How Can Aussie Listed Property Funds Innovate in Aged Care and Retirement Living?

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Retirement living is a key investment priority for many listed property funds right now.

Today, Stockland [ASX:SGP] closed a deal to purchase eight retirement villages from Masonic Homes for a healthy $75.8 million.

Last week, Eureka Group Holdings [ASX:EGH] acquired its 11th retirement village.

In May, Estia Health [ASX:EHE] acquired four new nursing homes across two states.

Several operators are also building new facilities. And they’re not your typical old folks’ homes either. They’re modern, stylish buildings with blends of independent living and nursing home rooms, for continuous care.

Analysts are positive about the future of the retirement and aged care living industry.

For example, Tom Duncan, associate director of research at Colliers International, reports that:

The Healthcare and Retirement Living (HRL) sector, which includes aged care [and] retirement livingis poised for growth. This will be fuelled by strong investment fundamentals and Australia’s growing and ageing population who will seek more economic living options. HRL is subject to significant market interest [because of] a greater than ever need for a solid offering in this key sector.’

According to Department of Health forecasts, Australia will need an extra 7,667 aged care places per year up to 2022. That’s in addition to the thousands of independent living dwellings that will be built to meet demand from older Australians selectively downsizing.

But what does ‘economic’ mean? Surely it doesn’t just mean cheaper to buy into, or cheaper to be a member of? And importantly, what does ‘solid offering’ mean? Does that mean specialist care for different conditions, a variety of dwelling styles, different price points, or something else altogether?

One thing is clear. As the retirement and aged care market becomes more crowded, big listed funds will have to diversify to stay competitive. In Duncan’s report for Colliers, he also mentioned that ‘The ideal balance of a portfolio [of retirement properties] will include an appropriate mix of new and innovative product’.

For inspiration on what’s ‘innovative’ in retirement living, Aussie property companies can look overseas.

De Hogeweyk

De Hogeweyk is a gated village that’s part of the Hogewey nursing home organisation in Weesp, in the Netherlands. It’s owned by Vivium, a government company.

The reason this Dutch village is so unique is that it’s been specially designed for residents with dementia. It’s a self-contained community with its own park, town square, supermarket, theatre, salon, eateries, and so on. There are 23 houses amongst the 152 residents.

Over 250 staff act as shopkeepers, waiters etc. whilst caring for the residents. They help to maintain the Truman Show-style ‘reality’ that the residents live in. This is labour-intensive and expensive. So to help pay for all this, members of the public are allowed in to spend money at the shops and entertainment venues.

De Hogeweyk

Left to right: the square, some of the shops, the supermarket, and the pub.
Source: Allianz,
[Click to enlarge]

Residents are reportedly happier, healthier, and require less medication. Each resident pays around €5,000 per month for a place in the village. That’s around $7,216, or $236.60 per day. In Australia, the maximum basic daily fee that the government will pay for new residents is $47.49 per day. So a ‘dementia village’ in Australia would be a high care option, or a premium option that wealthier families of dementia sufferers could elect to pay for.

The expertise to design a village like this is readily available. Dementia Village Architects is a Dutch firm that’s worked on De Hogeweyk, as well as the future Mahal Cielo Village in San Luis Obispo, California.

Lasell Village

Several studies have shown that lifelong learning has real health benefits. Seniors who continue to learn are often sharper, more engaged, and happier. A 2004 study in the Oxford Review of Education said that ‘Participation in lifelong learning had effects upon a range of health outcomes; well‐being, protection and recovery from mental health difficulties, and the capacity to cope with potentially stress‐inducing circumstances including the onset and progression of chronic illness and disability. These effects were mediated by relatively immediate impacts of learning upon psychosocial qualities; self‐esteem, self‐efficacy, a sense of purpose and hope, competences, and social integration.’

In other words, it’s got mental and emotional benefits, as well as physical ones.

At Lasell Village in Newton, Massachusetts, they’re serious about senior education. So much so that it’s compulsory. Residents at the village must complete a minimum of 450 hours of academic classes and fitness classes every year.


Source: Lasell Village
[Click to enlarge]

Courses are run at the Village, and residents are also encouraged and helped to attend nearby colleges. For example, they can take undergraduate and graduate programs at the nearby Lasell College. Some residents also teach or tutor. Residents can also take courses at other institutions. Harvard University is less than 20 minutes away, so they’re in good academic company.

High rise retirement in China

In China, it’s traditional for older people to move in with their children when they can no longer maintain their own home and look after themselves. In many cases, they’ll start living with their children well before they even retire. It’s seen as the children’s duty to look after their parents and grandparents. Elderly people are accorded the highest possible level of respect and care.

But Chinese society is changing. There are plenty of worldly couples and young families who don’t want and to move in with them when they’re old. They’ve got careers to chase, overseas holidays to take, and they’re used to the idea of personal space. That doesn’t mean they don’t love and respect their parents, though. They want the best of amenities and care for their parents — they just want to outsource it. Which is why there’s burgeoning international interest in luxury retirement living in China.

Still, land prices are ridiculous in major cities like Beijing and Shanghai. So it doesn’t really make sense for Chinese companies — or foreign companies operating in China — to build spread-out Western style villages. The smart solution is to design high rise apartment buildings that still meet the mobility needs of older residents.

Enter the Xiangshu Bay project, currently being developed in Shanghai by American firm Merrill Gardens.

Xiangshu Bay will offer meals, housekeeping and medical supervision. But it will also have purpose built recreation spaces, manicured gardens, transport for shopping and appointments, and a swimming pool. A restaurant, café, fitness centre, library, spa and hair salon will round out the luxury onsite offerings. Merrill Gardens is also attempting to cater to the locals with mah-jong rooms, arts studios, and a tea house.

In addition to the nursing home area, and a secure area for residents with dementia, the project will also have 150 independent living units.


[Click to enlarge]

They’ve also got another stunning tower planned for the northern city of Harbin.


[Click to enlarge]

Of course, places in these developments won’t come cheap. The company is planning to charge up to $3,375 a month for a place at the Shanghai development.

In some ways, it will be a proof-of-concept for Chinese interest in luxury supported retirement living.

It could go head to head with the developments underway by Australia’s Aveo Group [ASX:AOG] in partnership with Tide Holdings China. They’re planning two developments, in forested areas just outside Shanghai (left) and Beijing (right):

Source: Aveo China
[Click to enlarge]

It seems developments like these could be a smart option for high-priced Aussie cities including Sydney and Melbourne.

By the way, if you’re interested in the idea of a luxury retirement community, but you’re not sure if you’ll have enough to pay for one, don’t miss Kris Sayce’s report ‘5 Things You Can Do In The Next 30 Days To Boost Your Retirement Pot’. In this report, you’ll find invaluable tools, tips and tricks for maximising your retirement wealth. Kris’s simple 5-point plan is something you can put into action today…to help boost your retirement pot in the next 30 days. Click here to find out how to download your free copy.

Eva Mellors,
Contributor, Money Morning

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