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Glut of villages, lack of villagers


A glut of retirement villages may soon find property developers wishing they had stuck to building inner-city flats.

Fears of a repeat of the 1980s, when many businesses lost money investing in an oversupplied retirement village market, were voiced at a conference of the Retirement Villages Association in Auckland yesterday.

Cliff Cook, association chairman and deputy chairman of the Metlifecare group, gave the warning to an industry he says will soon be faced with too many units and not enough buyers.

The new home and apartment buyer markets had slowed, so many developers had turned to the retirement village industry "as a panacea."

Estimates were that the number of units and apartments for retired people would double to 18,000 nationwide within three years. Growth in Auckland is expected to be around 160 per cent.

"The failure of one village can impact on all, both in the form of public confidence and legislative overreaction," said Mr Cook.

"It took 15 years to accumulate 9000 units; it's hardly likely [that] doubling that number in a three-year period will be smooth.

"We started the first private village in Nelson in 1983. There were 27 start-ups announced within six months of that, many by large developers, none of which are still in the business today."

Mr Cook said none of the residents had lost money when the operators, mostly large corporates, pulled out of the market.

"It is a long-term capital intensive business and they looked at them from the background of being developers developing units."

The retirement village business was definitely growing, but there was only so much growth that could be sustained at any one time. In the 1980s, some operators borrowed a lot of money to get into the business and got into trouble.

Alan Clarke, chief executive of rest-home operator Eldercare, echoed Mr Cook's sentiments. There had been a lot of new entries to the retirement accommodation market in recent months.

"These are from people who have not been traditionally involved in the market," said Mr Clarke.

One firm involved in retirement complexes is Arrow International.

Spokeswoman Naomi Kitchener said that at present only 3 per cent of people aged over 65 lived in traditional retirement villages. Arrow was involved in expanding that market, developing new apartment resort-style complexes that would appeal to a new generation of retired people.

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