Ranking 300-plus retirement villages and their 71 operators, a $1.5b property developer’s gloomy view of the market right now, who’s chasing $500,000+ from a failed house builder, projections for the construction sector and Naylor Love’s appointment to replace CEO Rick Herd: all this is in today’s Property Insider.
How can you tell whether one retirement village is better than another?
More than 300 New Zealand retirement villages and 71 operators have been ranked according to best practice and buyer-friendliness in a new survey.
Lobby group for residents the Retirement Village Residents Association, headed by Brian Peat, released its findings on Friday, showing which villages and owners measure up best.
“In 2022, the association began developing a best practice score that would objectively rank village providers. To ensure the score was based purely on factual data rather than subjective information, [the association] focused on 19 key terms found in each village’s occupation rights agreement. Virtually all of these terms have financial implications,” the study said.
Weekly fees paid to owners, deferred management fees (how much owners’ estates are repaid after about three years), transfer fees, chattel replacement, capital-loss clauses and operators’ insurance excess were just some of the measures used in the rankings.
Not everyone found the survey helpful.
Lobbyists for owners, the Retirement Villages Association headed by Graham Wilkinson, encouraged people to ignore the survey.
“The scorecard is a flawed and incomplete analysis which fails to provide a comprehensive picture of the various offerings from individual villages. The scorecard only has contributions from a number of the 470 retirement villages across the country and even then, it is not possible to rate them on such a simplistic basis,” that owners’ association said.
Residents choose a village for safety and security, companionship, peace of mind, certainty of cost and a pathway to care if they need it – in other words, they look for intangible benefits rather than a one-size-fits-all model, they said.
But Nigel Matthews of the residents’ lobby association, said: “The majority of villages are covered. Some of the smaller ones haven’t responded even though we’ve mailed and emailed them over the last nine months.”
Ryman Healthcare mothballing and selling sites, ASB’s interim net profit falling, Fletcher Building’s credit rating possibly being downgraded, interest rates staying high, few major new building projects - what does this all mean?
One developer, who has built around $1.5 billion of new projects nationally in the last 20 years, sees this as a sign of much worse times for the real estate sector.
He is forecasting many more layoffs, insolvencies and mortgagee sales.
Others in the sector also cite stress after labour recruiters ELE went into receivership in December, Buildhub went into liquidation this month and Compass Homes (Franklin) failed, having not sold one new house for 12 months. Architects are being laid off from some businesses, in response to falling workloads.
Kāinga Ora being under review by the new Government is also being seen by many in the industry as a sign its workloads could be severely pruned.
The developer, who didn’t want to be named, thinks mortgage stress is far worse than many people realise, that banks are reluctant to force sales and are doing all they can to support borrowers.
“You’ll see more sales soon as people default, but few people are buying,” he predicted.
Centrix’s latest Creditor Indicator report out last month revealed mortgage arrears climbing, with 20,800 accounts past due, up 21 per cent from the same period a year prior. The proportion of home loans reported in arrears rose to 1.40 per cent in December, up from 1.33 per cent in November.
The developer also said large-scale projects like the NZ International Convention Centre, Horizon Hotel, Deloitte Auckland and the City Rail Link are either done now or due to be completed soon, taking multibillion-dollar construction jobs out of the mix.
Liquidator Grant Reynolds says creditors want more than $500,000 from failed South Auckland house builder Compass Homes (Franklin): $335,000 for unsecured creditors and $181,000 to Inland Revenue.
Company owner Garry Shuttleworth told the Herald last month the business built more than 200 new residences in the fast-growing Pōkeno but lost staff members, section prices and materials spiralled, interest rates increased and the business suffered “the perfect storm”.
Reynolds revealed a grim picture: “The company had not traded extensively for some time and had not made any new sales for more than 12 months. Other economic conditions including escalating building material costs, inflation and access to finance had an impact on sales.”
PlaceMakers Auckland South-East Hub, Spark New Zealand, Westpac New Zealand, Storage King Pōkeno, Genesis Energy, Dominator (Garage Door Solutions), Fletcher Distribution, Tile Warehouse, Carpet Court Retailing, Auckland Council, Waikato Wardrobes 2019, Rangehood Solutions, Jensen Foundations, Image Glass Thames, Counties Fencing Contractors, SB Tiling and Rural Power Solutions are just some of those named as creditors and appearing in Reynolds’ first report.
The National Construction Pipeline Report, completed for the Ministry of Business, Innovation and Employment, revealed eye-watering historic inflation.
The capital goods price index showed that in 2022, inflation hit 13 per cent for residential buildings, 10 per cent for non-residential buildings and 16 per cent for infrastructure.
This follows inflation of 14 per cent, 8 per cent and 7 per cent in those sectors in 2021. This has resulted in some local councils re-evaluating and recosting projects in their long-term plans, the report said.
Over all types of properties, construction boomed post-Covid. Residential building activity shot from $31.8 billion in 2019 to $33.8b in 2022 and infrastructure jumped from $12.7b to $14.5b.
In 2019, total construction activity was $56.9b, and this fell slightly in 2020 to $54.6b because of pandemic restrictions.
“Our forecast is for activity to fall to a low of $54.6b in 2027, consistent with activity levels in 2020,” the report by BRANZ and Pacifecon forecast.
National builder Naylor Love, building New Zealand’s first Ikea, has appointed a new boss.
Bruno Goedeke will become the new chief executive when Rick Herd retires at the end of next month. Goedeke is already a boss at the business, being regional director for Auckland and the Waikato/Bay of Plenty, where the company has significant workloads.
His appointment was welcomed by those within the business last week, many having worked with him extensively in the nearly 20 years he’s been there.
Goedeke has qualifications in quantity surveying, property development and management.
He joined Naylor Love in 2005 as contracts manager, having worked in South Africa and Britain previously.
Nayor Love is finishing Kiwi Property’s 295-unit Resido build-to-rent apartments at Sylvia Park, doing the Christ Church Cathedral reinstatement, the Wellington Town Hall redevelopment, a five-year copper pipe replacement project at Wellington Regional Hospital, Waipapa Tower 3 at Christchurch Hospital, ACC’s new Dunedin office and a multi-stage redevelopment of Skyline Queenstown.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
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