Summerset St Johns is a new retirement village in Auckland's eastern suburbs. Photo / Summerset Group
Summerset St Johns is a new retirement village in Auckland's eastern suburbs. Photo / Summerset Group
Scott Scoullar, chief executive of Summerset Group with a $3 billion market capitalisation, said a mistake was made in the company’s NZX notice this week.
He also explained why most of the finished units at the company’s new $450 million St Johns retirement village are unsold.
Tuesday’s announcement said25% of the so far completed units at the Auckland project were sold but Scoullar said a word was missed out.
“The NZX announcement was meant to say over 25% sold. It is actually 30% sold so it’s 70% is unsold,” Scoullar said.
He was referring to the 200 new apartments released to the market in October in the project, which Prime Minister Christoper Luxon opened on December 6.
Only 60% of the project is finished and it will be another two years before construction is done.
But a 70% vacancy wasn’t unexpected, Scoullar said.
“When you launch a village, you’d expect around 30% to 50% to be presold, so this sits at the bottom end. We delivered a significantly larger volume of units - 200 units in the first stage opened in October, compared to only 30 to 40 units usually delivered in any one village at once.
“So it was a huge number released for sale at St Johns. We’re pretty buoyant that 30% is now sold. But you’re right, there’s still a long way to go.”
Scott Scoullar (centre).
Summerset’s Tuesday notice was not so much about St Johns vacancies as its record sales, moving the highest number of units in a year, recording 1238 settlements, up 12% during 2024.
Figures were issued for the quarter to December 31 but Scoullar also gave total sales for the 2024 calendar year.
“Summerset Group is pleased to report 361 sales for the quarter ending December 31, 2024, comprising 169 new sales and 192 resales,” a notice to the NZX said.
The business recorded 361 sales of villas, apartments and hospital beds in that three months. But it was in resales - when a resident left a unit - that the company set a record.
Total settlements in Q4 were on par with the same period in 2023 when there were 360 sales but the company made its highest resale quarter in the three months to December 31, 2024.
All that was achieved in the face of the ongoing housing market downturn, with national residential prices dropping and volumes of unsold stock throughout many parts of New Zealand rising.
The new Summerset St Johns retirement village in Auckland. Photo / Summerset Group
Further questions were put to Scoullar about the company and the wider sector to give context to sales, vacancies and the outlook.
Q: How much effect has the housing downturn had with people getting less for their homes, meaning buying is harder?
“Affordability would not be that significant a factor. We do allow people to pay less for a home for a higher deferred management fee - we’re only at 25% in our DMF and the cheapest in the market across all listed operators. But we can go to 30% if people are say $50,000 short of buying their dream home.”
Q: Given vacancies also declared by two other listed retirement village owner/operators, is there any trend beginning to emerge of vacancies across the sector?
“Definitely, people will have experienced a consumer struggle to settle the sale of their homes at times. The trend over the last 12 months is that I think you’d find retirement village owner/operators are generally holding elevated levels of stock. Summerset’s vacancy factor across the whole portfolio is only 3%.”
Q: Do you see any longer-term falling demand for RV units and hospital beds?
“No. Even through a tougher trading year, we’re still up on sales. We’re 20% up on resales during the 2024 calendar year and 5% up on new sales.”
Q: When is the +75-year-old population projected to peak in NZ?
“Not for ages. We’re only about five years into a 30-year cycle.”
Q: Did Summerset become bigger than Ryman by market capitalisation last month - are you the number one listed RV owner/operator in NZ?
“In December, we did pass them in market cap size but it depends on the day-by-day trading,” Scoullar said.
Ryman was this week trading around $4.62, giving it a $3.17b market cap.
Summerset is trading around $12.98, giving it a $3.07b market cap. Its full-year result is out next month.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
