Australia has a rapidly ageing population.
It seems like every week, new studies and reports are released showing how demographics are shifting towards people of retirement age. Some, like the government’s Intergenerational Report, are about budgeting for Australia’s future. Some are about planning communities for the needs of ageing people. Others are about market demand for goods and services specific to retirees and the elderly.
There’s plenty of data and opinion available regarding what needs to be done to cater for older people in the future. And many businesses are acting on it already.
Take retirement living, for example. Over the past few years, a number of property and service companies have ramped up their concentration on the retirement and/ aged care sector. For example, some companies with a variety of different property divisions are initiating more ‘senior living’ developments than other residential developments.
The thing is, they’re not just increasing the number of properties they build. They’re also dramatically changing the type of homes they build, and the ‘value-ads’ that are incorporated. They’re doing this in anticipation of future cohorts of retirees having different needs and preferences.
What trends are industry insiders predicting?
Apartments
Broadly speaking, apartments are going to be more popular. The trend is called ‘luxury downsizing’. Retirees want smaller, low maintenance homes. But when they give up their suburban standalone house, they want to get back for their buck. So they’re using some of the capital they’ve gained to downsize to an upscale city apartment.
In 2014, the Australian Housing and Urban Research Institute released a report entitled ‘Downsizing amongst older Australians’. It showed that, of those who decided to downsize, around 23% chose some kind of flat or apartment.
Source: ahuri.edu.au
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Those who were surveyed also talked about their reasons for downsizing. Some cited lifestyle and security concerns. One NSW man, aged 65–-69 at the time of the survey, said ‘It was eight years ago that we moved and we didn’t need such a big house and when we’re travelling a lot you’ve got a responsibility of a house whereas in an apartment you just close your front door and go.’
Another said ‘I was very apprehensive about moving to an apartment … I thought that if you go into an apartment you’d be shut away and you wouldn’t see anybody … But just the reverse has happened here’.
It’s a sign that Australians, and older Australians in particular, are getting more used to the idea of living in an apartment. That amenities exclusive to houses, like large gardens, are becoming less of a priority. The report also said that ‘… there could be a generational shift in these attitudes in future aged cohorts, as people were becoming more familiar with apartment living as a permanent lifestyle choice.’
This makes sense, seeing as more Australians than ever are living in apartments. According to the last Census, the percentage of Australians living in apartments rose by 0.5%. The census before that, it rose by 1.1%. And the time before that, 0.5%.
So over the next 10– -20 years, a higher proportion of retirees will have got used to living in an apartment.
Boutique developments
The older Australians of the future won’t just want homes that meet their practical needs. They’ll want homes that reflect their personalities, beliefs and preferences.
To start with, there’s eco-friendly retirement communities. Already, a number of planned communities are being designed with eco-friendly features designed to appeal to older Australians conscious of climate change. Some features, for example highly energy efficient design, double up as a way for retired residents to save money.
Then, there’s the heritage and industrial conversions. Once the domain of inner city Gen Xers, they’re increasingly popular amongst older people who want a sense of heritage and exclusivity when choosing an apartment. They don’t want generic apartment towers that could be anywhere. Take the heritage listed Tip Top Bakery development in Brunswick East, Melbourne for example. News coverage of the event since its completion in July last year showed it had already attracted a high proportion of retirees.
Source: littleprojects.com.au
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Boutique luxury inner city developments also hold appeal for empty nesters looking for the aforementioned luxury downsizing option. Developers and agents are already reporting higher interest from retirees and empty nesters. Roy Marcellus, a sales director with the Crown Group, recently said ‘They [empty nesters] want the lifestyle but five or six bedrooms doesn’t suit them any more … one, two and three-bedroom penthouses [will] go like hotcakes for that market’.
Principal of Ginnane & Associates, Martin Ginnane, recently said ‘the grey and ageing dollar is very powerful’. He was referring to the emerging trend amongst developers of large retail precincts to build residential complexes on top of malls. For example, Grocon built the two apartment towers above QV in Melbourne. GPT Group [ASX:GPT] are thinking about building on top of Melbourne Central. And of course, the Crown Group have created Sydney by Crown, in the heart of the Sydney CBD. Sydney by Crown sold out in just four hours in November last year.
Tiny house communities
The tiny house movement is one of the biggest trends to hit residential property in the past few years. At least, it is in the Western Hemisphere.
The definition of a ‘tiny house’ depends on who you talk to. Generally, it’s up to 400 square feet ([37 square metres)]. Hardcore tiny house devotees try to make their houses as small as possible, with some micro-homes reaching 100 square feet (a little over nine square metres) or less.
These homes are pared back to the bare essentials. There’s usually a Murphy bed or a lofted sleeping space. Kitchens are compact but complete —– smaller appliances in a studio-style arrangement. There are no long hallways, spare bedrooms, storage rooms, dining rooms, separate home offices, or other extras.
In other words, it’s the perfect cosy low-maintenance style for retirees.
Take this design from Canada-based firm Smallworks. It’s just 400 square feet, but smart design makes it look airy and open. It’s even got a separate bedroom and a storage space.
Source: smallworks.ca
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In May, the tale of ‘Bestie Row’ went viral. Four couples, all close friends, built 37 square metrem² tiny houses next to each other on the same plot near the Llano River in Texas. They employed Matt Garcia of Matt Garcia Design, Austin, to ensure the finished product was more designer than DIY. The couples plan to live there now and through their retirements.
Source: mattgarciadesign.com
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Personally, I prefer the stylish look of the Portland ‘micro-community’ homes. Or the too-cute Tiny House Village in Sonoma County, California.
Left four images: Portland, Oregon. Source: techdwell.com
Right three images: Sonoma County, California. Source: fourlightshouses.com
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But I digress.
These tiny houses aren’t just being built in North America, either. The homes pictured below are all located in Australia.
Source: tinyhouseblog.com, domain.com.au, news.com.au
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Stockland
Stockland Corporation Ltd [ASX:SGP] is leading the charge in luxury retirement apartments.
Stockland is currently redeveloping the Cardinal Freeman Retirement Village. It’s located in the inner Sydney suburb of Ashfield, one of the fastest growing suburbs in terms of land value according to Domain.
The $160 million redevelopment will include 240 new apartments. They’ll range in size from one to three bedrooms, each with its own carpark. The community will also have its own cinema, swimming pool, gym, and café. Heritage gardens on site are set to be restored. There will also be a 2,400 square metre ‘village green’ with gardens and lawn space.
If the artist’s impressions are anything to go by, it’s going to be ([as my grandma would say)] very smart indeed.
Source: stockland.com.au
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Stephen Bull is the Group Executive and CEO of Retirement Living at Stockland. When the development was announced, he said: ‘Our customers are increasingly interested in buying into villages that deliver contemporary, luxury, lifestyle homes, surrounded by world-class amenities, such as our fully-appointed clubhouses and plenty of green, open spaces … The design sets a new benchmark that will appeal strongly to Australia’s ageing population.’
Whilst the sales and information centre hasn’t yet opened, it’s possible to estimate a guide price. According to realestate.com.au, the median unit price in Ashfield is $606,750. The median for a one-bedroom is $410,000. And according to Stockland’s last Property Portfolio release, a place at Cardinal Freeman currently costs $143,000– – $699,000. So… do with that information what you will. It seems obvious that places at the new and revamped Cardinal Freeman will cost more than the old one. But Stockland might try to keep it priced the same in relation to its other villages.
Lifestyle Communities
Lifestyle Communities [ASX:LIC] is all about affordable, low maintenance properties.
Their tagline is ‘downsize to a bigger life’.
According to their mission statement, they want to ‘offer homeowners a bigger life by making independent luxury living truly affordable.’ Residents buy the house, and have a long term [90 year] lease on the land. They then pay a weekly site fee that covers maintenance and running costs of common facilities.
Unlike many retirement villages that offer independent living, Lifestyle Villages homes aren’t apartments or units. Nor are they townhouses. They’re true standalone houses. You could compare the Lifestyle Communities portfolio with the Stockland portfolio. Of the roughly 3,000 new homes Stockland has in the pipeline, at least 10% are apartments.
There’s one thing in particular about Lifestyle’s home designs that make living in them extra affordable. Namely, the size and layout.
Take the Glenelg, for example. This undeniably cute weatherboard cottage is like a shrunk down version of a regular cottage. The main body of the house, not counting the carport and the tacked-on kitchen, is just 51 square metres. While that might not meet the strict definition of a tiny house ([37 square metres]), it’s getting darn close.
Source: lifestylecommunities.com.au
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Especially when you consider that the average new house in Australia is nearly five times that size.
According to ABS stats, by 2013, the average floor area of a new house was 241.1 square metres. There was a 2.6% increase in average size in the 10 years up to 2013. And a 48.5% increase over 28 years that records have been kept. If the trend continues, the next generation of Aussies could be living in ridiculously sprawling new houses.
Source: adapted from abs.gov.au
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Even Lifestyle’s very biggest 2+ bedroom home designs are less than half the size of the average new house —– 100– to 110 square metres.
For perspective within the retirement housing subset, you can also contrast Lifestyle designs with a competitor. A cursory search reveals that most major providers, including listed companies, don’t offer one bedroom standalone houses. Most one bedroom retirement residences are apartments or attached units. Of independent villages and small networks, most one bedroom independent living units start at around 80 to 90 square metres.
Take Lend Lease [ASX:LLC] for example. Like Lifestyle, they’ve got several villages across Victoria. A quick survey of the listings at their newer villages reveals the average floor size is 130 to 140 square metres. And a majority of those aren’t even detached houses; they’re clusters, duplexes or rows.
Aveo
In the past few years, Aveo Group [ASX:AOG] has released and acquired a number of boutique retirement developments.
Toorak Place is a retirement apartment complex located in Victoria’s most expensive suburb (12th12 in Australia). It was designed by prominent architecture and planning firm SJB. Luxurious, bespoke design features abound throughout the lobby and apartments. There’s even a private resident access to the shopping centre below. A top floor three bedroom penthouse is currently advertised for sale at $1.7 million. A two bedroom apartment recently sold for $1.09 million. And then there’s the service fees.
The Toorak Place lobby; far removed from your average retirement village.
Source: villages.com.au
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Australian Unity
Australian Unity [ASX:AYUHA] is listed on the ASX in the form of a five-year bond, due to mature next year.
Its latest development, now selling off the plan, is called The Residences. It’s the same name as Stockland’s development in Ashfield; there’s obviously something about the word that marketers think sounds particularly plush.
The Residences are located above Rathdowne in Carlton, Victoria. It’s a boutique apartment development designed by international architecture firm Fender Katsalidis. It features a cinema, gym, hydrotherapy pool, restaurant, wellness centre, and store. There’s even a rooftop bar garden —– much more hip than hip replacement.
Source: realestate.com.au, rathdowneplace.com
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It’s luxurious, boutique and exclusive. Which is probably why it’s so expensive. The three bedroom penthouse is now listed, off the plan, at $1.56 million. The cheapest listing according to realestate.com.au is a two bedroom first floor apartment at $748,000. That’s nearly $300,000 more than the average two bedroom unit in Carlton.
If you’re interested in living in a boutique retirement apartment when you finish working, it might be time to start saving. The high-end retirement developments of the future are only going to get more expensive. And with more luxurious amenities, so will the ongoing fees.
Of course, there are lots of ways to save for your retirement. And there are lots of ways you can pay ongoing community fees. For example, you could cover your fees with dividend payments. In his report ‘How To Boost Your Income Using Dividends’, income stocks expert Matt Hibbard shows you how it’s done. Read this report and you’ll discover the three golden keys to dividend stock selection. Click here to find out how to get your free copy.
Eva Mellors,
Contributor, Money Morning
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The post How Listed Property Companies are Getting Ahead of Trends in Retirement Living appeared first on Stock Market News, Finance and Investments | Money Morning Australia.