Summerset Group, New Zealand's busiest developer of new retirement village units, has revealed a $290 million expansion at Whangarei and Cambridge which experts say will help meet continuing demand in the sector and offset the company's major city developments.
John Collyns, Retirement Villages Association executive director, said big investments like this have a huge flow-on effect in terms of job creation and economic boosts, particularly in smaller places like Cambridge.
"It's not just a big investment for the company but also for the areas where these are going to be built," Collyns said of plans for more than 400 new units and two hospitals.
He cited the association's Retirement Village Contribution to Housing, Employment, and GDP in New Zealand report by PwC.
"The retirement village sector employs approximately 19,000 people across its
villages to support day-to-day operations. On average, for every 100 retirement
village units, there are 64 staff to support operations. Over the next seven to eight-years, approximately 9500 new jobs will be created from the construction of new villages," the report said.
Jeremy Simpson, a Forsyth Barr senior equities analyst, said the two purchases were "business as usual" for Summerset, which has a market capitalisation of $1.2b.
"For every urban site they will buy in Wellington or Auckland, they will offset that with a regional site as well. The demographics in the sector are compelling. There's lots of demand, particularly for care," Simpson said.
Summerset's shares were today trading around $5.52.
Simpson said its purchases announced today were illustrations of its desire for a wide geographic asset spread.
"There's lots of demand for what they are doing and they're wanting a spread of villages," he said, noting higher costs of building taller structures in places like Auckland and Wellington compared with low-rise buildings in less densely developed areas like Whangarei.
Summerset said: "The purchases bring Summerset's land bank up to 12 properties across New Zealand, with another 26 villages already open or in development."
Julian Cook, chief executive, said the company was looking for land in both areas for some time.
The 11ha property in Whangarei is at Mount Denby beside Kamo and Tikipunga, about 5km from the city centre. The site was elevated and beside the Whangarei Golf Club. It is in the Puna Rere Dr area.
The 8ha Cambridge property is at 80 Laurent Rd, about 2km from the town centre near local parks and racetracks, Summerset said.
Each village will have more than 200 independent villas and about 70 serviced apartments, rest home and hospital-level care and a place for those affected by dementia, Summerset said.
Lisa Chen, the Auckland-based JLL senior research analyst, released a new national report on retirement villages on Friday afternoon.
That classed Summerset as New Zealand's busiest developer of new stock and one of the "big six" businesses, of which five are NZX listed and Bupa is the only unlisted.
"Summerset has the largest development pipeline, followed by Ryman, Metlifecare, Oceania and Arvida," the JLL report said.
"Both Summerset and Ryman focus significantly on new villages - over 70 per cent of their development pipeline. Summerset particularly is anticipating an increase to their build rate to an average of 600 retirement units a year - during 2018 alone, they acquired three sites in Napier, New Plymouth and Papamoa to help propel their own pipeline forward," the JLL report said.
The latest six-monthly retirement village complaint report from the Commission For Financial Capability showed 127 users entered data into the complaints portal between April 1 and October 31, 2018.
Around 193 villages or 70 per cent recorded no complaints but 81 villages reported 203 complaints.
People complained about maintenance and repair of buildings, management and staff personnel, resident behaviour, repair of grounds, fees and charges and transfers and terminations. But 23 per cent of 47 complains were classified as "other" which was explained as service levels and service quality.
Serious issues affecting residents' health, like exposing them to a risk of falls or to dampness inside their homes, were cited in the report.
An updated report from the commission is due soon.