STOCKLAND

Stockland released their strategic review under their new management team, headed by Mark Steinert, this week. Stockland are one of the three major retirement village operators in Australia. They have over 62 retirement villages under their management.

There had been speculation in previous weeks, including a report in The Australian newspaper on April 22^nd 2013, suggesting that Stockland were planning to try and sell their retirement village holding. The article suggests that there holding is not financially profitable. This has led to speculation within the retirement village sector. In particular, about the future and stability of retirement villages in Australia.

Stockland’s commitment to retirement village sector reinforced

The good news is that in the release by Stockland this week, they have reinforced their commitment to the retirement village sector. They have stated that they will continue to develop new villages and feel that the business fundamentals of retirement living remain persuasive. Stockland will continue to focus on ensuring they deliver a positive customer experience for their residents. They state that ensuring that residents enjoy their experience of village life is the best way to ensure the success of the sector.

Stockland admit that the previous couple of years have been difficult. The soft residential market has impacted resident’s ability to sell their homes. This, in turn, makes it hard for retirees to fund their entry into a retirement village setting. This has also impacted upon those trying to sell their retirement village units, which has in turn led to recent concern about the financial sense or viability of buying into a retirement village.

There is evidence, however, that the housing market seems to be turning a corner. It is believed the anticipated upturn will flow directly onto the retirement village sector. Stockland point to four key drivers that have helped them make the decision to remain in the retirement village sector. These include:

1. The rapidly aging population in Australia. Currently 14% of the population is over 65 years of age, but by 2030 20% of the population is expected to be over 65. This equates to 5.6 million people. The likelihood is that these over 65’s will be more active and more likely to appreciate and enjoy the lifestyle offerings of retirement village life.
2. Only 5% of over 65s live in retirement villages in Australia. Penetration numbers are much higher overseas. In the US, for example, over 10% of over 65s live in villages. This suggests that there is plenty of growth opportunity in the Australian retirement village sector.
3. Stockland feel that their current retirement village structure and management is a positive one that will ensure ongoing success. They highlight resident satisfaction rates in their villages at 90%. Their standard pricing structure is competitive, they believe, compared to the rest of the market, and their Loan/Lease/DMF model is well-accepted and is a very affordable solution compared to renting as key pointers to that view.
4. And finally, the government is becoming increasingly supportive of the sector as the economic and social benefits of village life are recognised by government, business and retirees alike.

So, with the decision of Stockland to remain in the sector, and the focus of their strategy to ‘achieve happy, full villages (and more of them) by delivering older Australians a better way to live’, it looks like the rumours of the decline of the sector were a little premature.

In actual fact, the sector, if the figures provided by Stockland htttp://www.stockland.com.au/retirement.htm) are anything to go by, looks to be in for a period of growth and revitalisation. It looks like a perfect time to buy into a retirement village and to start living the lifestyle now.

13^th May 2013

Deborah Cooke