Australia’s retirement and aged-care providers are moving to develop mid-rise, apartment-style accommodation close to inner cities where residents have spent much of their lives.
The demand for such accommodation is set to rise as baby boomers, many of them accustomed to inner-city life, inch closer to retirement.
Major players such as Aveo, Lend Lease, Stockand and Australian Unity are gaining exposure in so-called “vertical villages”. At Ashfield in Sydney’s inner west, Stockland is developing medium-rise apartments at the Cardinal Freeman Retirement Village.
In Melbourne, more typical of the trend is Australian Unity’s Rathdowne Place, a six-storey 162-unit aged facility in Carlton, a few blocks from the bustling Little Italy section of Lygon Street.
Behind the facility, two nine-storey retirement unit towers are planned, each with 90-odd units that will be priced from about $450,000 to $1.2 million.
In the aged-care facility, the refundable accommodation deposits vary from $380,000 to $1.3 million. The facility has a hotel-style feel, with foyers, dining and break-out areas on each level. A cafe, gym and pool on the ground floor are open to non-residents as well.
Derek McMillan, chief executive of Australian Unity’s Retirement Living division, explained the benefits of co-locating aged care with retirement, despite the differing financial structure in each sector. With a $900 million portfolio of retirement and aged-care assets, Australian Unity has to make projects such as Rathdowne Place stack up against a high-return residential development.
“The risks are different, no doubt,” he said. “You have to build all at once and it is more expensive.
“We take a lower development margin than most residential developments. We’re in it for the long term and over the longer term the annuity type income that comes from the deferred fees offsets the smaller development profit,” Mr McMillan said
The property industry has embraced “vertical” retirement projects nationwide, in line with the broader market trend towards multi-storey living, said Mary Wood, executive director of the Property Council of Australia’s Retirement Living Council.
“Older Australians are much more used to apartment living than previous generations, as is the general community. This explains why a lot of the innovation in retirement living is in urban, high-density areas.
“Baby boomers want services and care brought to them. So retirement village operators are increasingly offering a suite of services, not just units in attractive locations.”
While the big players are moving into the new sector, not-for-profit groups may have an advantage, having controlled some prized inner-city sites for decades.
Andrew Giles, of One Fell Swoop, is consulting on and marketing at least 12 vertical style projects in Melbourne and other capitals.
“Almost all of those are being done in inner-urban areas and almost all are being done by church and charitable groups,” he said.