The retirement living sector is expanding rapidly, driven by Australia's aging population, which has increased the demand for aged care facilities.
By 2066, there will be more than 4.5 million Australians aged 65 to 74, with those aged 75 to 84 accounting for a third of the older population (about 3.5 million), and one in five will be 85 or older.
According to Ibisworld's retirement village trends report, the sector generated $5.4 billion in revenue and employed 29,000 people in the past five years, with expectations of continued growth as operators develop new projects to meet rising demand.
Traditionally, retirement living involved village layouts with provided meals and varying care levels based on residents' age and health. However, today's retirees have higher and more diverse expectations for their living arrangements.
With the wealthy Baby Boomer generation retiring, the focus on retirement living has shifted towards luxury and desirable locations.
Vertical high-density apartments in inner-city areas have gained popularity among retirees who wish to stay in familiar neighborhoods and enjoy city culture. Developers have capitalised on this trend by targeting affluent downsizers with luxury apartments featuring in-house amenities such as cinemas, golf simulators, wine cellars and restaurants.
One example of this luxury trend is Ardency in Richmond, Melbourne, where residents enjoy hotel-style concierge services, a cinema, café, and yoga and Pilates studio, with prices starting at over $1 million.
Current retirement properties on realestate.com.au range from under $100,000 to over $4 million, with most listings priced between $350,000 and $640,000.
According to the 2023 PwC-Property Council Retirement Census, the average cost of a two-bedroom unit in a retirement village is 43% cheaper than houses in the same postcode across Australia, averaging $559,000 compared to the median house price of $986,000.
In metro Sydney, 59% of two-bedroom retirement properties are priced lower than the median house price, offering retirees a more affordable option in one of Australia's most expensive cities.
The current average age of residents in aged care is 80, with the average age of new entrants at 75.
This indicates a market for properties catering to younger retirees aged 55 to 75.
Developers can attract this demographic by offering luxury apartments in desirable locations, encouraging earlier transitions into retirement living.
Retirement development owners are adopting a hands-off approach for healthier, younger retirees, providing in-house care as their needs evolve.
An example of a development targeting early retirees is the Palm Lake Resort in Pelican Waters, QLD, which offers a secure gated community with a golf course, country club, and complimentary golf cart with each property.
The Cove in Ocean Grove, VIC, is marketing its development to working over-50s, semi-retired, or retired homeowners and describe it as "Ocean Grove’s exclusive new hub for active downsizers seeking adventure, social connection and wellness".
Retirement village owners face challenges with near-capacity operations, maintaining a 5% vacancy rate across the industry in 2023, down from 11% the previous year.
And in some cities and regional areas the vacancy rate is as low as 2%.
With the retiree population expected to grow significantly, there is a pressing need to build more properties to meet demand.
Realestate.com.au has seen a 10% increase in retirement project listings over the past year, with 60% more projects onsite compared to June 2020.
Most developments are concentrated in NSW, VIC, and QLD, with Victoria leading at 37%, followed by NSW at 35% and QLD at 23%. Victoria's retirement developments have surged by 150% since June 2020.
However, ACT, NT, TAS, and SA have seen consistently low retirement project numbers over the past four years.
There has been a significant increase in demand for retirement developments over the past year, with enquiries increasing by 15% nationally.
Enquiries for properties in NSW and QLD are the highest and have increased by over 30% year-on-year.
The retirement living sector in Australia is experiencing robust growth, driven by an aging population with evolving expectations.
Luxury and location have become key factors in new developments, catering to affluent downsizers and younger retirees.
Despite the sector's expansion, there remains a pressing need to increase property availability to meet growing demand.
