the development pipeline.
For example of the thirteen villages within Summerset’s development
pipeline eleven have plans for care beds; 595 care beds are contained
within the pipeline compared to 2,116 retirement units. Summerset
have stated in their annual report 2013 that they will “focus on
continuum of care model”.
9
Penetration Rates
The rate is based on the methodology of the percentage calculated
by dividing the estimated number of people living in retirement village
units divided by either the population count in the area aged 65+ years
or 75+ years.
The penetration rate helps measure the degree to which a market
is either underserved or saturated and between years provides an
indication of the growth within the industry. It also offers an indicative
percentage of the demand for future retirement villages.
Penetration Rates by Region 2013
Region
NZRVD 2013
Estimated Resident
Count
PR 65+ Years
Population Count
PR 75+ Years
Penetration Rate
Population Count Penetration Rate
Auckland
8,703
163,158
5.3%
67,968
12.8%
Bay of Plenty
3,353
46,878
7.2%
20,487
16.4%
Canterbury
2,844
83,841
3.4%
37,458
7.6%
Gisborne
330
6,123
5.4%
2,592
12.7%
Hawkes Bay
1,210
25,464
4.8%
11,118
10.9%
Manawatu/Wanganui
1,629
37,128
4.4%
16,749
9.7%
Nelson/Tasman/Marlborough
1,060
25,461
4.2%
10,707
9.9%
Northland
903
27,759
3.3%
11,157
8.1%
Otago
887
31,692
2.8%
13,983
6.3%
Southland
356
14,622
2.4%
6,588
5.4%
Taranaki
609
17,805
3.4%
8,205
7.4%
Waikato
2,371
59,574
4.0%
25,053
9.5%
Wellington
3,032
62,268
4.9%
26,712
11.4%
0
5,178
0.0%
2,088
0.0%
New Zealand
27,287
606,951
4.5%
260,865
10.5%
North Island
22,140
446,157
5.0%
190,041
11.7%
South Island
5,147
160,794
3.2%
70,824
7.3%
West Coast
(Source: JLL NZRVD)
The above table combines the estimated resident counts within NZCO
registered villages within the NZRVD in 2013 with the 2013 census
counts of NZ residents aged 65+ years and 75+ years. The result is an
estimated retirement village penetration rate by region.
The 65+ rate is often cited in retirement village associated literature;
however, research has indicated that most residents enter around
73 years of age and the average age within the village is 79 years,
therefore we prefer the 75+ penetration ratio, as such we provide both
the 65+ and 75+ ratios.
• The results indicate a 65+ rate of 4.5% and a 75+ rate of 10.5%
within NZ as a whole
• The region achieving the highest penetration rates was the Bay of
Plenty with 7.2% and 16.4% respectively
• This indicates a region with a higher acceptance level of retirement
village accommodation and indicates that the area may support
higher penetration rates than the market as a whole. The current
penetrate rates within an area can be a key indicator in determining
the demand potential of that area.
• Auckland experiences rates of 5.3% and 12.8% respectively
International Comparisons: With NZ’s penetration rate of the 65+ age group at approximately 4.5%, this compares to an Australian rate of circa
5%, while in the US it is estimated to be much higher at circa 10-12%
10
• The North Island experiences notably higher penetration rates than
the South Island
• An extensive development pipeline for the Auckland Region we
would expect the penetration rate in the region to increase notably
over the next few years, we also expect the differentiation between
the North and South Islands to deepen.
Penetration Rate Analysis 2012/2013 –
Resident per Unit Ratio
65+ Years
Resident Ratio/Unit
75+ Years
Resident Ratio/Unit
Resident/Unit Ratio 1.13
1.30
1.13
1.30
NZRVD 2012
4.2%
4.8%
9.4%
10.8%
NZRVD 2013
4.5%
5.2%
10.5%
12.0%
Change 2012/2013
0.3%
0.4%
1.1%
1.2%
(Source: JLL Research and Consulting)
While we have looked at the impacts of using estimated population
counts in 2012 and actual counts in 2013 in the section NZRVD 2012
vs. 2013 – What are the changes?, this section takes a look at the
impact of using different resident per unit ratios. While in the NZRVD
we use a ratio of 1.13 residents per unit, the major industry players
often use a ratio of 1.3 in resource consent applications; therefore, we
have provided both ratios in previous table.
The results indicate that using a higher resident per unit ratio increases
the penetration rate from 4.5% to 5.2% in the 65+ rate and from
10.5% to 12.0% for the 75+ ratio in 2013. Therefore, we believe that
the penetration rates provided through the NZRVD can be viewed as
conservative.
The change in the penetration rates from the 2012 to 2013 results
indicates a slightly higher growth of 0.1% between the two residents to
unit ratios.
Demand Drivers; Macro and
Micro
Demand drivers for increasing the penetration rate are many and
varied and include the following at a macro level;
• Greater acceptance of the retirement village style of living
• Quality and offering advances of the industry
• Longer life expectancy and reliance/ demand for continuation of care
throughout the aging years
• Visitation of partner/spouse if in rest home, hospital or dementia
care on site
• Increased demand for an easier way of life (less worry about
gardening/lawns, empty house when travelling etc.)
• As well as a greater demand for security and the social aspects the
village lifestyle can offer
• Increased knowledge of the industry and what it has to offer, both
by the potential residents and their children/careers will also help to
drive up penetration rates
On the other hand demand and supply restrictors include the New
Zealand’s Government’s policy of ageing in place , limited funding
increases and stringent lending criteria for retirement villages and care
facilities.
At a micro level demand within individual locations can be driven by
positive local features such as the access to facilities in the area, a
large population base, affordability levels and new product availability,
i.e. new construction of retirement villages can drive up the penetration
rate in an area, coastal locations and locations with views. The
major growth location for retirement village development has been,
and will continue to be, in the coastal regions of New Zealand near
large metros. The main reason being that often coastal landscape is
therapeutic for residents not just in terms of its physical or climatic
character, but also through its imputed social characteristics, and
historical layering’s as a healthy place.
Increasing Penetration
Rates – Demand Generation
Potential
An increasing penetration rate is a major driver of retirement village
demand generation. Availability of suitable product is one factor
determining penetration rates, as well as the availability of alternative
retiree housing options, affordability and local socio-economic
considerations are also major factors driving penetration rates.
Residential market affordability and liquidity are key influential
variables on the demand side. Current residential market conditions,
particularly within the Auckland region, indicate positive transferal
rates for potential retirement village residents, however, developers
must take into account the risk that residential market affordability
and liquidity can change for the negative, as experienced in the years
following the GFC.
Many areas in New Zealand are expected to achieve higher
penetration rates in coming years due to the combination of an ageing
population, a greater acceptance of living in a retirement village and
newer more suitable product being developed. While the national
11
penetration rate is at circa 10.5% for the 75+ years group this could
rise substantially.
The impacts/sensitivity of unit demand to penetration rates is looked at
in the following section.
Demand Sensitivity - 75+ years
Penetration Rates: 10% to 13%
Year
75+ Population
Penetration Rate
10%
11%
12%
13%
2016
302,000
30,200
33,220 36,240 39,260
2021
357,600
35,760
39,336 42,912 46,488
2026
448,000
44,800
49,280 53,760 58,240
2031
537,800
53,780
59,158 64,536 69,914
2036
639,600
63,960
70,356 76,752 83,148
Change
2016/2036
337,600
33,760
37,136 40,512 43,888
(Source: JLL Research and Consulting; SNZ)
The previous table indicates that the NZ population aged 75+ years is
projected to increase from a count of circa 300,000 in 2016 to 640,000
in 2036, if the penetration rate was to remain at a stable 10% over this
time frame the additional retirement village demand generated through
an aging population alone would be circa 34,000 residents or circa
26,000 to 30,000 units.
If the industry experiences not only an aging population but also an
increase in penetration rate from approximately 10% to 13% over this
time frame the demand would increase by circa 53,000 residents or
41,000 to 47,000 units.
Therefore, of these 53,000 additional retirement village residents
between 2016 and 2036, 34,000 would be generated through an
aging population and 19,000 through a 3% increase in the 75+ year
penetration rate.
Therefore the aging population and potential penetration rate
increases are expected to create significant retirement village
accommodation demand over the next twenty years. For example,
under the base scenario of 10% penetrate rate and additional demand
of circa 34,000 residents and 30,000 units, this equates to 170 villages
with an average of 200 residents per village. This increases to 47,000
units and 265 villages under an aging population plus a 3% rise in
the penetration rate scenario. This equates to 1,500 units per annum
under the base scenario and 2,350 units per annum under the 3%
penetration rate rise scenario.
12
Whilst we have looked at the potential demand side of the economic
equation in the previous section, we now turn our attention to the
supply side, with a look at the development pipeline data captured in
the NZRVD 2013.
Development Pipeline –
Supply Side
JLL NZRVD records detailed information about the development
pipeline of the NZCO registered retirement village industry from the
point of village planning being underway (i.e. land banking is recorded
to some extent but not to a point where we can comment on the total
level of land banking occurring in the industry).
Of the 351 NZCO registered retirement villages 88 had some level
of development pipeline, while there is an additional 40 new villages
within the pipeline, yet to get registered with the NZCO, as at end
2013.
The 88 Registered NZ Companies Office village’s development
pipeline had:
• A mix of planning stages and commencement but in summary circa
15 were in the “early planning” stage, 19 in the “in planning” stage
and 54 where in some stage of “under construction”1
• There was a total of 6,017 units in the pipeline
• The Auckland region captured 1,432 of the development pipeline
units, 24% of the total units, while the Bay of Plenty region captured
1,052, 17% of the total units
The 40 New Build Villages: currently unregistered development
pipeline had:
• A mix of planning stages and commencement but in summary circa
27 were in the “early planning” stage, 8 in the “in planning” stage,
and 5 in some stage of “under construction”
• There was a total of 4,629 units
• 2,476 of the units, 53% of the total units, are situated in the
Auckland region
Of the total pipeline information captured in the NZRVD 2013 the
Auckland Region totalled 3,908 units and 37% of the total pipeline.
This is followed by 1,336 units and 13% in the Wellington region,
1,202 and 11% in the Bay of Plenty region and 1,198 and 11% in the
Canterbury region. The results by region are provided in the following
table.
Early Planning: this stage is prior to resource consent being granted In Planning: where resource consent has been granted Under Construction: this indicates that the main contract for at least some of the work has
been awarded and work has started, or is about too, on some part of the villages construction
1
Development Pipeline Summary Table
Registered Villages
New Builds – yet to be Registered
Total
Villages
Units
Villages JLL have
estimated unit numbers
Villages
Units
Villages JLL have
estimated unit numbers
Units
% of Total
Pipeline
Auckland
19
1,432
19
17
2,476
16
3,908
37%
Bay of Plenty
14
1,052
12
1
150
1
1,202
11%
Canterbury
17
691
12
4
507
3
1,198
11%
Gisborne
2
221
2
0
-
0
221
2%
Hawkes Bay
3
179
3
1
100
1
279
3%
ManawatuWanganui
5
149
5
3
114
2
263
2%
Nelson/Tasman/
Marlborough
4
229
4
2
174
2
403
4%
Northland
4
293
4
1
200
1
493
5%
Otago
2
263
2
3
139
2
402
4%
Southland
1
62
1
0
-
0
62
1%
Taranaki
1
16
1
2
198
2
214
2%
Waikato
10
642
10
2
23
1
665
6%
Region
Wellington
6
788
6
4
548
2
1,336
13%
TOTAL
88
6,017
81
40
4,629
33
10,646
100%
(Source: JLL NZRVD 2013)
The demand pipeline is largely Auckland focussed; this is particularly
the case within the unregistered new village’s category. Auckland
has also been the focus for land banking which is not included in the
previous table. Land banking is looked at in the following section,
along with the summary of the NZRVD 2013 development pipeline
data for the five largest retirement village operators in NZ.
Development Pipeline - Five Largest
Operators
The following table listed the results of the development pipeline data
gathered through the NZRVD 2013; this data does not include land
banking as the development needs to be within the early planning
stage to get into the NZRVD database, however, some land banking
information is provided within the following paragraphs.
Development Pipeline Units
Registered
Villages
Unregistered
Villages
Total
Ryman
780
680
1,460
Metlifecare
143
406
549
Summerset
893
1,444
2,337
Oceania
829
361
1,190
Bupa
121
63
184
2,766
2,954
5,720
TOTAL
(Source: JLL NZRVD 2013)
13
Summerset has the largest development pipeline of the five largest
operators as captured within the NZRVD 2013. Summerset has a
target development pipeline of 250 units in 2014 and 300 per annum
in 2015 and beyond, as stated in the Summerset Annual Report 2013.
With a build rate of 300 units per annum it would take Summerset
seven to eight years to complete their current development pipeline.
Ryman has the second largest development pipeline as captured by
the NZRVD 2013; however they also have four unannounced sites in
their land bank with an estimated capacity for 400 serviced units and
594 independent units, a total of almost 1,000 units and an average
of 250 units per site. All four land bank sites are located within the
Auckland region.
Whist Bupa’s retirement village operations have a limited development
pipeline within the early planning plus stages of development, Bupa
have a notable land bank in Wellington, Christchurch and a number
of sites in Auckland; Apollo Drive, Mairangi Bay and West and South
Auckland.
14
The land bank is largely focused on the Auckland region, with Ryman,
Summerset and Bupa alone having substantial land banked within
the region. This focus of development within the Auckland region
may lead to short term over supply; however, demand is expected
to take up this supply with relative ease as the aging population and
increasing penetration rates generate significant demand levels, as
illustrated in the previous section. This is particularly the case under
current residential market conditions, with positive affordability and
liquidity features facilitating the transition of potential retirement village
residents from their family homes into the retirement village lifestyle.
A fully developed large format retirement village is around a six to eight
year project, if time frames and the resource consent process goes
smoothly, thus providing a time frame for demand to be generating to
take up the supply.
Summary
An analysis of the NZRVD 2013 indicates a positive growth in
penetration rates from the 2012 results of circa 0.3% for the 65+ year’s
penetration rate and 0.7% within the 75+ year’s rate. It also finds
eight new NZCO registered villages, circa 2,300 new units and 2,600
residents.
The top five operators; Ryman, Metlifecare, Summerset, Oceania and
Bupa account for 49% of the retirement village industry’s units, a level
that has remained stable since the NZRVD 2012.
Demand forecasting, based in Statistics NZ’s population by age group
forecasts and the penetration rates provided by the NZRVD 2013 data,
indicate a demand for approximately 1,500 to 2,350 units per annum
from 2014 to 2034.
On the other hand the development pipeline data gathered within the
NZRVD 2013 indicates a development pipeline of over 10,000 units,
along with a notable quantity of land banking. The 10,000 units within
the pipeline would take six to eight years to be absorbed by the market
under the demand criteria outlined within this paper.
Whilst we can find little to indicate the potential for wide-spread
oversupply within the industry, there is some indication of potential
short-term oversupply within the Auckland region, this conclusion is
largely based on the land banking occurring within the area by the five
largest village operators.
While there are indicators of strong demand forecasts over the next
twenty years, moving forward the NZ retirement industry players need
to be aware of all the variables involved within the demand and supply
equation in order to put the right product in the right place at the right
time.
The development of the NZRVD and the work undertaken by the JLL’s
Valuation and Consultancy teams has provided more transparency and
understanding of the demand and supply drivers in the New Zealand
retirement village industry and we look forward to providing the
industry with the NZRVD 2014 in December 2014.
15
AUCKLAND
Level 16. PwC Tower
188 Quay Street
PO Box 165
Auckland
Ph: +64 9 366 1666
Fax: +64 9 309 7628
WELLINGTON
Level 10. Lumley House
3-11 Hunter Street
PO Box 10-343
Wellington
Ph: +64 4 499 1666
Fax: +64 4 471 2558
CHRISTCHURCH
1 Papanui Road
Merivale
PO Box 6466
Christchurch
Ph: +64 3 375 6600
Fax: +64 3 355 7671
Angela Webster
Economist and Research Consultant
Mobile +64 22 643 6315
angela.webster@ap.jll.com
Michael Nimot
Director Health and Aged Care
Mobile +64 275 855 928
michael.nimot@ap.jll.com
Justin Kean
Director Research and Capital Markets
Mobile +64 21 302 257
justin.kean@ap.jll.com
Photos supplied by Bupa; Lend Lease; Metlifecare and Oceania
www.jll.co.nz
COPYRIGHT © JONES LANG LASALLE 2014 All rights reserved. No part of this publication may be published without prior written permission from Jones Lang LaSalle. The
information in this publication should be regarded solely as a general guide. Whilst care has been taken in its preparation no representation is made or responsibility accepted for the
accuracy of the whole or any part. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than
absolute certainties. The process of making forward projections involves assumptions regarding numerous variables which are acutely sensitive to changing conditions, variations in
any one of which may significantly affect the outcome, and we draw your attention to this factor. Jones Lang LaSalle Licenced Under REAA 2008.