Old Folks Homes Are Not So Easy
Sydney Morning Herald
Saturday July 17, 2004
One of the growth areas of property development has become the aged care and retirement home, with private and listed companies all moving into the sector.
The growth in demand for these properties is not surprising given the country's ageing population. Mirvac, FKP Properties and the private Rosecorp group are among many developers offering these developments to investors and owner/occupiers.But the managing director of independent research house Stantons, Lois Towart, says while demand for retirement living and residential aged care is projected to grow in the medium and longer term, it is not carte blanche for property developers to enter into the market. Ms Towart has forecast annual growth in demand for retirement homes and aged care of about 3 per cent. "Whereas the development of retirement accommodation is a property issue and the construction of many facilities involves property developers, the ongoing management of premises once they are established is a completely different business," Ms Towart said."It is this marrying of property development and retirement living/aged care services provision that makes the industry so complex."Furthermore, it is compounded by government regulation and policy, which can dramatically affect profitability."Ms Towart said this was expected to favour consolidation of the sector. "This consolidation can also be expected to favour larger facilities, with many smaller (and older) facilities being rationalised."Similar to retirement villages, the development of residential aged care facilities is more than a property development activity (and in NSW falls under the SEPP Seniors Living 2004).Not only are there the straight development issues of available sites at feasible prices but also the government regulations, coupled with government policy, which (due to the lower cost) has been favourable toward assisted community living."Some regional local governments are favourable to residential aged care facilities as they provide employment to the area," Ms Towart said.
© 2004 Sydney Morning Herald
